Leonardt on Cultivating Chinese Consumption

This is a nice article by Leonardt.

But somehow it all seems too long and complicated for the reality of the situation.

The main obstacle for China, and a big one for the U.S. and the rest of the world, is explained in a single paragraph.

...By buying large amounts of United States Treasury bonds (and, to a lesser extent, Japanese and European bonds), China has kept its currency artificially low. The renminbi has roughly the same value today as it did in 1990, relative to a basket of other currencies, which is remarkable considering how much faster China’s economy has grown than the world economy. The low renminbi holds down the price of Chinese-made goods in other countries, increasing exports. But it also means that foreign-made products are more expensive within China than they would otherwise be. In effect, China’s government is deliberately reducing the buying power of its own consumers to subsidize its exporters.

Lower prices and they will spend.

That would be good for China.  And everyone else.