• Created by Unknown User (cuicui@mit.edu), last modified by Unknown User (rongyuan@mit.edu) on Jan 26, 2011 00:45

(red star)   This page is dedicated to identification and analysis of specific policy problems in China.

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Trade and Currency

Cuicui comments:

This article claims that contrary to the traditional narrative that RMB is undervalued, reducing job opportunities in US, in reality RMB is appreciating because manufacturing jobs are losing in China and increasing in number in both US and other developing economics such as Brazil and Turkey. However, in my point of view, the article has several flaws: 1) The author only looked at the job reports for 2009 and 2010, which may not be conclusive; 2) The author seems to attribute the loss of manufacturing jobs only to exchange rate, ignoring other factors such as the fact that China is restructuring its economy.

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China Economics 

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4 Comments

  1. Unknown User (rongyuan@mit.edu)

    Just read the article from Xiaonei. A great piece of work indeed. However, it leaves an unanswered question: what jobs can those dismissed Chinese workers have if large amount of manufacturing companies collapse?

    1. Unknown User (cuicui@mit.edu)

      I think one of the reasons why our government don't like increase in RMB value is that our GDP will suffer due to loss of a significant portion of manufacturing companies. To compensate for the loss in GDP (or, economic development) due to fewer manufacturing companies, we have to explore new and expand current Third Industries, i.e., facilitate economic structural change, where laid off workers can fill in vacancies. But here is another question: will the laid off workers, typically ill-educated labor, do a good job in their new positions? In this light, our government should increase spending for education.

      1. Unknown User (rongyuan@mit.edu)

        We basically asked same question. Agree with your answer! But the increase of Human Capital (skills/productivity of worker) takes much longer than the increase of Physical Capital.

        Indeed, long term investments, like education and R&D, can never be the wrong things to do. However, things are hard to promote without strong incentives.

        Another counter point is that some countries haven't enjoyed fast economic growth even with high average education level. 

  2. Unknown User (rongyuan@mit.edu)

    Just read the article about China's soft power. In the last para, the authur mentioned the limit of China's soft power -- "They don't have a coherent vision of the world to offer." What a great comment! It may sounds too ambitious, but should it be part of our vision statement? Please consider this.