"Treasury Declines to Rebuke China" (#290, Topic B)

On page A6 in today's Wall Street Journal, one reads a brief story, whose headline is given above. Compared to the fanfare last week, when Treasury secretary Henry Paulson led a cabinet-level delegation to China to deal with this very issue (and when the story was covered on its front-page), this is truly a letdown. The essence of today's story is that "the Treasury has again declined to brand the country [China] a currency manipulator." What constitutes a "currency manipulator" is never defined. When a country pegs its currency to a fixed rate in US-dollar terms, "that country has, in effect, delegated its treasury function to the Fed", as Larry Ludlow summarized in his program over CNBC today; he further stated that such a move is to be cherished rather than condemned -- I share Ludlow's views fully. There are, at the moment, more than 30 countries using the US dollar as their legal tender. Tagging a country's currency to a fixed exchange rate in US-currency terms is but a step removed from that. Last week, over the same Ludlow's program at CNBC, a commentator angrily protested that promoting a weak US dollar resulting in consumers' paying a higher price is "amoral." Another commentator on the same program stated that the administration must view US's employment policy in the "totality" -- meaning that protectionist actions that benefit certain segments of the US economy (such as textile workers in the south, with one of its senators acting as their vocal spokesman) are invariably at the expense of other industries or the citizenry as a whole. Indeed, this is confirmed by another story I read last week. After some 18 years, the administration has finally removed stiff tariff over imported steel. While such tariffs have undoubtedly benefitted domestic steel workers, they have adversely affected the automobile industry. (The story only mentioned the auto industry; presumably, other industries that use steel as raw material are similarly affected -- this may account for their moving to China to set up factories there: to take advantage not only of her lower labor cost, but also to escape the stiff tariff on steel.)