Yuan a debate?

The only thing saving the U.S. from falling into a steep recession right now is the export boom. The falling dollar has made American goods (and services) so cheap that Europe and Japan have been buying tons of our stuff. How many tons? Well, goods exports are now a higher percentage of U.S. GDP (13%) than at any point since World War 2.

Here's the problem, though: our most important trading partner hasn't followed the developed world in letting its currency appreciate against the dollar. That would be China. Though China's yuan has appreciated about 20% against the dollar over the last few years - and China's trade surplus with the U.S. has shrunk a bit - that is nowhere near the amount of currency shift necessary to really equalize trade between our country and theirs. The yuan is still de-facto pegged.

And of course this produces other problems besides stifling American exports. In order to keep the yuan cheap, China has to keep buying tons and tons of U.S. debt. That gives China's government a lot of influence over our policies - for example, the nationalization of Fannie Mae and Freddie Mac was mainly meant to reassure Chinese bond-holders that they would get their money back. The longer China keeps its yuan peg, the more leverage they get over every aspect of U.S. sovereignty.

So why don't we hear the presidential candidates talking about the yuan issue? For McCain, the answer is clear: the businesses that back him make a lot more money off cheap Chinese labor than they do from selling to the Chinese consumer, so they like to keep the yuan cheap.

But what about Obama? Democrats traditionally support manufacturing, and the export boom is the clearest signal in years that there's something politicians can do to support manufacturing (i.e. pressure China to let the yuan appreciate). Ohio, Michigan, Pennsylvania, Indiana, and Tennessee are important exporters, and would love to sell their wares in China. Where is Obama on this?

In fact, where is Obama on anything these days?