March 18, 2010
-- by Dave Johnson
China's currency manipulation is a worldwide problem, not just a job-killer here.
In a speech to students at Beijing’s Tsinghua University, the ambassador, Jon Huntsman, said that economic problems in the United States had increased pressure there for a change in the value of the renminbi, which China currently ties to the value of the dollar. That has kept Chinese exports comparatively cheap and, critics say, hampered other nations’ recovery from the global recession.
“My Chinese friends like to pitch this as just an American issue. I like to say that there are many countries that feel the same way,” Mr. Huntsman said. But he focused on the growing political backlash from Americans who feel the currency policy is hurting them. [emphasis added]
The managing director of the IMF - the 'I' stands for "International" - agrees. IMF Head Says Yuan Remains Undervalued
International Monetary Fund Managing Director Dominique Strauss-Kahn said Wednesday that China's currency remains undervalued.
China’s decision to base its economic growth on exporting deliberately undervalued goods is threatening economies around the world. It is fueling huge trade deficits in the United States and Europe. Even worse, it is crowding out exports from other developing countries, threatening their hopes of recovery.
In the Financial Times, Martin Wolf writes in China and Germany unite to impose global deflation,
[. . .] Surplus countries insist on continuing just as before. But they refuse to accept that their reliance on export surpluses must rebound upon themselves, once their customers go broke. Indeed, that is just what is happening. Meanwhile, countries that ran huge external deficits in the past can cut the massive fiscal deficits that result from post-bubble deleveraging by their private sectors only via a big surge in their net exports. If surplus countries fail to offset that shift, through expansion in aggregate demand, the world is inevitably caught in a “beggar-my-neighbour” battle: everybody seeks desperately to foist excess supplies on to their trading partners. That was a big part of the catastrophe of the 1930s, too.
The United States is not alone here. If the United States takes a stand the world will be behind us. We need to do what is right. On April 15 the President should declare China to be the currency manipulator that it is. Then trade can start to rebalance.
Posted by Dave Johnson at March 18, 2010 10:48 AM
Applied Material moves to China...
Dave...you support increasing our manufacturing and exports. We must be corporate tax, business friendly.
We should be learning how Germany has ramped up manufacturing exports
Great article I really liked it, I think it kinda leaves out on how we're responsible for this. We teach this business philosophy that worships the dollar, and find new and horrible ways to exploit people to save more. China's been taking it for years, and now they can emerge as the big dog because we tanked our economies and gave what we didn't have to the people who caused the problem. China's doing this because we can't do anything about it, we need to change both policy and philosophy to end this.
Posted by: Chris Nuckols at March 21, 2010 11:03 AM
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