U.S. Treasury Secretary Henry Paulson calls on China to revalue Yuan but China is looking for ways to fool Americans again – end of outsourcing?
Kiran Chaube
Apr. 21, 2007

The trade war is imminent. The Chinese leaders knew that long time back. America understands that slowly. China just cannot revalue its currency beyond one or two percent. The fact is that it is in a fair playing ground, the Chinese economy will not grow 10% a year; it will shrink 20% a year in a great depression. China’s biggest problem is its communism. The state run enterprises lose enormously and lay off close to 25 million workers a year. China has to use low Yuan to import jobs from United States and Western Europe to keep growing at a rate of 10% or more.

The China trick may be coming to an end finally. U.S. Treasury Secretary Henry Paulson is from the corporate world. The superb investment banker understands game playing very well. He is trying to work with China knowing very well what Chinese leaders are trying to do. U.S. Treasury Secretary Henry Paulson calls on China to revalue Yuan but China is looking for ways to fool Americans again. It’s a cat and mouse game. The cat has to understand that it is dealing with a deceptive mouse.

The end game for outsourcing may be nearer than anyone can imagine. American internally are not liking what their Government is doing in the name of outsourcing.

A very interesting legislation went through the House of Representatives in Washington. The corporate officers including CEOs must get approval from shareholders on their compensation packages. The pension funds hold big chunk of shares of large corporations. Sooner or later these mega investors will claim that outsourcing be stopped and eventually reversed.

China may have created its own problem. Japan did the same is take in the eighties. Conspicuous bad trading partners are never appreciated. Like in Japan, China may tail spin into deflation driven recession. That will be the end of China’s double-digit growth story.

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