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China & free markets

| Thursday, Sept. 23, 2004

Our focus is on China, where its overheated economy rockets ahead at 9-plus percent, much of that growth predicated on manufacturing exports.

It is argued that the yuan, cheapened by its fixed price against the dollar, makes China's exports less costly than they ought to be and therefore is unfair competition.

Yet government efforts to slow the economy are having an effect. The worldwide recovery of steel prices was largely pinned on Chinese imports, which have declined. Will the U.S. steel industry beg for reimposition of tariffs• Will the Chinese tail-wag the American dog?

The developed world provides markets for cheap Chinese goods partly in hopes that the surging Chinese will concentrate on civil economics and not militarism -- finding its national identity and pride in the former and not the latter. But how long can the imbalance of trade with the United States persist, and how long can the militarists be held at bay?

There is more to consider. In the last five years the land available for cultivation has fallen more than 17 percent owing to industrial expansion. Chinese food imports will grow, but will the government, finally, be able to feed its people?

Folks may draw a bead on the balance of trade deficit and the loss of U.S. manufacturing. These could be among the least of our problems.

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