Today's Stories

May 1, 2008

Michael Hudson
The Fed Sinks the Dollar

April 30, 2008

William P. O'Connor
The Day I Lost My Innocence

Bob Fitrakis /
Harvey Wasserman
Did the Supreme Court Just Elect John McCain?

Tariq Ali
Storming Heaven: 1968 Revisited

John Ross
Bad Jazz in NOLA: Three NAFTA Leaders Sit It for the Last Time

Glen Ford
Pop Goes the Race-Neutral Campaign!

Joshua Frank
Election Season Piffle: Thinking Outside the Voting Booth

Ashley Smith
Iraq After Basra

Robert Weissman
Medical R&D That Works in the Developing World

Sen. Russ Feingold
Bush's Shroud of Secrecy

Website of the Day
Richard Nixon, April 30, 1970

April 29, 2008

Uri Avnery
The Military Option

Roedad Khan
Why Gen. Musharraf Must Go

Chris Floyd
The Torture Election

Paul Craig Roberts
The Iraq War Morphs Into the Iran War

Dave Lindorff
Invasion of the Pumpheads

Mats Svensson
Mental Barriers in Palestine

Peter Morici
Will the Fed Broaden Its Focus?

Mike Ferner
Inside American Royalty's Security Bubble

John Weisheit
Towing Icebergs to San Pedro

Amit Srivastava
China Olympics, Tibet Crackdown, Coke Profits

Website of the Day
Tom Friedman Gets Creamed

April 28, 2008

JoAnn Wypijewski
On Queen's Boulevard, the Night Sean Bell's Killers Got Off

Mike Whitney
Jeremiah Wright Delivers the Knockout Punch: But Will It Topple Obama?

Iris Keltz
The Fruiting Fig Tree: Memories of East Jerusalem

Steve Niva
The New Walls of Baghdad: the Israeli Model Surges Toward Iraq

David Macaray
CAFTA's Bloodtrails

John Ross
"Adelitas" Shut Down Mexico's Congress

Stephen Lendman
The Politics of Green Scare

Malou Innocent
On "Withdrawing Responsibly" from Iraq

Christopher Brauchli
Want to Learn the Ins-and-Outs of the Slumping Economy? Just Ask Ashley ...

William Kaufman
Michael Moore's Embrace of Obama: a Polemic Devoid of Politics

Website of the Day
Get Your Fix

April 26 / 27, 2008

Alexander Cockburn
Nothing Will Get Hillary Out of the Race

Ralph Nader
A World of Hunger

Peter Camejo
A Crying Shame: the Wages of Left Capitulation

Harvey Wasserman
Making You Pay for the Next Chernobyl--in Advance!

Franklin Lamb
Will U.S. Policy in Lebanon and the Middle East Ever Change?

Wajahat Ali
Fisk Fighting: an Exclusive Interview with Robert Fisk

Mike Whitney
Food Riots and Speculators

Andrew Wimmer
Obliterate Them!

David Yearsley
Nero, Frederick the Great, Nixon ... They All Did It Better Than Clinton

Greg Moses
Chicago: the Stupid Experiment

Ron Jacobs
Walking the Lonely Road

Robert Fantina
Bush v. Carter: Let History Judge

Missy Comley Beattie
Introducing President McCain

Linn Cohen-Cole
The Criminalization of Raw Milk: a Mennonite Farmer is Hauled Away

Paul Krassner
Remembering Ruben Salazar

Jeffrey St. Clair
Booked Up

Poets' Basement
Buknatski, Khaiyat, Lair, and Kowit

Website of the Weekend
Justice for Sean Bell

April 25, 2008

George Ciccariello-Maher
Embedded with the Tupamaros

Dave Lindorff
The Bitter and the Biased: How Clinton Courted Racists in Pennsylvania

Franklin Lamb
The Israeli Project Has Failed in Lebanon

Alan Farago
Hacking the Development Code: the Politics of Zoning in Florida

John W. Farley
Syiran Nukes: the Phantom Menace

Kathleen M. Barry
Some Questions for "Femininists for Clinton:" Is There Really Any Difference Between Hillary and Condi?

