If they can jack with their currency why can't we add tariffs? I know, I am a backward thinking protectionist.
Theoretically we benefit from them artificially lowering their currency. Its like they subsidize their exports which means we can purchase their goods cheap.
The US$ has increased against the Japanese Yen by 3.6% from 2007 and 58% from 2012. And it's also higher against the Euro. ($1.15 to the Euro today vs. $1.47 in May 2011). And we barely blinked an eye.
While this will make American goods more expensive in China, how much do American companies actually sell in China? There's a tremendous trade deficit, so we buy much more than we sell and this will make Chinese exports less expensive to American companies, although a few percent difference probably won't change any prices at retail. But this should be a positive for companies that manufacture in China.
While this will make American goods more expensive in China, how much do American companies actually sell in China? There's a tremendous trade deficit, so we buy much more than we sell and this will make Chinese exports less expensive to American companies, although a few percent difference probably won't change any prices at retail. But this should be a positive for companies that manufacture in China.
1
This is a reasonably smart thing for China to do. This is what Greece should've done - exit the Euro, so they can have a currency to devalue. Devaluing your currency is one way to grow your economy.
What about the AED and other Gulf currencies?
I think the Mandarins are now realizing they can't control their business men That this is happening in the space of two generations, in a country with thousands of years of controlling the people, is fascinating, especially when you compare with Europe/Greece
1
China is like a bull in a china shop. Watch out world because unfortunately they do matter because of their size. Hopefully China will stop with the fixed currency rates, but I seriously doubt they will ever give up on manipulating the market to their advantage.
1
There may or may not be an 800 lb. gorilla in the room which no can see for certain. How sluggish is the Chinese economy? When it comes to its economy, China's data collection is less than reliable and certainly not always fully disclosed to outsiders. Western experts believe that GDP growth has declined to 7%. What if it is substantially less? The Chief Economist for the Economist Magazine believes this currency devaluation is part of a long term transition to a more market based currency and an expanded domestic consumer market. Maybe so. However, at this point, it is equally plausible that the currency devaluation is part of a short term crisis management response to a substantially worsening economic condition.
Gorillas don't get much above 550 lbs. Are you thinking Yeti? Tibet is now a so-called 'autonomous' region of China. Seriously though, I'd call China the 8,000 lb Asian bull elephant in the room, or China Shop.
Though I am more persuaded by the opinion that China's latest devaluation of its renminbi is more motivated by a desire to increase economic output by making China's exports cheaper and thus more competitive, China devaluation of the renminbi still leaves it at a premium to what its market value would be, if it were a freely traded currency. So whether China's motive is to increase the competitiveness of its exports or to allow its renminbi exchange rate to be more determined by market forces, its actions do not constitute impermissible currency manipulation.
Or to put it another way, those, who don't like China recent devaluation of its renminbi, would like it even less and would be much more greatly harmed, if China were to let its renminbi be freely traded in international currency markets. And that move would be consistent with China's obligations under the WTO. So, if you don't like China as an active setter of the renminbi's exchange rate, then imagine the effect on China's competitiveness if became a passive taker of the renminbi's market determined value.
Or to put it another way, those, who don't like China recent devaluation of its renminbi, would like it even less and would be much more greatly harmed, if China were to let its renminbi be freely traded in international currency markets. And that move would be consistent with China's obligations under the WTO. So, if you don't like China as an active setter of the renminbi's exchange rate, then imagine the effect on China's competitiveness if became a passive taker of the renminbi's market determined value.
2
Merci, monsieur.
I see no way that this could be part of a sober effort at liberalization. That would require less explicit control over the exchange rate as a precursor to liberalizing the capital account. The fact that the PBOC retains the ability to simply set the narrow trading band and make changes as it sees fit is an indictment of its lip service toward liberalization. In fact, the need to seek recourse to a purely exchange rate driven move in order to make a case for liberalization reflects the failure of China to do more than offer lip service to all the other economic reforms––specifically the currency reform to open the capital account, remove the peg, and float the currency--the government has discussed over the last several years. Devaluation of this type is tantamount to an admission that China is unable or unwilling to make the other changes that economic fundamentals require.
2
Adam Bobrow's last sentence hits the bullseye. China cannot wean itself from exports. China's whole strategy of Asian economic development, for which it has set up the AIIB and other institutions, is directed at building railroads to increase Chinese exports to all of Eurasia. Domestic consumption means Chinese take money from other Chinese, which exacerbates political tensions among Chinese. Exporting means Chinese take money from other countries, which is called "China Dream". The historical global economic supremacy that China wants to restore was based on 250 years' receipt (1570-1820) of South American silver from Spanish traders in Manila, exchanged for masses of light industrial products, just as China has done in the last 30 years. The idea that China's past great wealth was fully self-generated is sheer fantasy.
