There are roughly 15 million unemployed Americans. China has to generate 15 million new jobs a year just to keep employment levels where they are, or 300,000 jobs per week.
The official number of migrant workers, those from China's impoverished rural regions who work in its cities, is estimated to be 120 million, or 9% of the population. That estimate is undoubtedly low and higher than the population of Mexico.
These are the reasons behind Beijing's jawboning on the issue of its currency manipulation. Everyday low prices for Chinese exports have lifted the country into second place economically and its leaders are committed to stalling the inevitable revaluation as long as possible. This is their fiduciary obligation and also a social imperative in a country that is a cell phone swarm away from revolution in certain regions.
What's interesting, however, is that China's other cornerstone policy is its hold over the US and EU economies. Trillions are held in its government and, quietly, in blue chip stocks. Its been buying Yen and Greece's bonds to keep both currencies higher.
China has also chosen to benefit, trade-wise, certain key influencers such as Germany's automakers and certain US blue chips so they will lobby against retaliatory action on the currency front.
This week's award of a Nobel Peace Prize to a jailed Chinese activist is an embarrassing backdrop but what will turn the tide is the anger of other emerging economies with job creation problems of their own "We are in the midst of an international currency war," said Brazil's finance minister earlier this week.
This week these emerging economies began to gang up against China as its artificially low Yuan is going to force them to have to competitively devalue their currencies and impose damaging protectionist measures.
World Bank chief Robert Zoellick knows where this leads -- to a Great Depression -- and has said so but the emerging economies are also in a box.
They have done what the US should have done long ago.
For months, US Treasury Secretary, Tim Geithner, has played good cop to Congress' bad cop even though he has in his hip pocket proof that China's 25% to 40% undervalued and can, without approval, impose an equivalent tariff on all Chinese goods and services. China protests that this retaliation would contravene World Trade Organization rules -- a claim which is, considering the scale of their cheating, laughable.
Meanwhile, the devaluation of the US dollar is helping the stock markets along with the glacial improvement in incomes and spending. (US incomes were up 0.4% in August and consumer spending 0.5% following months' of increases).
But this week's events reveal that it is time that the US, EU, Canada, Mexico, Brazil, Turkey and everyone must gang up. Since 2008 when the developed world hit the wall, China's created another 30 million jobs or nearly the population of Canada or California. Enough's enough.
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