Mohammed Alireza
Cowboys and Iranians

Nick Dearden
Haiti and the Black Hole of Debt

Carmelo Ruiz Marrero
Why Biotech is Betting on Biofuels

Bruce Springsteen
Farewell to Danny

Website of the Day
It's Bigger Than Hip Hop

April 24, 2008

Linn Washington, Jr.
Duplicity Demeans Clinton Campaign (or When Bill Praised Farrakhan)

Franklin Lamb
Bush to Nasrallah: an Offer Hezbollah Cannot Refuse?

Jennifer Van Bergen
The High Crimes of John Yoo: the President's Executioner

Joanne Mariner
U.S. Hypocrisy and the Malaysian Guantánamo

Mark Engler
Trade Politics and the Battle for the Soul of the Democratic Party

Dave Lindorff
The Politics of Obliteration: Hillary's Monstrous Threat

John Blair
Obama's Missed Opportunities in Evansville: Did He Even Know It Was Earth Day?

De Clarke / Stan Goff
Politics is Food is Politics

Binoy Kampmark
Bowling for Boris: the Tories, Red Ken and the London Mayoral Race

Philippe Marlière
Sarkozy and the Specter of May 68

Peter Morici
The Bank of England Misses the Point

Website of the Day
Fair Food Nation

April 23, 2008

Cockburn / St. Clair
Straggling to Denver

Vijay Prashad
McCain's Mask

Paul Craig Roberts
What the Iraq War is About

Stephen Soldz
The Involuntary Drugging of U.S. Detainees

Laura Santina
Hillary: Another Feminist Perspective

John Stauber /
Sheldon Rampton
Pentagon News Networks

Dave Lindorff
What Double Digit Win? Media Round Up in PA

George Ciccariello-Maher
Radical Chavismo Growls a Challenge

Ralph Nader
Andy Stern's Rackets

John Weisheit
Rearranging Deck Chairs at Glen Canyon Dam

Website of the Day
Wal-Mart's "Cost of Admission"

April 22, 2008

David Isenberg
Spinning Saddam's Linkages

Stan Cox
The Political Economics of Greenwashing

David Macaray
Memo to the Clinton Campaign: They Are Still Murdering Labor Unionists in Colombia

Jeff Birkenstein
Playing the Opposite Game: Or Why Can't I Sell Out?

Mike Whitney
Memo to Bernanke: Enough With the Rate Cuts, Already!

Nikolas Kozloff
Bush's Paraguayan Fiasco

Floyd Rudmin
From Lhasa to Bilbao: Journey of a Double Standard

Carlos Villarreal
Why John Yoo Should be Dismissed From Boalt Law School--And Prosecuted

Ray McGovern
What About the War, Pope Benedict?

Michael Gould-Wartofsky
El Barrio Fights Back Against Globalized Gentrification

Robert Ovetz
A Fish Tale

Pat Wolff
Rightwing Power Grab in Cornhusker State

Website of the Day
Defend the Rutgers 3!

April 21, 2008

Bill Quigley
The U.S. Role in Haiti's Food Riots

Uri Avnery
The Lion and the Gazelle

Dave Lindorff
The U.S. Economy and the Costs of War

Wajahat Ali
Finding Osama Bin Laden with Morgan Spurlock

Andy Worthington
Hollow Gestures at Guantánamo

Robert Jensen
The Sorrows of Race and Gender

Ron Jacobs
Clampdown at Evergreen

Dan Bacher
The Great Salmon Closure

Harvey Wasserman
Where's George?

Danny Alexander
Remembering Danny Federici

Website of the Day
Save Our Taco Trucks!

April 19 / 20, 2008

Alexander Cockburn
McCain: What Really Happened When He Was a POW?

Patrick Cockburn
A New Struggle is Beginning in Iraq

Wajahat Ali
Zinn Speaks

Andrew Wimmer
Papal Benedictions

Rev. William E. Alberts
Jeremiah Wright and America's Continuing "Separate and Unequal" Societies

David Rosen
Texas Two-Step: The Polygamy Raid and the Regulation of Sexual Life

Robert Fantina
McCain Detests War?