2
The Chinese central bank actions are apparently in response to decreases in the market exchange rates.
It sounds as if they are not trying to maintain the previous higher "official" rate ( the rate the bank would pay) to the same level.
Is that very different than the way other nations central banks operate?
It sounds as if they are not trying to maintain the previous higher "official" rate ( the rate the bank would pay) to the same level.
Is that very different than the way other nations central banks operate?
So how come the Republican presidential candidates are still talking about "debasing the dollar". The dollar basically is allowed to float, which means it does not change drrastically from day-to-day. Germany plays this game very well with the EURO, in its exports, especially to the rest of Europe, the Euro is an undervalued Mark, but without the increaased cost of imports which would otherwise ensue.
Two days ago Irwin was arguing very firmly for the opposite view although he's now trying to frame it as though he accepted the proposition that it was an open question. He didn't. As it happens his original take makes more sense but now he's decided to go overboard on the currency war explanation at the precise moment when the slide is halting. And again, as he pointed out the other day, to get it in true perspective, a ~3% devaluation against the dollar is hardly earth shattering and puts the relative relationship to back to about where it was at the end of last year.
3
The top concern of Chinese government officials, beyond lining their own pockets, is the number of employed. Too many people looking for work and they run the risk of losing control of the populace. Presumably, unemployment numbers are seriously concerning them and they're hoping by slashing the exchange rate they can give a near-term boost to exports and, as a result, employment.
At some point, one has to wonder whether very close control by a central government coupled with rampant widespread corruption can ever result in sustainable economic growth. Odds are very strongly against.
At some point, one has to wonder whether very close control by a central government coupled with rampant widespread corruption can ever result in sustainable economic growth. Odds are very strongly against.
2
Better currency wars than hot wars, but it is clear that China intends to achieve world dominance and will use any means necessary to achieve that result. As the underlying decisions for China's currency are essentially dictated by China's political leaders, one has to assume that this is just another means China intends to employ to achieve its world dominance objectives.
The action of the Chinese stock market looks similar to the Oct 1987 stock crash, the largest one day drop ever for the U.S market. A year later, who remembered? I expect the same result might occur in this instance, as well.
China's currency moves are irrelevant. They can float it , fix it or make love to it. You can't have a trade war when trade is irrelevant. Either you are a tribe or you are not. Tribes don't need trade. They conquer and build.
2
They have a sizeable trade surplus, so either of two things are keeping their currency down: purchases by the private sector or purchase by the government of investments overseas. With problems in their economy it is obvious that the government is taking over.
1
The more abrupt a move the government allows, the more the devaluation looks of a piece with China’s frantic efforts to prop up its stock market earlier this summer — a short-term, desperation solution to a pressing problem....
[ Repeatedly slanted language. What happened in the United States when the S&P fell nearly 25% in October 2007? Secretary of Treasury Rubin was nothing if not abrupt on currency moves in the 1990s.
I am truly saddened and dismayed by the way in which China is reported and analyzed in the New York Times. ]
[ Repeatedly slanted language. What happened in the United States when the S&P fell nearly 25% in October 2007? Secretary of Treasury Rubin was nothing if not abrupt on currency moves in the 1990s.
I am truly saddened and dismayed by the way in which China is reported and analyzed in the New York Times. ]
5
Yeah Truth hurts when it is not in line with official Chinese Government propaganda. You know none of China's leaders and their familys did not get out of the market when it tanked.
What you don't seem to understand is that nations like Japan, India, and the USA, indeed virtualy all major industrial nations apart from China, allow their currency to float freely. Only China, the worlds 2nd largest economy, does not.
We say iPhone, they say dollars- isn't "the concept of money numbers" really nothing more than a philosophy". Depending on how one spends, saves, wastes, loses it? Or our governments, and /or societies claims to set some such value depending on a desire for one product or another . . .the old economics laws of 'supply and demand' may now become archaic in today's world with the new philosophy of worthless money and governments that just print and give it away
1
All money is worthless. Just print it up and give it away? Where and who? Money has been printed and given away for centuries. Supply and demand is a intellectual creation.
Money may be an intellectual creation, but it is a much more efficient way to decide how many fresh corn cobs/ chicken parts/steaks etc are the equivalent of a gallon of gas/KWH of electicity/hour of teaching... etc.
