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Question: Can America stay competitive?

Paul Krugman: I don’t think that’s the issue.  I mean competitiveness can take care of itself actually.  The Chinese currency is gonna have to rise.  They’re running huge trade surpluses, but it’s actually in their own interest to stop doing it.  Right now they’re piling up huge quantities of dollars that earn very low interest.  And this is a bizarre use of their . . . of their resources.  They’re still a very poor country.  The real impact of China on us is . . . is actually on resources and environment.  The Chinese have become major competitors for a limited supply of oil.  And so here we are with $90 a barrel oil; and that, rather than the competition from Chinese goods, is the problem for our economy.  And you know . . . and there’s a certain assumption which I think we’re all gonna drown because of Chinese carbon dioxide if we don’t first die because of the mercury from the Chinese coal burning power plants.  So another huge impact on the environment as are we.  But now there’s another country that’s doing huge impacts on the environment, and this is a . . . raises the urgency of getting a kind of international agreement to deal with these things.

 

Paul Krugman on China

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