Ramzy Baroud
The Politics of Armageddon: McCain's Pastors and the Middle East

Saul Landau
The No Escape Clause on Iraq

Dr. Susan Block
Raelians, Aliens and Evolution

David Yearsley
Suitcase Arias and Ithacan Jazz

Phyllis Pollack
On the Red Carpet with the Rolling Stones

Jeffrey St. Clair
Booked Up

Poets' Basement
Hartz, Newberry and Khaiyat

April 18, 2008

John Ross
The Bush Legacy: Losing Latin America

Dave Lindorff
Courage and Conviction: In Praise of Bill Ayers

Dan Glazebrook
An Interview with Robert Fisk

Carl Finamore
A Look Inside the Hangars

Rannie Amiri
J Street: Do We Really Need Another Pro-Israel Lobby?

Richard Morse
A Creepy Roadblock at Midnight

Ko Young-dae
CONPLAN 8022: Inside Bush's Nuclear War Plan for the Korean Peninsula

Farooq Sulehria
A Himalayan Surprise

April 17, 2008

Michael Hudson
Hillary Joins the Vast Rightwing Financial Conspiracy

Robert Bryce
The Ethanol Apologists

Kathy Kelly
Weary of War? Don't Collaborate

Madis Senner
The Carrion Feeders' Ball: How Hedge Funds Reap Billions Off Economic Misery

Peter Morici
The G7, the Banks and GE

Ron Jacobs
Washington, al-Maliki and the Militias

William S. Lind
A Confirming Moment in Basra

James Murren
Obama's Disconnect with Small Town America

Ben Terrall
Losing Haiti

Walter Brasch
Political Log Rolling in Clinton County, PA

Website of the Day
Stealth Attack: Homegrown "Terrorism" Bill

April 16, 2008

Bill Kauffman
The Candidates from Nowhere

Roxanne Dunbar-Ortiz
Colonization and Massacres

Saul Landau
How to Leave Iraq

Peter Morici
McCain's Economic Plan: GOP Out of Ideas (But So are the Democrats)

Eric Toussaint /
Damien Millet
Bankers Saved, Human Rights Sacrificed

Jeff Ballinger
Inside Nike's Asian Sweatshops: Squeezed Vietnamese Workers Strike Back

David Macaray
Union Strikes and Replacement Workers

Gary Leupp
Electoral Revolution in Nepal

Richard Morse
The Food Riots in Haiti

George Ciccariello-Maher
Einstein Turns in His Grave

Dave Lindorff
Letters from the Bitter Belt

Website of the Day
Surviving Prozac

April 15, 2008

Ralph Nader
The Politics of Distraction in an Age of Gotcha Capitalism

Uri Avnery
Manifest Destiny and Israel

Brian Cloughley
Arrogant Lies

David Price
Outrageous Pre-Tour de France Ban

Joe Bageant
Bitter America: Media Shit Storms and Heartland Reality

Steve Early
The Purple Punch-Out in Dearborn

Mats Svensson
To Create Something from Nothing: the Making of a Palestinian State

Michael Donnelly
Dead-Eye Hil and the Elitist

April Howard /
Benjamin Dangl
Dissecting the Politics of Paraguay's Next President

Laray Polk
Let's Not Put the Torch in a Bubble

Charles Modiano
What Does a Woman Have to Do to Get on the Cover of Sports Illustrated?

Website of the Day
The $3 Trillion Shopping Spree

April 14, 2008

Carl Finamore
Airline Deregulation Makes a Hard Landing

Michael Hudson
A Trillion Dollar Rescue for Wall Street Gamblers

M. Shahid Alam
Hizbullah's Big Win: Has Israel Finally Met Its Match?

Patrick Cockburn
A Cleric, a Pol and a Warrior

Paul Craig Roberts
Petraeus Sets Up Iran

Joanne Mariner
Redition to Jordan: What Happens When the Gloves Come Off?

