The Irrationality of Scapegoating China
By wchung | 22 Feb, 2025

U.S. politicians would instill more faith in Americans and sense of cooperation in China's leaders by being appreciative rather than irrational.

In tough times politicians look for scapegoats. Recently they’ve zeroed in on China, as they’ve done so often in the past. They rant that our high jobless rate is due in large part to China keeping the yuan artificially low to boost exports to the U.S. and keep U.S. imports prohibitively expensive.

This reasoning is so contrary to economic realities that it’s hard to decide where to begin.

Let’s start by recalling that the U.S. didn’t have a jobless problem back in February of 2007 when a buck was fetching 7.74 yuan. Our economy was roaring along and everyone was making money. Today the dollar fetches only 6.82 yuan, representing a very rapid 13.5% appreciation in three years. If anything, those facts might plausibly suggest that appreciating the yuan caused our jobless rate!

The truth is that our housing-based speculative bubble popped in monumental fashion, forcing belt-tightening by all those who went on spending sprees on borrowed money. That produced the inevitable layoffs. China can’t be blamed for the consequences of that American orgy of greed and resulting hangover any more than it can be credited with the boom it fueled between 2003 and 2008.

Let’s not forget that in 2000 U.S. exports to China was only $16.3 bil. In 2009 it was $69.6 bil., a 427% increase! By contrast U.S. imports from China was $100 bil. in 2000 and $296.4 bil. in 2009, a 296% increase. While that still leaves a big trade deficit, that deficit it closing rapidly. The growing demand for U.S. goods in China is already playing a key role in the growth of U.S. firms like Boeing, Microsoft, GM, Apple, McDonald’s and others.

The irrationality of scapegoating China goes much deeper. Since 1979 China has pulled itself up by the bootstraps — with little U.S. help — from two centuries of impoverishment brought on by incompetent rulers and the depredations of western powers — including the U.S. — seeking easy profits from unequal trade. Now that half of China has progressed into an industrialized economy, it must cope with the multiplying expectations of its people for better living and working conditions, social security and health care, while trying to pull up its restive rural population before it explodes into the kind of anti-modernist rage that has fueled Islamic terrorist groups.

China is a highly imperfect nation, with much that can be criticized. But not even the most rabid American critic can fault the stupendous progress it has made the past half century in raising the quality of life for its people while becoming perhaps the world’s leading engine of economic stability and growth at a time when the west’s much-vaunted free capitalism failed spectacularly, taking the world to the brink of economic collapse.

China’s leaders are well aware of their nation’s achievement and don’t respond constructively to reflexive bashing by a nation that has been unnecessarily antagonistic in the past. American politicians would get a lot more cooperation from China — and maybe even more votes from those all-important independent voters — by intelligently acknowledging China’s key role in pulling the world through this recession brought on largely by blind, uncontrolled western greed. At least that would show that some much-needed learning has taken place among those we are trusting to navigate a tricky place in our development.