Dear China. Please Revalue your Currency or Forfeit the Remnants of Your International Credibility
The last 9 months have witnessed a series of incidents in which an unattractively hubris-laden China has chosen, apparently quite deliberately, to bully the rest of the world and assert itself. One of the major ongoing bones of contention between an increasingly affluent China and the rest of the world (especially the USA) is its repeated refusal to revalue its currency, which, it is repeatedly alleged by “Western” economists, has remained at an unrealistically low level vis-à-vis other currencies for many years, to the continuing benefit of China’s massive exports, and, presumably, to the detriment of its unprotected workers.
Today I stumbled on what I feel is a trivial but cogent piece of proof of China’s persistent unrealistic undervaluation of the yuan (cf. pound or dollar), or rembimbi (cf sterling). I bought 3 cheap (but pragmatically old-fashioned and abstemiously small) wineglasses and 4 small water tumblers in a local Chinese-run $2 shop. The wineglasses cost me A$2.50 each and the package of 4 x 9-ounce / 270 ml. water tumblers (ID: GLA 7608, Barcode: 9321214037608) cost a mere A$2.95. [$2.95!] Think of the possible costs and profits: factory costs, workers’ wages, sea transport over thousands of kilometres from China to Australia, truck transport to the shop, and profit by the Australian retailer. I asked the manager of the $2 shop how much profit was available for the various stages of the product’s journey. She shrugged her shoulders.
QED? Come on, China. Do the decent thing!1