China versus America: The Yuan

[Schadenfroh]

http://www.reuters.com/article/idUSTRE68S0NJ20100929

a bill to treat China's exchange rate as a subsidy, opening the door to extra duties on Chinese goods entering the United States, some of which are already subject to special levies.

U.S. lawmakers have long brandished the sword of trade retaliation for what they see as China's deliberate policy of undervaluing the yuan to give its exports an unfair advantage in global markets.

So, I guess if this passes we will be in a trade war? I am no expert on currency exchange, so I understand that by them pegging their currency to the dollar at a low exchange rate, that makes all of their exports cheaper and thus harming domestic industry.

However, if we do start slapping more tariffs on them, they will surely counter-attack. Not sure if this is the best time, a recession, to deal with problems like this. The only market for U.S. manufactured goods will likely be the U.S. itself as other countries will likely want the cheapest product and if it is not manufactured domestically, they will not care to chose the U.S. over China when making a purchasing decision.

In short, I am not confident in the ability of the U.S. to compete in the manufacturing sector with the third world unless other developed nations put tariffs in place favoring U.S. goods over goods from developing countries (free trade agreements with the U.S. and other developed countries to help with this?), but then again, why should they care if neither good is manufactured domestically.

Bah, I need to take economics when I get the time.

 

[alphatarget1]

http://www.reuters.com/article/idUSTRE68S0NJ20100929



So, I guess if this passes we will be in a trade war? I am no expert on currency exchange, so I understand that by them pegging their currency to the dollar at a low exchange rate, that makes all of their exports cheaper and thus harming domestic industry.

However, if we do start slapping more tariffs on them, they will surely counter-attack. Not sure if this is the best time, a recession, to deal with problems like this. The only market for U.S. manufactured goods will likely be the U.S. itself as other countries will likely want the cheapest product and if it is not manufactured domestically, they will not care to chose the U.S. over China when making a purchasing decision.

In short, I am not confident in the ability of the U.S. to compete in the manufacturing sector with the third world unless other developed nations put tariffs in place favoring U.S. goods over goods from developing countries (free trade agreements with the U.S. and other developed countries to help with this?), but then again, why should they care if neither good is manufactured domestically.

Bah, I need to take economics when I get the time.

Meh, I don't think this bill does any good. There is still an insatiable demand of cheap foreign goods. People don't care for quality anymore.

 

[JS80]

China keeping their Yuan artificially low means we are able to use Chinese labor at a discount...people are so stupid. This benefits us. We send them devaluing dollars and they send us TVs and computers for cheap. At the end they will be the ones holding the bag.

 

[bamacre]

China keeping their Yuan artificially low means we are able to use Chinese labor at a discount...people are so stupid. This benefits us. We send them devaluing dollars and they send us TVs and computers for cheap. At the end they will be the ones holding the bag.

It benefits us for a while, until we get addicted to it, and they decide to take it away. The irony in this is we are begging them to take it away. On top of that, we are demonizing China for intentionally lowering the value of their currency to increase their exports, because we, .... want to intentionally lower the value of our currency so we can increase our exports. We want our own people to work their ass off exporting products that we ourselves won't be able to afford because our currency has been debased. Sure we want to produce more, and export more, but at what cost are we willing to pay to get there? Our gov't seems to answer that question with "whatever cost is necessary." And if they get their way, we'll all be working in sweatshops for the equivalent of 25 cents per hour.