The U.S. was there in the not so distant past. The days of child labor, currency manipulation, corruption, lawlessness, intellectual property law violations, pollution, and human rights violations are eerily similar to the what China is being accused of. Granted, the world has changed considerably since the U.S. committed much of those acts so there is some validity to holding China to a different standard. The issue is that the U.S. stopped many of those practices because it did not serve a function or produce value anymore. For example, one of the main reasons for the Fair Labor Standards Act that set child labor rules was to encourage the employment of adults instead of children. Child labor was cheaper, which contributed to high unemployment for adults - men.
The single greatest resource for a country is its population - human capital. The value of a country rises and falls based on the quality of its population. A lack of education or intellectual capacity requires a reliance on physical labor because repetitive movement needs only basic intelligence. Prosperity depends on the movement from physical labor to intellectual labor or knowledge labor. The resource cost of migrating a physical labor worker to a knowledge worker is large. As such, the knowledge worker can demand higher wages or the business can demand a higher price for its services. Prosperity is the gap between the cost of living and the wages earned.
China is capitalizing on its cheap labor because it is the one resource in abundance, now. Part of China's capitalizing is managing it currency to ensure that the labor remains cheaper relative to other currencies. It makes sense that China would try to extend its cheap labor dominance until it can transform its economy. China has to move to a more self sufficient model - creating products in country for its population - relying less on exports. An artificially low currency also makes imports more costly for the Chinese. By producing products and services cheaper than what it can import it for, means that China will see an increase in prosperity that is domestically generated rather than dependent on foreign businesses.
China has learned how to do this because of outsourcing. The downside of outsourcing by developed or industrialized countries to China is the knowledge transfer. It is evident in the counterfeit shadow market in China. An export so large and pervasive that it is almost incapable of being solved because the resource cost for global enforcement is likely not worth it - at least not on a large scale. Shadow markets or black markets necessitate a criminal element because the activity by design operates outside of the law. There is no amount of contracting between multinational corporations and labor providers in China to prevent the theft of intellectual property. It is laughable that a piece of paper was the barrier decided upon by businesses. All it takes is an initial knowledge transfer and a little reverse engineering to create a better mouse trap.
China's one child policy is another reason, probably the greatest reason, why it has to move to a more self sufficient economy. Less people to sustain its export dominance. The preference for male children is expected to manifest itself in a much greater male to female ratio in the next 20 years. Artificially limiting the birth rate is creating a natural limitation because there is expected to be a lot less females giving birth in China. A high demand for females will encourage higher expectations for males to create an equilibrium, which is going to create social issues in China and for the global community. Human trafficking, prostitution, kidnappings, rapes, commoditizing of females are just some social issues that may result. And time is incapable of manipulation when it comes to the aging of a human beings. Aging cannot be sped up or slowed down so any solution is dependent on time. China has no choice, but to transform.
Just as the U.S. found itself with policies that were not conducive to being a global leader, China is slowly coming to the same realization of necessity. The pace, however, is not the domain of the U.S. government.
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