If China’s liberalized currency policy truly leads to better balance in the global economy, it will be helped by another unexpected Chinese phenomenon.
That’s the nascent labor activism in China.
Admittedly, there’s a lot of extrapolation that has to go on in order to contemplate a virtuous circle between a strong Chinese yuan, reducing the price of needed imports and fighting inflation at home, and a newly muscular labor movement winning higher wages and benefits broadly across a gigantic nation.
First, you have to stipulate that Saturday’s announcement by the Chinese government that it would return to the managed exchange rate policy in force before the credit crisis will result in a significant and steady appreciation of the yuan.