Martha Rosenberg
Suicide and Cymbalta

Dave Lindorff
The Bitterness Thing: Is Obama Channeling Nader

P. Sainath
Hot Messages to Sex Dancer Doom Condi's New Finnish Pal

John V. Whitbeck
On Hypocrisy Over Tibet: a Personal Reflection

Website of the Day
Spying on Environmental Groups

April 12 / 13, 2008

Alexander Cockburn
Olympic Torch Toasts US Candidates

Patrick Cockburn
Warlord: the Rise of Muqtada al-Sadr

Mike Whitney
Want to Save the Economy?

David Yearsley
Film Scores and Westerns: the Stealth Cavalry of Empire

Robert Fantina
Bush's Brand of Morality

Conn Hallinan
Another Defining Moment in Iraq

Bill Hatch
In Praise of Hippies and the Counter-Culture

Ramzy Baroud
The Basra Battles

George S. Hishmeh
Back to Square One

Ron Jacobs
The New New Left in Latin America

Nikolas Kozloff
Olympic Torch in Buenos Aires

Charles Thomson
The British Prime Minister and the Tate's Tin of Shit

Alexander Billet
The Disney-fication of CBGB

Missy Beattie
Huffing and Puffing to Failure

David Michael Green
America's Jones for War

Seth Sandronsky
Education Entrepreneurs

Prairie Miller
Meeting David Wilson

Jeffrey St. Clair
Booked Up

Poets' Basement
Ko Un, Ibn Salma and Greaves

Website of the Weekend
Americans United for Palestinian Human Rights

April 11, 2008

Nikolas Kozloff
The Clintons and Their Sordid Colombia Advocacy

Wajahat Ali
Revenge of the Ghetto Nerd: an Exclusive Interview with Junot Diaz

Sharon Smith
Let Them Eat Ethanol!

Yigal Bronner / Neve Gordon
Digging for Trouble: the Politics of Archaeology in East Jerusalem

Alan Farago
Eating South Florida

Dave Lindorff
On Waking Sleeping Giants: Lessons for America from China

George Wuerthner
Money for Nothing? The Problems with the Conservation Reserve Program

Christopher Brauchli
Prostitutes Don't Do Funerals

Website of the Day
Animals Explain the Insurance Industry: a Health Care Video

April 10, 2008

Mathieu Vernerey
Tibet for the Tibetans!

Elizabeth Schulte
Slavery in the Fields

David Macaray
Labor Unions Will Never Get a Fair Shake

Ashley Smith
The Rise of Muqtada al-Sadr

Peter Morici
Driving Up Debt and Dragging Down Growth

Jacob Hornberger
The Military's Distintegrating Family Life

Harold Austin
Snitch or Else: Prison Officials Threaten Gang Drop Outs

Website of the Day
Hillary: the Wal-Mart Videos

April 9, 2008

Paul Craig Roberts
The Fading American Economy

Winslow T. Wheeler
Congressional Theater: the Petraeus / Crocker Hearings

C. Hand
Why Dave Marash Left Al Jazeera

Paul Krassner
Sex and Violins

Paul Wolf
Colombian "Magnicidio" Remains a Mystery After 60 Years

Wajahat Ali
Alien Invasion!

Karyn Strickler
Lost in the Fumes: the Sierra Club Sells Out to Clorox

Dan La Botz
Confronting the Economic Crisis

Eric Walberg
The Shadow of Munich: Another NATO Flop

Robin Millenthal
Enough Already! Growth and the Tar Sands Economy

Website of the Day
Conservative Nanny State

April 8, 2008

Mike Whitney
Should Khalid Sheikh Mohammed be Set Free?

Nikolas Kozloff
Bush Bullies Congress on Colombia Deal

Greg Moses
Migrant Detention in South Texas

Joshua Frank
The Other Military Draft

John Ross
Mexico City's Urban Tribes Go on the Warpath Against EMOS

Michael Donnelly
Hillary's Western Swing

John V. Walsh
Why Obama Lost Massachusetts

Jeff Nygaard
Health, Security and Mandates

Bill Piper
Last Shot for a Bush Legacy?

