American pressure on Beijing to revalue the yuan is now dominating the news, but China is following Japan as a manifestation of a much bigger problem. Globalization is broken. As now structured, it is undermining U.S. productive capability and becoming unsustainable.
Without fundamental change in the rules of globalization, any conceivable yuan revaluation now won’t have much impact on world economic imbalances. Remember that in the 1980s economists said a revaluation of the Japanese yen between 20 percent and 30 percent would balance trade. But the yen has more than doubled since then, and Japan still maintains a large trade surplus both globally and with the United States, as do all of the world’s major economies.
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