1. I thought that "ren" in renminbi (人民幣) means "people" and it is pronounced "zhen". Am I wrong?
2. Apart of many devaluations of the currency of many preceding regimes in China, it is surprising that the most recent, relatively minor devaluation has led to such big drops on the world stock exchanges. The abolition of the gold standard of the paper currencies must have had a stronger effect on those who pull the strings of the bourses.
2. Apart of many devaluations of the currency of many preceding regimes in China, it is surprising that the most recent, relatively minor devaluation has led to such big drops on the world stock exchanges. The abolition of the gold standard of the paper currencies must have had a stronger effect on those who pull the strings of the bourses.
"ren" pronounced as "zhen" is about regional dialect. Many Chinese say "ren" as "ren".
Thank you! Indeed, the pronunciation I cited is that of Manchuria or the former Manchu-Di-Guo, the Empire of the Manchu State.
In the end, we have iPhones, and they have dollars. Now they will be getting fewer dollars for their iPhones. I am unable to convince myself this is bad for us.
2
We say iPhone, they say dollars- isn't "the concept I money numbers" really nothing more than a philosophy". Depending on how one spends, saves, wastes, loses it? Or our governments, and /or societies claims to set some such value depending on a desire for one product or another . . .the old economics laws of 'supply and demand' may now become archaic in today's world with the new philosophy of worthless money and governments that just print and give it away
1
Yes, the sky is falling, Obama is a failure. Let's buy gold, and grain futures.
Clearly, how ever the move is interpreted, bad news should be anticipated.
1
This isn't a currency war. What it is, though, is the inflationary bubble that China has been absorbing is finally deflating, as predicted. The effects of the slow burnoff of that fiat currency is felt globally due to trade imbalances, and therein is the real problem, beyond mere currencies. China is trying to mitigate that deflation so it's slow and not a pop, which will really screw them up. They're not in panic mode, but they are concerned, because they don't totally know the effects of this, even though the effects are readily predictable for all fiat currencies. The unknown is how the Chinese accumulation of commodity and rare-earth metals can be used to soften the impact and provide a fallback position for both their currency and their export production. That remains to be seen.
1
Commodities are the first to inflate and the first to deflate in anticipation of reduced demand. This analysis is off.
This currency move is more an effort to coerce a larger impact from US interest payments on notes, while encouraging exports and domestic production. To do this, the Chinese equities markets have to get up off the mat and start swinging. Unlikely, with a $6T hangover.
This currency move is more an effort to coerce a larger impact from US interest payments on notes, while encouraging exports and domestic production. To do this, the Chinese equities markets have to get up off the mat and start swinging. Unlikely, with a $6T hangover.
1
i'm surmising the main problem here is the run up in China's stock market and the resulting loss of confidence and lessened discretionary spending by its citizens. The central bank encouraged the bubble through it's lending policies, just as the Fed under Greenspan did here leading up to the dot-com bubble. The gov't in order to stem this is taking collateral action to shore up exports through devaluation, something that has been proven to work for them. I suspect at some point, they will switch back to also favor domestic consumption, a sign of a maturing economy.
The point i wish to make here is that China need not repeat our mistakes in developing its economy. Compared to our banking sector after the repeal of Glass-Steagal, the Chinese have done well just by avoiding this. But in the use of coal for rapid industrialization (as we did), they are failing their people miserably, because there are now other ways of generating electricity without the evil effects of coal. I say evil, because coal dust and by products of burning coal released into the atmosphere are poison, even without global warming/climate change. Without Republicans and fossil fuel companies, the U.S. would be making major investment through a carbon tax to switch to Renewables. In the long run this form of power is much cheaper than fossil fuels, and the disasters of global warming might be avoided. It would also be possible to breath clean air. China should lead here with solar and wind.
The point i wish to make here is that China need not repeat our mistakes in developing its economy. Compared to our banking sector after the repeal of Glass-Steagal, the Chinese have done well just by avoiding this. But in the use of coal for rapid industrialization (as we did), they are failing their people miserably, because there are now other ways of generating electricity without the evil effects of coal. I say evil, because coal dust and by products of burning coal released into the atmosphere are poison, even without global warming/climate change. Without Republicans and fossil fuel companies, the U.S. would be making major investment through a carbon tax to switch to Renewables. In the long run this form of power is much cheaper than fossil fuels, and the disasters of global warming might be avoided. It would also be possible to breath clean air. China should lead here with solar and wind.