Sen. Russ Feingold
Legal Representation and the Death Penalty

Website of the Day
Catonsville 9, Forty Years Later

April 7, 2008

Ishmael Reed
The Irish Black Thing

Harry Browne
Irish Peace Activist Acquitted; Deported

Uri Avnery
Tibet and Palestine

Lenni Brenner
Obama's Constitution, His Pastor and His Unbelieving Mom in Heaven

Ayesha Ijaz Khan
America Must Respect Pakistan's Democracy

Robert Fisk
Fearful Lives in the Land of the Free

Edwin Krales
Ensuring the Success of Fascism in Spain: the US Corporate Role

Chris Genovali
Vancouver Island's Dwindling Ancient Forests

Website of the Day
LA Artists Against War

April 5 / 6, 2008

Alexander Cockburn
Did the Elites Want MLK Dead?

Ramzy Baroud
There are No Checkpoints in Heaven

Ralph Nader
Runaway Bailouts

David Yearsley
How Scott Joplin Had Wall Street Down

Saul Landau
Sex Politics in America

Paul Craig Roberts
The Petraeus and Crocker Show

Lawrence Korb / Ian Moss
Rev. Jeremiah Wright, a True Patriot

Seth Sandronsky
Meet America's Promise Alliance: Colin Powell's New Gig

John Ross
La Cumbia de la Doctrina Bush: Colombia Kills Four Mexican Students in Ecuador Bombing

Robert Fantina
McCain, Republicans and Family Values

David Michael Green
Back to Disaster: Hoover at Home, Tet Abroad

Missy Beattie
McCan't

Patrick Bond
Vultures Circle Zimbabwe

Dr. Susan Block
The New American Pot Dealers

Phyllis Pollack
The Stones Meet the Press

Adam Engel
The Boobus in the Lie

Jeffrey St. Clair
Booked Up

Poets' Basement
Diamand and St. Clair

Website of the Weekend
Richard Pryor Goes to the Gun Shop

Subscribe Online

A Wrong Policy and Its Consequences

Blaming the Yuan for the Deficit with China

By BEHZAD YAGHMAIAN

The U.S. deficit with China had reached a record high, and the Americans were increasing the pressure on the Chinese government to further revalue the yuan to help reduce the trade gap when I visited Charles Lee in his medium-size factory in Shenzhen one late evening last summer. Clad in hooded uniforms, young men and women were busy, making decorative soap, baby shampoo, bubble bath, and soap crayons. Elsewhere on the compound, others were packaging the products, preparing them for shipment to Walmart stores in the United States before the Christmas Season. A picture of Spiderman decorated the small blue packages of bubble bath trademarked by a company in New Jersey. There were no sign of Lee's factory. 

Charles Lee and his workers are among the unknown faces behind the vast and elaborate production chain used by American companies, and the rising deficit with China. His factory is one of the thousands of labor-intensive enterprises supplying the American market through subcontracting agreements. The yuan appreciation was hurting Lee's business, and many others like his, but the deficit was showing no sign of decline.

Conceding to American pressures, China relinquished its decade-long policy of pegging the yuan to the dollar in July 2005. The yuan rose by more than 5% in the first year, 12% by the end of 2007, and 14.13% by March 2008. Meanwhile, the trade deficit with China continued to swell by more than 15 percent, from $201 billion in 2005 to $232 billion in 2006; it reached $256 billion by the end of 2007.

An otherwise potent policy instrument had become ineffective in narrowing the trade gap. Instead, it was leading to harsh consequences for workers of many small and medium size factories in China. The American policy makers had gotten the story of China and its role in the U.S. economy all wrong.

* * *

China's economic relations with the U.S. changed after August 26, 1980, when Deng Xiaoping declared Shenzhen, a small fishing village facing Hong Kong, the country's first Free Economic Zone. "To get rich is glorious," said Deng Xiaoping, inspiring the children of government officials, unemployed university graduates, ex-convicts, and others to go to Shenzhen, setting up China's first privately owned businesses in many years. Millions of impoverished farmers followed, fueling the city's newly built factories. Shenzhen became the epicenter of capitalist reform in China; it offered cheap labor, and a regulation free environment to Chinese and foreign entrepreneurs, including Americans.

