Many friends might have already noticed that the trade clash between the USA and China has been progressively escalating. For years now, the US has advised China to raise its RenMinBi (yuan) currency exchange rate against the US dollar and to stop the manipulation of the exchange rate that produces the favourable trade surplus to China. Yet, the Chinese government pays no heed and does not change too much. By using the power of a government, the Chinese Communists forcefully keep the yuan devalued, thus producing a super-cheap price for Chinese goods that does not fit the regular pattern of the market economy. This devaluation has manufactured the biggest international trade imbalance ever in history. This kind of conduct has not only hurt the US economy, but is also costing huge damage to China's own economy.
People understand well how China's trade surplus hurts the USA with increased unemployment and increased debt, etc. However, when we are talking about how the Chinese economy gets hurt as well, many people do not understand. The general logic of the Chinese is "If I have hurt the others, I must have had a good deal. How could I harm myself at the same time?" Yet, there is an old Chinese saying: "Damaging the others is not beneficial to oneself." The Chinese government's forceful reduction of the exchanging rate to produce the trade surplus is really the kind of conduct that is not beneficial to itself.
Most importantly, those who make money with the lowered exchange rate of RenMinBi are not all the Chinese. The incomes of the majority of waged labour are forced to stay low because of this low currency rate. The products produced in China are sold at only slightly reduced prices on the international market. The huge profits in between manufacture and sale are taken away by the minority capitalists, thus producing a gigantic disparity between the rich and the poor in China. This huge disparity not only damages the interest of the poor people, but also damages the security of the society and the moral standard, thus producing a full-scale social crisis in China. In fact, even the wealthy people inside China are living in this crisis in a constant state of anxiety. Despite their extreme extravagance and luxury, their days are not easy.
One of the results of the extreme disparity between the rich and poor in China is the fact that the Chinese internal market is very small. The productivity in China is much higher than the ability to consume. Most of the production is middle-range consumer goods, yet a huge chunk of the consumer market is not inside China. This means that the survival of the manufacturing industry is mainly dependent on the international market, i.e. in the control of others. Should there be any sign of disturbance from the international market the whole industry will suffer unrest.
Now, the European and American countries have to take trade protectionism as a way to counteract the forced low exchange rate policy of the Chinese government. This action resulted in stopped or reduced production, which thus affected the whole economy through the chain of productivity. As soon as America started to restrict China's exporting cheap steel into the USA, a group of Chinese who made money from coal and steel disappeared from the chart of the wealthy. Behind that, there are many salaried people who lost their jobs. This is one of the consequences of lowering the RenMinBi exchange rate to make trouble for the others.
Besides, Chinese industry's lack of innovation and lack of quality guarantee is well known. The low quality products that flood the world have already made the "made in China" label notorious. That is another form of negative consequence of maintaining the low RMB currency exchange rate so low-quality goods could grab the market with their low prices.
Stealing and plagiarizing is much less costly than true innovation and low quality is less costly than good quality. This kind of vicious investment orientation has not only damaged the reputation of "made in China", but also the potential for the Chinese economy to continue its development. It makes a tiny fraction wealthy by damaging the interests of the majority. It uses up all the resources from our ancestors at the cost of our future generations, not just by environmental pollution. This situation is mainly caused by the orientation of the export economy, and thus is the main disastrous result from the forced low yuan exchange rate.
The prerequisite of this economic and political monopoly is the very poor human rights condition in China. To maintain the monopoly, Chinese government needs to suppress human rights. Recently, there was a brave Beijing citizen named Li Jinping, who went to the Public Safety Bureau to apply for permission to demonstrate against the US President's China visit. On the first thought, one might think that he was just a "patriotic youth". In reality, this is not true. What Mr. Li was against was having the US President only talk about business, but not human rights during his China visit. Mr. Li's thoughts represent the viewpoints of many Chinese.
Talking only about business instead of human rights will result in the dictatorship of the Nazi Germany time. Yet we must understand that free speech and free press are directly related to trade, and are among the issues of trade. Within the world, trade agreement there is special provision requiring the member country to guarantee free speech and free media, otherwise there is no guarantee of free trade.
To monopolize information is a main condition to produce political and economic monopoly. I wish the protest by Beijing citizen Li Jinxing could receive enough attention from both the American and Chinese government. We care about not just human rights alone. Human rights are also the basic condition for a free trade and democratic politics.