4
Japan has been weakening its currency, far more than China. India has been weakening its currency for years. When Japan and India weaken currencies, war is not mentioned. When China mildly weakens it currency after years of strengthening the currency, the word "war" appears. When the dollar weakened for years, the word "war" was not used.
I do not understand such slanted reporting on China.
I do not understand such slanted reporting on China.
7
There's a world of difference in the interventions you mention. It seems you are only interested on squelching what you perceive "slanted reporting on China". If that is so, just say it. The other examples are false equivalences.
By the way, there is nothing slanted, if anything, the NYT and the US press in general have been a lagging behind on a number of issues, namely the 2 trillion dollar island grabbing, militarization and expansion by China in the South China sea.
By the way, there is nothing slanted, if anything, the NYT and the US press in general have been a lagging behind on a number of issues, namely the 2 trillion dollar island grabbing, militarization and expansion by China in the South China sea.
2
One of the most obviously bigoted and logically corrupt analyses I've read this year.
There is no moral or other requirement that any one country's monetary policy benefit that of any other country. Full stop. The Chinese made a decision that may or may not be the right decision. It shouldn't need mentioning that the majority of the countries in the world are wildly affected by the slightest change in taxes, tariffs, treaties, or any other economic policy agreed upon by the G-10 collectively, or individually...and that their opinions are neither asked for or considered when given.
The market decides the result of this. The rest is either straight racism, or that particular whiff one smells whenever the moneyed elite of this country begin to soil themselves at the prospect of losing capital, that sulfurous malodor typically accompanying policy changes erected to protect capitalists from capitalism. Watch the press over the next week -- the politicians that take this so-called "issue" on are the ones that will betray you.
There is no moral or other requirement that any one country's monetary policy benefit that of any other country. Full stop. The Chinese made a decision that may or may not be the right decision. It shouldn't need mentioning that the majority of the countries in the world are wildly affected by the slightest change in taxes, tariffs, treaties, or any other economic policy agreed upon by the G-10 collectively, or individually...and that their opinions are neither asked for or considered when given.
The market decides the result of this. The rest is either straight racism, or that particular whiff one smells whenever the moneyed elite of this country begin to soil themselves at the prospect of losing capital, that sulfurous malodor typically accompanying policy changes erected to protect capitalists from capitalism. Watch the press over the next week -- the politicians that take this so-called "issue" on are the ones that will betray you.
12
"There is no moral or other requirement that any one country's monetary policy benefit that of any other country."
Whenever one country doesn't play fair, there is a moral argument. And the Chinese do not have a history of playing fair.
Whenever one country doesn't play fair, there is a moral argument. And the Chinese do not have a history of playing fair.
12
The People's Republic of China has, in past, been under immense political pressure from the US because of alleged undervaluation of its currency, the renminbi.
http://economix.blogs.nytimes.com/2010/10/06/how-china-sees-its-currency/
http://economix.blogs.nytimes.com/2010/10/06/how-china-sees-its-currency/
That we have to grope for answers is, in itself, not a good omen but shouldn't be surprising. Had the Chinese government been financially collegial, a more thorough and credible explanation would have been offered in advance. Beyond a currency war, it's too early to make such an accusation, China seems to be acting in a panic-like way or certainly without finesse. Alternately, this is just how things are done in China, no need for nuanced explanation, the government decides and the people, now the world community, follow.
1
This export of deflation by the Chinese Communist Capitalist government is a slap in the face to the freeworld's open market where governments don't fear handing over power to a newly elected political party.
Does anybody see this devaluation as a means to placate their masses at the expense of jobs in the west?
China is acting like a very bad player in the world economy and the thing to fear is that the communists in charge obviously don't give a damn.
The West must impose import duties against Chinese goods while waiting for the Chinese to apologize.
Does anybody see this devaluation as a means to placate their masses at the expense of jobs in the west?
China is acting like a very bad player in the world economy and the thing to fear is that the communists in charge obviously don't give a damn.
The West must impose import duties against Chinese goods while waiting for the Chinese to apologize.
17
The US will run about a $500 billion trade deficit with China in 2015, yet China is devaluing its currency against the dollar; shouldn't the complete opposite be occurring? Well nooo ... because China emphatically won't buy US made products. The fact is the relative currency values have no corrective power when one side adamently refuses to deal in fair trade.
Of course the US could alwys and legitimately impose tariffs on Chinese goods (already does on tires) but this doesn't address the main problem; which is that the US has ceded vast amounts of its manufacturing industry, patents, and technologies to China. There is a lot the US imports from China it simply can't and doesn't make anymore.
