According to USA Today, China's government tried to put a "human face" on its opposition to raising the value of the yuan by presenting the case of a small business owner who is worried that he will lose his workers to better paying employers if the yuan rises in value. Of course, this is not exactly how the situation was described. In the article, the small business owner on display complained that his material costs had risen by 17 percent in the last year while his labor costs had risen by 30 percent. He then added that a 3 percent rise in the value of the yuan would be devastating. Of course if his labor costs rose by 30 percent this suggests that his workers have many other options where they can make better wages. He must therefore raise his wages to keep pace. If this makes him unable to stay in business, then it would be unfortunate for him, but present no real problem for his workers, since they obviously have alternative employment options. This does not sound like a humanitarian crisis.
--Dean Baker
