Dispatches From China

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Surcharge on Chinese goods is not the answer

Paul Krugman, 2008 Nobel Prize winner and highly acclaimed economist, says the United States should slap a 25-percent surcharge (not a tariff, although the difference escapes me) on all Chinese products, until Beijing revalues its RMB currency.

Stephen Roach, current Asia chairman of Morgan Stanley, who’s worked for the Federal Reserve and Brookings Institute, has degrees from University of Wisconsin in Madison (for which he gets10 credibility bonus points), N.Y. University and lectures at Yale, disagrees. In an interview on Bloomberg on March 19, Roach said, ,”I think we should take out the baseball bat on Paul Krugman – I mean I think that the advice is completely wrong.”

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Roach said a surcharge would be “lashing out at China rather than tending to our own business,” which should be boosting U.S. savings rates.

Roach would have more credibility if he was not also telling anyone who will listen that China does not have a real estate bubble.

How often do you see a captain of commerce characterized as a communist-sympathizing panda lover by a self-proclaimed left wing ideologue?

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Read more in the latest Dispatches From China column here.

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