We should impose tariffs and seek to balance the trade - but it's gonna be a very long road back even if we start tomorrow.
Of course the US could alwys and legitimately impose tariffs on Chinese goods (already does on tires) but this doesn't address the main problem; which is that the US has ceded vast amounts of its manufacturing industry, patents, and technologies to China. There is a lot the US imports from China it simply can't and doesn't make anymore.
We should impose tariffs and seek to balance the trade - but it's gonna be a very long road back even if we start tomorrow.
29
Why don't we impose tariffs on a country known for chiseling competitors, dumping products on the U S market stealing trade secrets, hacking our computers, and otherwise being a very bad actor? And we want to do more, not less, business with them?
10
Interesting point. With the NSA hacking computers and stealing trade secrets worldwide, this would mean that every country should impose tariffs for US products.
Seems like you thought too US-centered ;)
Seems like you thought too US-centered ;)
Except that up to now the "currency war" argument has been based on a belief that China's currency is undervalued, meaning that if it were allowed to be freely traded it would appreciate. Therefore, the current rapid devaluation in currency markets if anything undermines the "currency war" argument. In any case, the only way to find out the currency's real long-term value is for the markets to stabilize, not for China to (try to) refix the rate. Maybe the Chinese could narrow the band within which it is allowed to fluctuate in a single day, so that the exchange rate could move at a more measured pace toward its real value?
3
When the United States has an economic downturn, incumbent politicians might lose their jobs and be forced into a plush retirement. If China has a major economic downturn, there will be a revolution and everybody in power today is going to lose their head. The Chinese people have no abiding love for their undemocratic and deeply corrupt government. If it doesn't deliver growth, it cannot survive.
China has a lot of problems, but one of its biggest is that the Chinese economic miracle was built on the backs of rural peasants who could be grossly exploited to drive exports. Effectively, the wealth of the rest of the world poured into China through its export markets. But now the bottom-rung jobs have been picked off by even poorer nations, wages inside China are rising and China's prior success has forced manufacturers worldwide to become much more efficient. The times of easy growth gains through exports are gone. But China is still running the same play from its old playbook. It smacks of desperation.
This is a government that fears its own people. They are going to do everything they can to prop up growth. If that doesn't work, there are always the tanks. But no matter what, Chinese policy in the near term is going to be driven mainly by the self-preservation instincts of those in power.
China has a lot of problems, but one of its biggest is that the Chinese economic miracle was built on the backs of rural peasants who could be grossly exploited to drive exports. Effectively, the wealth of the rest of the world poured into China through its export markets. But now the bottom-rung jobs have been picked off by even poorer nations, wages inside China are rising and China's prior success has forced manufacturers worldwide to become much more efficient. The times of easy growth gains through exports are gone. But China is still running the same play from its old playbook. It smacks of desperation.
This is a government that fears its own people. They are going to do everything they can to prop up growth. If that doesn't work, there are always the tanks. But no matter what, Chinese policy in the near term is going to be driven mainly by the self-preservation instincts of those in power.
24
Where was this nuanced and thoughtful commentary on foreign affairs from "W" in DC from 2001 to 2009???
2
The leaders are not concerned about a revolution, they are concerned about the elite losing money in their stock market. The leaders are not desperate, they are maintaining the status quo.
1
If it were that American politicians were afraid of its own people. We would actually get some rational policies that benefit most people instead of their lobbyists in the Beltway.
1
When the US dollar has appreciated anywhere between 20% and 50% against other world currencies and the Chinese RMB has been strengthening against the dollar for a decade, its not surprising that a little devaluation occurs.
The outsized reaction of the market is far more surprising. Why react so strongly about this small change and not much to far larger currency devaluations of our largest export markets in the Americas?
(The US exports $552 billion to Canada and Mexico, $276 billion to EU countries, only $123 billion to China)
The outsized reaction of the market is far more surprising. Why react so strongly about this small change and not much to far larger currency devaluations of our largest export markets in the Americas?
(The US exports $552 billion to Canada and Mexico, $276 billion to EU countries, only $123 billion to China)
11
Economic policy driven by short term political calculus. Result: the Peking duck has come home to roost.
5
I struggle to see how anyone can characterize what China is doing as a "Currency War" maneuver. A currency war would be a government intervening/manipulating currency markets to competitively devalue its currency, aiming to gain an export advantage and boost growth (which doesn't work in a global economy anyway, but that's for another day). China previously intervened in FX markets to keep the Renminbi strong versus the dollar--a de-facto peg. It appears, from the last two days moves, they have stepped back from that. They are intervening (manipulating) exchange rates less now, not more. The fact the currency went down is doesn't make that move any more a currency war technique.
