The Foreign Service Journal, May 2005

of their manufactured products to the United States via China. The $96.7-billion increase in imports from the PRC from 2000 to 2004 was partially offset by a $23-bil- lion decrease in imports from Japan, Taiwan, South Korea, Singapore and Hong Kong over the same period. Is China the Culprit? Nonetheless, many in the United States continue to focus simplistically on China as the chief culprit behind our increasing global trade deficit. There have been per- sistent calls in Congress for economic sanctions against Beijing for alleged “currency manipulation” due to its fixed exchange-rate policy. This is in sharp and ironic contrast to our pressure on it to maintain this policy in the late 1990s during the Asian financial crisis. When the rest of the region experienced dramatic currency depre- ciation, we looked to China to maintain currency stabili- ty. Now, we blame it for our global trade deficit. In fact, should Beijing move to a more flexible exchange rate pol- icy as the U.S. administration has encouraged, it is not at all clear that its currency would appreciate, because China has relatively low interest rates and an essentially balanced trade (its $30-billion trade surplus represents less than 3 percent of China’s total trade in 2004). Along the same lines, in its 2004 study, the U.S.-China Economic and Security Review Commission estimated that nearly 100,000 jobs would move from the United States to China as a result of production shifts in 2004. More generally, the commission noted that production shifts out of the United States to Mexico, China, India and other Asian countries have seen a major increase in the last three years. The fact is, however, that, given sig- nificant wage and cost differentials between the United States and developing countries around the world, the gradual shift of low value-added production to lower- wage countries is to be expected, just as U.S. and other developed countries’ industrial sectors continue their strength in higher-end, higher value-added manufactur- ing. China itself has seen the net loss of nearly 15 million manufacturing jobs since 1995 as a result of state-owned- F O C U S M A Y 2 0 0 5 / F O R E I G N S E R V I C E J O U R N A L 21 The Embassy Plan Overseas Insurance Personal Auto & Contents Coverage Experience that helps you avoid the pitfalls of a highly complex business. Repeat business that results from providing what’s best for the customer not the agent nor the insurance company. Since 1969, Harry M. Jannette International has provided dependable coverage with U.S. carriers with a financial rating of A+ or higher to thousands of Foreign Service Personnel worldwide. Thus you gain the broadest U.S. terms and conditions and flexible value limits often not available from other insurance carriers. MAJOR CREDIT CARDS ACCEPTED: SEE OUR WEBSITE APPLICATIONS Harry M. Jannette International, L.L.C. 8111 LBJ Freeway, Suite 585 Dallas, Texas 75251-1334 Toll Free (800) 256-5141 (972) 783-4915 Fax (972) 783-0545 E-mail: hmjintl@jannetteintl.com www.jannetteintl.com • WORLDWIDE COVERAGE Fire, theft, comprehensive and collision protection are available at foreign posts. • U.S. AUTO LIABILITY Available for short term on home leave, change of assignment, and new auto purchase prior to foreign departure. This coverage must be issued in combination with an “Embassy Plan” policy. • FOREIGN LIABILITY Contact your post for compliance with local laws, Excess liability limits are available over local liability coverage. • PERSONAL COVERAGE Household goods and transit, valuable articles, personal liability, life insurance . • EMPLOYEE ASSOCIATION INSURANCE Employee association insurance Including directors and officers. Your Reliable Choice