“The ‘American elite’ has ‘no idea’ what fatal consequences a revaluation of the yuan could have, says political commentator Liang Jing, adding that it would lead to a collapse in Chinese exports and ’cause a worsening in domestic income distribution.’

“What that means in plain language is that Chinese factories would need to lay off many workers and the divide between rich and poor would quickly grow wider — potentially plunging the country into social unrest.

“And if the Chinese government were to start allowing money to flow freely across its borders, something Washington is also pushing for, it would mean an ‘unprecedented exodus’ of capital from the country, the commentator says.”

“The ‘American elite’ has ‘no idea’ what fatal consequences a revaluation of the yuan could have, says political commentator Liang Jing, adding that it would lead to a collapse in Chinese exports and ’cause a worsening in domestic income distribution.’

“What that means in plain language is that Chinese factories would need to lay off many workers and the divide between rich and poor would quickly grow wider — potentially plunging the country into social unrest.

“And if the Chinese government were to start allowing money to flow freely across its borders, something Washington is also pushing for, it would mean an ‘unprecedented exodus’ of capital from the country, the commentator says.”

Nevertheess, Sarah Lacy at TechCrunch asks: “Does anyone really think Google would be doing this if it had top market share in the country?”

I understand that this paper’s general news sections are editorially separate from the editorial page. Otherwise, I don’t know whether the above statement would have escaped the scrutiny of the editorial board….

Wong continues: “Part of the legitimacy of the Chinese Communist Party lies in the notion, rightly or wrongly held, that it ousted foreign influence from the country and has tried to reunite fragments of China to return the boundaries of the modern nation to roughly those of the Qing Dynasty (1644-1912) at its height. That includes Taiwan, Tibet, the western region of Xinjiang and, by China’s calculation, Tawang.”

Perhaps such statements reflect sincerely held sentiments within China. On the other hand, beyond a certain point such rhetoric may amount to no more than a  self-serving cover-up for some bloodthirsty policies on part of the Chinese government. The president has been criticized for stiff-arming the Dalai Lama, with whom he plans to meet after the China trip. That treatment might have been inelegant, but I suppose that, at the very least, the United States has to stop short of advocating outright independence for Tibet….

On the other hand, the rate of change is difficult to estimate. John Pomfret’s reporting in Saturday’s Washington Post suggests that the “Pacific century” may be coming at a more rapid rate than we realize. His article concentrates on the effect of increasing Chinese economic clout in the state of Wisconsin.

“At the University of Wisconsin, as at college campuses across the United States, mainland Chinese dominate the study of science and technology and form the backbone of the engineering, chemistry and pharmacy departments…. Chinese investors have snapped up pieces of distressed real estate in Milwaukee, as they have in other crumbling Midwestern industrial cities, not to mention in Florida, California and Arizona.”

“These days Wisconsin is at the center of a new trade dispute with China. Appleton Coated of Kimberly was one of three paper companies to join with the United Steelworkers to file a petition with the government alleging that China was dumping certain types of paper products in the U.S. market…. Jon Geenan, international vice president for the United Steelworkers, grew up near the Kimberly plant. He estimates that Chinese and Indonesian imports have cost the state more than 5,000 jobs in its paper mills. That means dozens of foreclosed homes and hundreds of people who are behind on their property taxes. ‘Even the churches say that donations are down,’ he said. ‘They are definitely challenging the way we live.’”

The point of this post is not to specify what, if anything, should be done about all this — although perhaps something should be done. With regard to the penetration of Chinese paper products (or, for that matter, higher-value-added products like automobiles) into Western markets, I suppose I incline toward a  managed-trade view — that is, allow the importer to penetrate the market in such a way as to allow the importing country to develop economically, while limiting the market penetration before it gets to the point that communities such as the one described in Wisconsin are hollowed out. For my money, such a policy better balances the cost and benefits of trade than does the “Washington consensus” of recent decades. At the same time, free-traders may be correct if they argue that not much would be gained from limiting Chinese enrollment in American universities. That would antagonize the Chinese, while perhaps making the whole world poorer by limiting the number of available technicians and professionals in the hard sciences.

China has a more authoritarian political system than we would like. They have opened their system in other ways, however, and have allowed their people considerably more freedom than they would have a generation ago, in areas not strictly political. Furthermore, like Japan, they have adopted to a market system on their own terms, with more managed-trade and state-capitalist measures than market-ideologues in this country will allow.

Has America lost out by not following suit? Will it lose out in the future? Just asking….

“China is rattling the bars of a cage of its own making, since the reserves are a consequence of colossal intervention to stop its currency appreciating. In effect, it is trapped in the economic equivalent of the mutually assured destruction described by theorists of nuclear deterrence in the cold war. With exports amounting to two-fifths of GDP, it has been beholden to the US as borrower and spender of last resort in the global economy. And it cannot abandon the dollar without slashing the value of its own dollar reserves.”

Plender cites the writings of Josef Joffe regarding China’s limitations. Plender: “China, he says, is a place where the rest of the world essentially rents workers and workspace at deflated prices and distorted exchange rates. Its export dependence, as well as being an economic Achilles’ heel, has political consequences. These include 70,000 civil disturbances each year that are not factored into the linear growth forecasts beloved of investment bankers…. The US, meantime, still has an unmatched research and higher education establishment. And in 2008 its military budget was $607bn, representing almost half of the world’s total military spending. The military budget of China, so often touted as the next superpower, is less than one-seventh of that.”

If the new vehicle is embraced by hundreds of millions in India, what will be the implications for greenhouse-gas emissions and climate change? “It might even reduce emissions. If I drive my Tata, my Mercedes will be parked. So from an environmental point of view, pollution will be reduced because the consumption of fuel will be much less in the Nano.” The vehicle is envisioned strictly as a city car. “No one envisions them zipping along highways. There is no baggage space.”

Regarding the upcoming Copenhagen climate summit: “We at Tata are aware, obviously. We will do the right thing. We will not wait for subsidies. If there is a viable technology, we will go for that.” At the same time: “We want a deal based on equity. No one in the world can say that developing countries, because they used less until now, must continue to use less and widen the gap between developed and developing countries. We will put more carbon dioxide into the atmosphere. It is necessary for development. You can’t take India, where one-third of its population still don’t have electricity in their homes, and say to those countries: ‘Don’t give more power because it would be putting more CO2 into the atmosphere.’ Development is very important, and populations demand that. You cannot condemn those populations to living literally in darkness.”

My view has been that climate change should be addressed — whether this takes the form of reducing emissions immediately, or concentrating on research and development for alternative energy sources. Nevertheless, it should be kept in mind that there may be a limit to what can be accomplished — it is a matter of limiting damage to the natural environment, rather than completely avoiding or reversing it. Furthermore, if politicians from the developed countries are not careful, the left-right ramifications of the matter in India and China may be just the opposite of those in the rich countries….