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Sunday, January 30

The currency of offshoring

"Much of the discussion about skilled U.S. jobs going offshore focuses on fairly tangible topics such as low wages in Asia, better telecommunications systems and even guest worker visas.

But another, more arcane subject may play a role in U.S. job losses as well: currency policy. At least that's the argument made by Peter Morici, a business professor at the University of Maryland and former director of the Office of Economics at the U.S. International Trade Commission. 'Despite weakening against the euro and yen, the dollar remains overvalued against the Chinese yuan, Korean won and the Indian rupee,' Morici said in an email Friday. 'Currency manipulation by Asian central banks is stealing American growth, transferring good paying jobs from the U.S. Middle West and South to China and other Asian destinations.'

According to Morici, a government can make its exports artificially inexpensive by pegging its currency at a low rate against the dollar. China does this, Morici said, by buying up U.S. dollars with its currency, the yuan. 'China is flooding the market with yuan so it can flood the world with its exports,' he said.

The Chinese embassy in the United States did not immediately return a call seeking response.

Morici isn't alone in singling out China on the currency issue. U.S. Commerce Department Secretary Don Evans also has criticized the country for not letting market forces set currency rates."


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