China paranoid over currency question

Commentator David Frum.

TEXT OF COMMENTARY

Tess Vigeland: For years the United States has been pressuring China to boost the value of its currency. That would help narrow the U.S. trade deficit with that country.

Commentator David Frum recently returned from a State Department-sponsored tour of Chinese universities. He found students were passionately concerned about the currency question.


DAVID FRUM: In two weeks in China, you see many different amazing things. But visiting a range of Chinese university campuses, you hear the same one thing over and over again. They say, "In the 1980s, you destroyed your strongest ally Japan by forcing Japan to increase the value of its currency. Now you want to destroy China the same way."

There was no debunking that paranoid view.

You could explain that China's radically undervalued currency has produced China's nightmare real-estate bubble, pricing young people out of the market.

You could go historical, point out that the up valuation of the Japanese currency in the mid-1980s was followed by an increase in Japanese economic power, not a decline. No perceptible impact.

Maybe what was important was the question behind the question.

Here is China: huge, dynamic, and suddenly so rich that in a recent Gallup poll 43 percent of Americans predicted that the 21st century will be dominated by China -- as against only 38 percent who believe that the century will be led by the United States.

Yet these students believe that their country's rise could be halted by a frown from the almighty United States. Is that a concern about American hostility? Or an expression of a gnawing self-insecurity?

In China there is lots to be insecure about: environmental degradation, the widening gap between rich and poor, the ballooning real-estate bubble, poisoned milk and skyscrapers that burst mysteriously into flames, and a control-freak government flailing to suppress Facebook, YouTube and Twitter.

Perhaps it's less uncomfortable for the students to approach these topics obliquely by talking about something that edges up to the subjects they really have in mind. I therefore learned to answer the students' questions with another question, the question behind the question. To their question: "Why do you sell arms to Taiwan?" The answer: "Why does Taiwan want to buy them?" And to their question: "What will you do about our misaligned currency that threatens to wreck our economy?" with "What will you do about your misaligned currency that threatens to wreck your economy?"

VIGELAND: David Frum is founder of the website FrumForum, and a former speechwriter for President George W. Bush.

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