As someone who has argued that interest groups, domestic and foreign, have an effect on China's economic policies, I was at first glance happy to see Sewell Chan's article, "The U.S.-China Exchange Rate Squeeze," in Sunday's New York Times.
He argues that the conflict is difficult to resolve because of a stand-off of different interest groups in the US and China. In China exporters along the Southeast coast and state-owned enterprises (SOEs) which need to keep up exports appear to have the upper hand over those who would benefit from cheaper imports.
I buy part of this argument but not all of it. Yes, exporters favor a weaker RMB, and it is likely that the Ministry of Commerce is speaking up on their behalf in internal government debates. MOFCOM release the results of "stress tests" earlier in the year which showed that a small rise in the RMB would devastate exports. They're likely joined by the People's Bank of China whose leadership in principle believes that a stronger RMB and a floating rate would be beneficial for China's economy and give them more power to adopt monetary policies.
I think the article is on weaker ground when it talks about state-owned enterprises. Although everyone wants to be competitive selling abroad, in gross terms SOEs import much more than they export, since they primarily sell to the domestic market. In the year 2000 SOEs accounted for just under 50% of all Chinese exports; by 2009 their share dropped to under 20%. It should be in SOEs' collective interest to have a stronger RMB. But SOEs as a group are not making this case.
Why? It appears that they are either all just keeping their mouths shut out of habit of political discipline, or that interests amongst SOEs are sufficiently divided, with some favoring a weak RMB and others a stronger RMB. It is also possible that those who'd favor a stronger RMB are being compensated in several other ways, such as with export tax credits, low-interest loans, and other benefits, such that they don't need to whine, or at least do so publicly, about the exchange rate.
If Chan or others know of SOEs actively lobbying in either direction on this issue, I'd love to hear about it, online or offline.