It is not a new topics recently but I wonder whether it is time for a new policy to deal with the problems.
Compared to the U.S dollar, China yen is said to be undervalued from 25% to 40%.
In this article, Laurie Moncrieff, a small business owner cite her business problems:
" She described a global playing field that had become so uneven that Chinese goods were not just cheaper than comparable ones her company made, but often cost less than the price of the raw materials she used."
“It does me no good to hire people if I cannot sell my goods,” Moncrieff said.
Currency manipulation also acts like a tariff – or a tax -- on U.S. exports to China.
While Chinese currency manipulation is not new, Krugman, a Nobel Prize-winning economist said it has reached unprecedented levels. “These surpluses do come at the expense of jobs,” he said. He estimated that currency manipulation has displaced as many as three million U.S. jobs and argued that the U.S. needed to adopt a tougher trade policy.
Other scholar have the same argument. C. Fred Bergsten, Director of the Peterson Institute for International Economics regard currency manipulation as a policy of “exporting unemployment.”
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And about us? What do you guys think?
~~ Trung Pham
Currency manipulation is considered illegal under both United States law and international agreements so the real question is when are countries such as ourselves going to stop ignoring illegal acts in the trade market. I all about free trade and equal competition but currently this is not the case because it is nearly impossible to compete with Chinese goods while this currency issue is around.
ReplyDeleteI don't think China's attempts to keep its currency at a fixed rate with respect to the U.S. Dollar are illegal. With exports keeping increasing, the increased demand for the Chinese currency (Yuan) was expected to cause the Yuan to appreciate. However, in order for its exports to be internationally competitive, China pegged the value of the Yuan to the U.S. Dollar, constantly buying in the U.S. Dollar to maintain the Yuan's exchange rate.
ReplyDeleteChinese currency manipulation is not illegal in any respect, but it does contribute to an uneven global playing field and harm the job markets of many other countries.
"China now has to intervene in currency markets to the tune of $1 billion a day to keep its currency, the renminbi, from increasing in value against the dollar"
ReplyDeleteThe following is another good analysis about Chinese currency issue. Take a look if you guys are interested. Very thorough.
http://www.washingtonpost.com/wp-dyn/content/article/2010/03/25/AR2010032503777.html