Rushing to Shenzhen, many American firms set up production facilities, branches, and subsidiaries. Supplying their U.S. market from there, they inaugurated China's new role in the U.S. economy, and the surge of Chinese imports. Purchases by American firms from their affiliates in China increased from 10% in 1992, to 24.6% of total imports in 2006. It continues to rise at a fast rate.

The move to China was a part of the aggressive globalization of the U.S. corporations. Supported by all successive administrations since the 1980s, Americans expanded their investment, and production networks far beyond the boundaries of the United States. Direct investment was soon supplemented by the use of local producers as surrogates, changing the structure of the U.S. trade with each step, and making the import of finished and semi-finished products essential to the operation of American firms.

Many large American firms established strict long-term subcontracting agreements with non-affiliates that solely produce for them. Shenzhen became home to factories producing specifically designed products at set prices for American multinationals. Having no brand name of their own, they make what fills the shelves of retail stores under various American brands. Charles Lee's factory is one among thousands of such factories.

To many American corporations, China became like a new state, one not regulated by the U.S., or the Chinese government. Importing from China was no different from moving products between New York and Hawaii. As they expanded their subcontracting activities, pocketing billions of dollars in extra profits, imports from China skyrocketed. A rising trade deficit was unavoidable.

The American companies pay their subcontractors in U.S. dollars. In many ways, these purchase agreements resemble contracts between independent companies using the same currency within a country. Negotiated in dollars, the buying prices are unaffected by exchange rates. The revaluation of the yuan fails to increase the cost of imports for the American corporations; it leaves their demand for Chinese products unchanged.

The revaluation would have had the desired effect, were the imports also produced in the United States. Facing the rising prices of imports caused by the revaluation, some American consumers would have switched to domestic substitutes. However, that is not the situation in the case of most Chinese imports. There are a few American substitutes for Chinese imports. The Chinese apparel, electronics, furniture, toys, and many others in the exhausting list of imports, no longer compete with similar American products. If not from China, Americans would have to buy them from elsewhere. The deficit would remain; it would only be with other countries.

* * *

While leaving the imports from China unaffected, the revaluation of yuan hurts local subcontractors, and their workers. Converting their proceeds from the America contract to the local currency, the Chinese suppliers face a sharp decline in income. "My cots continue to rise, but my income declines as the yuan revalues," Charles Lee told me.

The yuan had hit a record high with the U.S. dollar, and the energy prices were soaring. "Many things are changing for businesses like mine. I worry about my factory and my workers," he said. Lee's fears were widespread in Shenzhen. To make matters worse, many American firms had been demanding lower prices from their subcontractors, threatening to move to India, and Vietnam.

"Sometimes I feel so bad when I do this. I know that my demand causes misery for them and their workers. This is very simple; a better deal for me means more pain there, but I have to protect the interest of the buyers. That is my job; I cannot change that," Peter Hu, the Chinese general manager of operations in an American trading company in China told me. Peter Hu is a liaison between the American buyers and local producers. His job is to find the best and cheapest suppliers for his customers.

Of all the foreign buyers, the Americans are "the worst," Jennifer, a twenty-seven year old employee in Hu's company told me. "Partnership and loyalty means nothing to them. They would leave you and go with whomever that gives them a lower price, even after a decade of really good relationship," she said.

The result has been intensified competition among the subcontractors. Trying to cope with the declining revenues, many labor-intensive producers without the technological capacity to improve productivity, and the ability to weather the changes, have been pressuring their workers, demanding overtime work (frequently without compensation), reducing labor standards, and using lower quality materials.

The continuing revaluation of yuan will force scores of small and medium size factories out of the market. This may be a welcomed consequence of the policy for China, streamlining the market and weeding out inefficient producers. Nevertheless, the short-term effect is more hardship for Chinese workers. "In a factory like mine, profit can only be made by exploiting the workers," Charles Lee said.

The revaluation of yuan cost Charles Lee a large drop in his 2007 profits. "Manufactures like me are on the bottom of the whole production chain. The export market has become difficult for me. I am now thinking about transferring to the domestic market," he told me in December.

