Key Numbers, Worth Watching.(international economic relations)

8.3 and 1.19, 4 and 0.4, 175 and 1,639. These are very powerful numbers. If in coming months any of them changes drastically, the world will change: 8.3 is how many Chinese renminbi can be purchased with $1 U.S.; 1.19 is the number of U.S. dollars needed to buy 1 euro; 4 percent is the projected rate of growth of the U.S. economy this year, while 0.4 is how much Europe will probably grow this year; 175 is the millions of dollars George W. Bush already has available to fund his re-election campaign; 1,639 is the number of U.S. soldiers killed and wounded in Iraq since President Bush announced the end of major combat in May. These are important numbers because each summarizes a trend with global consequences.

Take China's exchange rate, for example. The renminbi--fixed at 8.3 per U.S. dollar since 1994--is an important pillar of the Chinese economy, underpinning that country's spectacular export growth. China just surpassed Japan and is now the world's third largest exporter after the United States and Germany. Lately, however, many Americans have begun to complain that the renminbi is too cheap. Millions of Chinese and others are bringing back their U.S. dollars, hoping to profit from a revaluation. If that happens, Chinese exports will be more expensive, and prices inside China will also increase as the cost of imports rises. China's precarious financial system could suffer, and a political crisis might ensue. The renminbi cannot hold at 8.3 forever. But is unlikely that it will be worth anything different from 8.3 in the next 12 months. If it is, we will all feel the consequences regardless of where we live.

The effects of a more expensive euro, which has risen nearly 14 percent against the dollar this year, are already being felt. Last month Volkswagen announced that its financial results were hurt by the cheaper U.S. dollar. Coca-Cola gave the same explanation for its growth in earnings. The results of these two companies are not exceptions but examples illustrative of a wider trend: if the euro continues to strengthen, as is likely, the enormous gap between economic growth in the United States and Europe will continue. As Gerard Baker wrote in the Financial Times, in just the three months of this past summer the U.S. economy grew as much as the entire economy of Belgium. Admittedly, a large fiscal and trade deficit, huge consumer spending and the continuing willingness of foreigners to buy U.S. Treasury bonds all help power the U.S. economic engine. Clearly, this is not sustainable, and it is therefore easy to dismiss an ...