Why a Fast Appreciating Yuan Won't Help U.S. Economy

Shaun Rein of the China Market Research Group submits:

Originally published in CNBC

I recently attended an investing conference in New York on China, which included speeches from the likes of American Secretary of Commerce Gary Locke and hedge fund legend Barton Biggs.

Listening to many of the other speakers, I was surprised at their anger and fear towards China. I had hoped that rhetoric would dissipate after the mid-term elections last year. Many attribute Chinas boom as a result of stealing American jobs and intellectual property, rather than efficient economic policies and hard work ethic.

I asked Secretary Locke to respond to my position that a fast appreciating renminbi would not create more American jobs, as companies like Nike (NKE) and Apple (AAPL) would relocate their manufacturing to cheaper areas like Indonesia rather than back to America. I maintained that the real danger to the global economy is the Federal Reserves latest round of quantitative easing, which already is exporting inflationary bubbles to emerging markets.

Locke responded by saying China needs to appreciate the renminbi faster to play a more responsible role in the economic system. He also said Bernanke needs to stimulate Americas economy through a loose monetary policy. He did not take into account the criticism of Brazil and Germany about the Feds policies.

Are Locke and the other speakers right that a fast appreciating renminbi will create more jobs on American soil? No. Americas bilateral trade surplus with China arguably could drop, but the far m! ore impo rtant metric of overall surplus wont.

Why not? Locke

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