Charles Lee may leave the export market, but someone else in China, India, or elsewhere in the Third World would take up the slack. His soap and baby shampoo will be supplied by a manufacturer less sensitive to the wellbeing of the workers, or the quality of the products he exports. Shenzhen, and many other cities had marginally raised their minimum wage for the first time in more than two decades, when I met Charles Lee. "I am both happy and sad when workers' wages go up: happy because they live a better life, sad because my profits decline," he said.  Lacking such concerns, other suppliers simply transfer the burden to their workers, the ultimate losers of currency revaluation. Meanwhile, the American imports, and the deficit, will continue to rise.

***

Embracing free market capitalism, and relinquishing its old welfare policies, China moved from a poor but egalitarian society, to the fastest growing, and one of the most unequal countries in the world in less than three decades. The average income of the top 10% of the population is currently 11 times that of the lowest 10%. The poorest 20 percent of the population holds only 4.7 percent of China's income, while the richest 20 percent accounts for more than half. The inequality is alarmingly in housing. In China's urban areas, the top 20% of the population accounted for half of the housing value, whereas the lowest 20% held only 1.5% of the total in 2002. A similar distribution prevailed in the rural areas.

Charles Leeworkers are among the 200 million migrant workers laboring 10-12 hours a day, seven days a week (off only one day every other week, in most cases), earning between $100-200 a month. Many live in factory dormitories, sharing small rooms with eight to ten workers. Millions of others live in shared apartments in poor neighborhoods that house waitresses, salesgirls, real estate agents, and street cleaners.

The low wage of the Chinese workers attracts many American firms to China; it also limits America's ability to export to China, even with the revaluation of yuan. Saving money to build a home in their villages, or even renting a small private apartment in the city is an unrealizable dream for most workers I met in Shenzhen. Yu Xinhong, a twenty-one year old realtor from a village in Qinghai Province shares an apartment without kitchen with eleven colleagues, including her manager. Having left her village four years ago, she lives in one overcrowded apartment after another. "We were 12 girls in one room in my first factory job. Things have improved a lot. One day I will buy my own apartment in Shenzhen. That is my dream," she said. For now, her monthly income does not even allow her to rent a small place of her own.

Lu Xian, a thirty-year old mother of two, left her village in Hunan Province two years ago. "How long will you stay in Shenzhen?" I asked Lu Xian. "Until I save enough money to build a home for my family," she replied. "When do you think that would be?" I asked. Shaking her head, and laughing, she said, "Some day."

Leaving a life of poverty in the village, Lu Xian joined an army of migrant workers across the country. Back in the village, she was among 800 million farmers living with an annual per capita income of less than $500. Her home lacked tap water and heating; she did not have access to healthcare, and other basic needs. Unaffected by the unprecedented and impressive changes in China, millions of Chinese farmers like Lu Xian and her family still reside in mud houses, or brick homes without plumbing.

Even the educated Chinese with years of work experience are deprived of what China has been supplying the rest of the world. "Our houses look like hotels compared to those of poor farmers, but we don't have washers, or heating in winter," a forty-year old accountant for a government hospital told me during my visit to Anhui Province. Helping me as my interpreter, a university educated English teacher lamented about her $260 monthly income after 20 years of teaching.

These and millions of other Chinese seek a higher income to rent descent apartments, build bigger and better homes, eat more nutritious food, wear nicer clothes, and buy TV sets, DVD players, washing machines, furniture, and other consumer goods that made China the factory of the world in recent years.  China produces all that they need and aspire for. They are not potential buyers of American exports, at least not in the foreseeable future. For the most part, their consumption is largely unaffected by the revaluation of yuan. However, their appetite for basic consumer goods is a source of future growth for the domestic market in China.

China's celebrated capitalism enriched many American firms through investment, and subcontracting agreements with local manufacturers. The same economic model, and its resulting income inequality, is limiting America's exports to China. The US trade deficit will continue to soar. Trying to correct this with a revaluation of yuan is an exercise in futility. The chickens have come home to roost.

Behzad Yaghmaian is a professor of political economy at Ramapo College of New Jersey, and the author of Embracing the Infidel: Stories of Muslim Migrants on the Journey West. He can be reached at: behzad.yaghmaian@gmail.com