Ordinary Gweilo

From Bloomberg (via the SCMP):

I thought this was interesting but rather confusingly written, so I have paraphrased it. Then I concluded that perhaps it wasn’t so interesting…

Before China joined the World Trade Organisation in December 2001, how many brassieres sold in the United States did the mainland make – three out of five? Two? One? Actually, the number was only 4%. Meanwhile American manufacturers share was 40%, down from 50% in 1998.

After import quotas were lifted at the start of last year, the mainland’s share increased to 17% and domestic manufacturers share fell again to 43%. So the administration of George W. Bush has come to the aid of “America’s workers”, as Commerce Secretary Donald Evans put it. The argument is that Chinese exporters are using unjust state subsidies and an undervalued yuan to drive US brassiere makers out of business.

The American Textile Manufacturing Institute says China is stealing brassieres from other manufacturers by keeping an undervalued yuan pegged against a falling dollar.

But how does this complaint square against the loss of market share of Mexican manufacturers? The Mexican peso has weakened 7 per cent against the dollar this year, on top of a 12 per cent decline last year. Similarly, how is the dollar-linked yuan a threat to brassiere exporters in Haiti, whose own currency has fallen almost 10 per cent against the dollar this year? It declined 40 per cent last year.

In other words, the share of the market held by American manufacturers is in long-term decline, but in recent years China has replaced imports from Mexico and Haiti even though their currencies are weaker against the US Dollar. Basically China gets the blame for everything these days!