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Originally posted by Bad_Rich_Chic
Most studies of the econ. benefits/harms of free trade show that one-sided free trade is still beneficial to the free trader (i.e.: opening your own market benefits your economy overall, regardless of the trade or fiscal policies of your trade partners); perhaps even moreso than two-sided free trade relatively speaking, because the free trader gets benefits while the non-free trader gets comparatively fewer than they would if they, too, were open. So I'd say that there can be beneficial "free trade" with China even if China does not practice free trade. Who says that "free trade" has to be two-sided?

FWIW, I think the argument that China has "suppressed" its currency is a bit silly. It's pegged to the dollar, has been for dogs years. The dollar is, compared to most currencies, way down, and so the yuan is, too. That probably does mean that the yuan is undervalued vis a vis the dollar (and other currencies) when compared to what it would be if it floated, but it doesn't mean the Chinese gov't has some evil policy to artificially "suppress" their currency as part of some devious plot to screw US textile workers, as the press often seems to imply. Their longstanding currency policy has, currently, the effect of producing a very low-valued currency, which is beneficial to them in various ways at the moment, but ... I dunno, you can't really think that everyone (else) in the world should radically shift currency policy every time the international market produces some weird and not really forseen effect, so the whole thing has always seemed to me to be more of a straw man for various interests than a real economic issue. Honestly, the US has done more to "artificially suppress" its currency than China has, and while you can argue whether this is wise policy or not, I don't see the "unfair artificially suppressed yuan!" crowd yelling about how US exporters have an unfair advantage and the G should do something about it.

In any event, I think the low yuan does give a net benefit to the US, and I don't have a view of whether it is an "acceptable" practice or not. It primarily harms the Chinese in the long term, and while I might not do it were I Captain of the Universe, generally thinking it preferable to take a hit to the economy now and get it back on track than to suffer the greater harm of an entrenched, non-competitive, protected economy later, I'm not, and if someone wants to screw up to my benefit I generally have no moral compunction about letting them, so ... whatever.

Actually, I think the real risk posed by yuan's peg to the dollar is that, compared to FDI in other countires, investment in China is comparatively cheap, which means companies and investors (US and everyone else alike) risk overexposure to the coming economic armageddon over there. Investors with experience over there have been seriously reducing their exposure for a year or more, but the usual "hey, I just read in Newsweek that everyone's been investing in X for a couple years, and the price has gone way up, so now must be the time to buy in!" stupid money is flooding in ....

Oh, and "2" on the farm subsidies. I have family farming the great breadbasket, and they've lost the farm multiple times due to the "oppression of the American farmer at the hands of know-nothing city-folk who just want cheap, un-American agricultural products" or some such bullshit, even with subsidies, but somehow they can't take a hint.

Wow. I will defer to the learned one. Clearly I am not qualified to carry your proxy.