There were two pieces of news I cannot ignore today: U.S. Solar panel producers are preparing to file a complaint against China for violating global trade rules; and Congress, despite Whitehouse’s opposition, may soon pass a bill that will likely punish China with trade tariffs and sanctions for allegedly being a currency manipulator.
This puts me in a odd place of having to defend my loyalties one way or another: Do I side with U.S. companies and politicians and ask that China reduce its subsidies to the green sector and slow down the amazing progress made in terms of sustainability? Do I join the chant that China allows the yuan to free flow and let the market be impacted accordingly?
The choices are complicated; any haste in the matter would prove improper for both U.S. interests as well as China’s emerging dominance and yuan’s eventual status as one of the world’s basic reserve currencies.
I fear Congress is passing the bill calling China a currency manipulator is much a political maneuver than anything – showing their unemployed constituents that the problems of a bad economy is inevitably due to some foreign evil – not Congressional incompetency and corporate irresponsibility.
Last week, I met a friend for coffee and talked briefly about the Chinese currency. His advice is to focus not on protectionism and immovable Chinese politics, but instead, he asked that I look at any variable opportunities that may exist. His focus is on using Hong Kong as a focal point for foreign economic interactions with the PRC and allowing a slow but stead growth of yuan’s influence. Fearing that overnight changes may destabilize the already volatile global economy, I think his words carry a lot of wisdom. I too feel that an overnight transition is not the answer to the imperfections we see in the yuan. Along this logical progression, then, a Congressional bill that openly condemn the Chinese monetary policies and remedies with sanctions and tariffs contributes nothing positively.
In connection with the large subsidies Chinese government is pumping into their green industries and solar companies: if we had such a bill that makes it easier for protectionism, we are essentially building a wall around ourselves and cutting the U.S. off from the next phase of global development. We are already behind China and the rest of the world in investing in renewable energy. Cutting off the already existing competition would only give nonrenewable sector more incentives and profit opportunities here in the state side. We may do well in the next fifty or a hundred years, but what will happen after that? I get the eerie feeling this is another sort of the cold war, and we – the Americans – are building the walls and cutting ourselves off from the rest of the world.
Of course I don’t think it’s right that there should be uneven competition between the Chinese solar sector and the U.S. sector. But I ask who is to blame? Obama is trying really hard to pump subsidies into our own, but China has a larger savings reserve and more authoritative power to do as the central government pleases. It is the inherent difference of development strategies and politics since WWII. We can’t change history, but there is no reason we can’t build a cooperative future rather than a standoff one.
So I chose not to take a side. I think the Congressional bill is a load of horseshit and it’s a distraction to hold our politicians accountable for their lack of competence. The unemployment rate has very little to do with the yuan and the Congressional bill commits a straw-man fallacy. I do think the Chinese investment into its own solar sector is slightly unfair against the kind of money we can pump into our own, but I don’t fault the Chinese because they have a real incentive to help its own economy switch into a renewable model so the rest of the world won’t suffer from its continued consumption of fossil fuel and its massive polluting potential. I only ask that our politicians have a little bit more foresight and work with the Chinese on this and use their huge advantage to help boast our own solar industries and help ourselves switch over from the fossil dependencies.
At the end of the day, I think neither country is right or wrong but there is a common and sensible solution in all of this. Let’s not let politics get into the way of global progress.