I have two comments on this story:
As high-level delegations from the United States and China meet this week in Annapolis for their latest talks on economic coordination, the Bush administration’s concerns about the value of the Chinese currency have been overshadowed by anxiety over the global price of oil.
On the first day of talks, U.S. officials repeated their call yesterday for China to stop subsidizing fuel for its citizens, arguing that it contributes to surging demand for oil and thus higher global prices. Since Chinese citizens pay a fraction of the market price, they have less incentive to pull back in their use of gasoline and heating oil.
Comment the first: It’s pathetic for a country that subsidizes so many products, to the detriment of its own citizens, to criticize another country for subsidizing a product. It makes zero difference whether the product is corn, milk, sugar, or oil. Subsidies lead to distortions in an attempt to bypass the price system. There will be unintended consequences. It’s transparent when acknowledging this on one product and playing dumb on others.
Comment the second: If you’re meeting with representatives from another country for talks on “economic coordination”, it’s a bit embarrassing to be criticizing a country’s “economic coordination”. Central planning is as central planning does.