HONG KONG HOOEY.(The Talk of the Town)(why blaming China for US unemployment is wrong)

In the nineteen-eighties, as the United States struggled with high unemployment, vanishing factory jobs, and soaring trade deficits, American politicians found their culprit: Japan. Japanese exports were turning America into a land of burger flippers and hair stylists. "We've been running up the white flag, when we should be running up the American flag," Walter Mondale said in 1982. "What do we want our kids to do? Sweep up around Japanese computers?"

Twenty years later, the United States is once more facing high unemployment, vanishing factory jobs, and soaring trade deficits, and American politicians are glaring east again. This time, though, the villain is China. In the past few months, Bush Administration officials have blasted China for its "unfair" trade practices, with Commerce Secretary Donald L. Evans warning Beijing, "Time is running out." Republican Senator Jim Bunning, of Kentucky, said, "The Chinese are cheating," and suggested that the appropriate remedy was a "high inside fastball." (Bunning used to pitch in the major leagues.) Democratic presidential candidate Dick Gephardt said that trade with China is "a race to the bottom." And a motley crew of congressmen, including liberal Democrats and Southern conservatives, have proposed a bill to slap high-priced tariffs on Chinese goods. "This country can't be a patsy to a foreign competitor," Senator Jeff Sessions, of Alabama, said.

The inspiration for this bout of Sinophobia is our gigantic trade deficit. Last year, America bought about a hundred billion dollars more in goods from China than it sold to China; in the past five years, imports have doubled. China has accelerated this trend by holding down the value of its currency, the yuan. (An undervalued yuan makes Chinese goods cheaper, and American goods more expensive, than they otherwise would be, which, in turn, makes the trade deficit bigger.) Meanwhile, nearly three million American factory jobs have been lost since 2000. The diagnosis seems simple enough, and so does the solution: Get China to stop playing currency games, shrink the trade deficit, and bring back the jobs.

Here's the catch: Chinese companies aren't responsible for American unemployment. By and large, they're making things that Americans don't make anymore--shoes, cheap clothes, consumer electronics. As a recent study by the Federal Reserve Bank of Cleveland puts it, "The sort of jobs that would move to China left the U.S. a long time ago." The real losers are workers in Malaysia, Mexico, and Thailand, who used to make the DVD players and boxer shorts that China now churns out by the million. So, while it's true that China's currency is undervalued, a rise in the yuan wouldn't jump-start manufacturing here. Americans like TVs and T-shirts, so we're going to keep buying them from whoever makes them. And we buy a lot from everyone. This year, eighty per cent of the growth ...