Two recent (26 May) lengthy articles in The Economist dealt with the impact of import restictions on textiles from China and the net effect of a possible revaluation of the Yuan.
I have excerpted three paragraphs from those articles which are relevant to my post of 24 May on these subjects:
“The quotas and tariffs will not save the American textile industry or restore the 1m jobs it has lost since the 1980s. “China isn’t their problem,” says Laura Jones of the US Association of Importers of Textiles and Apparel. “It’s the whole rest of the world.”
“At most, the restrictions will slow Chinese export growth to the West. But any slack is likely to be taken up by other poor countries (my Italics). The “safeguard” measures—a product of the tortuous negotiations on China’s admission to the World Trade Organisation—cannot be used against other countries. One of the protectionist arguments used last year for prolonging quotas was that their abolition would wipe out export-based industries in poor countries that allegedly relied on quota protection from Chinese competition. “
“The true losers from any return of quotas will be American and European consumers and the retailers that cater to them. It will mean higher prices now, and hinder lower future prices by slowing the emergence of Chinese “supply-chain cities”, as UBS, an investment bank, calls them, that will handle the entire process of making a piece of clothing from sheep to shelf. “
“a small Chinese revaluation would have virtually no impact on America’s vast external deficit. China’s share of America’s imports is around 10%, so even a 10% appreciation would reduce the dollar’s trade-weighted value by only 1%. Were China’s move followed by the rest of Asia, the dollar’s value would fall by something closer to 4%. But even that would do little to close America’s $600 billion-plus current-account gap.”