The biggest problem in the "New Socialist Countryside" is just that – it is still pretty socialist. Yes, rural folk have taken great strides forward in recent years, and things are much better than they were in the past. Small businesses are a big reason behind that. Because it has become so easy to open a small shop or restaurant, the countryside is doing much better. But there’s nothing socialist about owning a private business.

The next step is clear: ownership of the land itself. This would be a benefit to everyone, but especially to those who work the land, and who therefore currently own nothing. In the cities, people can buy and sell apartments, even if they never actually own the physical land underneath them. But their ability to effectively engage in property trading is putting them far above their rural peers. Let the farmers into the game. Let them own their land.

The excellent High Frequency Economics newsletter produced by Carl Weinberg, which we read every week with great attention, believes that the Schumer-Graham bill which calls for a tax of 27.5% on the price of all goods imported into the United States from China unless China revalues its currency by some ridiculous amount will never get to the floor of the House of Representatives for a vote. Carl’s argument is that it is now widely recognised that no one will win if it comes to a vote.

The argument is persuasive. The two senators, somewhat better educated following their brave trip into the alien world of Communist China, now have the unenviable task of finding a way out of their un-painted corner.

Carl goes further and suggests that the world’s interests are best served by the yuan staying as weak as possible for as long as possible, because it benefits both US consumers and US businesses. We don’t necessarily need the senators to concede that. Just killing the bill will be sufficient, thank you.

This story in today’s Financial Times:

Disillusioned France hungers for reform

France’s students are in revolt. Its urban ghettoes are sporadically aflame. Its trades unions are planning national strikes on Tuesday. Its discredited 73-year-old president, Jacques Chirac, is serving out his time. An opinion poll, published by Le Figaro newspaper on Saturday, showed that 50 per cent of French people did not have faith in the market economy – compared with 20 per cent in communist China. One of history’s eternal questions resounds around Paris once again: can France reform itself without revolution?

What an extraordinary reversal. Faith in the market economy reflects confidence and a willingness to face risks, lack of faith in the market economy betrays fear of change and a desire for the certainties of the past.

It appears China is looking ahead and France is looking back.

US Senators Charles Schumer of New York and Lindsey Graham of
South Carolina, who have sponsored a bill to place a 27.5 per cent tariff on Chinese
exports entering the US if China doesn’t float its currency, were making conciliatory noises as they completed their visit to Beijing. Hopefully they are beginning to see that the only way out of the corner into which they have painted themselves is to declare victory and withdraw the bill.

"It’s
been an eye-opening visit," said Charles Schumer. Now that he has seen China for himself, he is "more optimistic that things can be worked out". Perhaps then he and fellow traveler Lindsey Graham will further postpone or even cancel the vote on their proposed tariffs on all imports from China. Either way, the measure has little chance of becoming law. Though the senators claim enough support to override a likely presidential veto, I don’t think the bill could muster enough votes to pass the House. Almost certainly, the House would not have the required two-thirds majority to override a veto.

But perhaps Schumer and Graham won’t let it come to that. They said that their meetings with Vice Premier Wu Yi and Commerce Minister Bo Xilai were enlightening, as the Chinese leaders showed them just how thin of a margin most Chinese firms operate on, and how a massive revaluation would have disturbing consequences. As Wen Jiabao put it recently, it is not the fault of the Chinese that Americans spend more money than they make.

If these senators really want to help, they should be promoting the one thing that really could bring China’s economy into line with the rest of the market-oriented world: letting the people own land. On that note, The Economist has published a survey of China this week, available now online. Most of the content is for subscribers only, but there are two excellent pieces for free here and here.