1
Your hypothesis would make more sense if there was a consistent and measured tone coming from the Bank of China that hinted at what was to come. This doesn't feel like it's part of a long term strategy that is being unrolled in a consistent and methodical way.
This sounds much more like an adolescent power that doesn't realise that while it cannot control markets (witness the Shanghai market collapse), its acting without warning is powerful enough to destabilise markets.
This sounds much more like an adolescent power that doesn't realise that while it cannot control markets (witness the Shanghai market collapse), its acting without warning is powerful enough to destabilise markets.
2
If the West, which are China's expeort markets were at all intelligent they would simply stop buying Chinese products period.
That would have a dual effect of really dumpnig the Chinese economy in the toilet and creating jobs.
That would have a dual effect of really dumpnig the Chinese economy in the toilet and creating jobs.
15
What does this have to do with intelligence? You presume that western consumers are primarily motivated by geopolitics. They are not - they care mostly about the prices of the things they buy. Most people can't afford to pay a 10-20% surcharge to achieve some long-term (and vague) goal.
1
You are correct, they are not but it would be intelligent of them to think more in those terms.
Sometimes long term goals are more worthwhile although you do have to wait on it.
Sometimes long term goals are more worthwhile although you do have to wait on it.
For many manufactured consumer products, US-made items are simply not available anymore.
1
Why must stock market traders react so violently all the time?
1
Normally NYChap, I would say you are right. But this is important news. China would not have done this, which does damage to its foreign policy asperations, unless their economy were in real trouble. This is very bad for global growth.
1
With their computer based programs they think they can sell for a profit now, and buy back cheaper soon. Problem is, when all those programs work together, a positive feedback downward spiral is created, resulting in what happened since Aug 1.
Why is China discussed as though it’s just another market economy when it’s a Communist Nation with a Planned Economy that does not adhere to trade agreements or operate under Market economy forces that the rest of the world does?
China’s steel production increased from 100 million tons/year to over 700 million tons/year flooding the world’s steel markets. China purposely created excess capacity in its steel industry and manipulates its currency to game the principles of capitalism and market forces to meet its domestic economic and political needs.
These are deliberate actions undertaken by China that actually damage capitalist economies that follow trade rules and have workers that have competitive advantages in world markets.
The average productivity in China = 30 man/hours vs. average productivity in the United States 2.5 man/hours per ton of steel. So China is able to manufacturer steel at 12 times the cost in man/hours, ship it roughly 7,000 miles, and dump their imported steel in the United States at a profit?
China has hollowed-out their overseas competition. An estimated loss of over 2,000,000 United States manufacturing jobs since 2001 attributed to exacerbated trade deficits with China.
How about an investigative New York Times report on how expanding a Planned Economy in China at the expense of a Capitalist market economy like the United States breaks down modern economic theories under such conditions because it is not a level playing field to begin with?
China’s steel production increased from 100 million tons/year to over 700 million tons/year flooding the world’s steel markets. China purposely created excess capacity in its steel industry and manipulates its currency to game the principles of capitalism and market forces to meet its domestic economic and political needs.
These are deliberate actions undertaken by China that actually damage capitalist economies that follow trade rules and have workers that have competitive advantages in world markets.
The average productivity in China = 30 man/hours vs. average productivity in the United States 2.5 man/hours per ton of steel. So China is able to manufacturer steel at 12 times the cost in man/hours, ship it roughly 7,000 miles, and dump their imported steel in the United States at a profit?
China has hollowed-out their overseas competition. An estimated loss of over 2,000,000 United States manufacturing jobs since 2001 attributed to exacerbated trade deficits with China.
How about an investigative New York Times report on how expanding a Planned Economy in China at the expense of a Capitalist market economy like the United States breaks down modern economic theories under such conditions because it is not a level playing field to begin with?
32
at some point in time all that wasteful resource allocation will be paid by chinese..look at their overall debt ..what have they accomplished with gigantic misallocation of resources
The Chinese Communist Party has a big stake in export manufacturing. Apparently, they are losing a lot money, now. So, the CCP used its undue influence at the CBOC to effect a currency devaluation, and boost its exports. The CCPs economic development plan to transform China from a backwards low productivity nation of 1.3 billion to a modern rich nation continues to cause havoc in the world economy. The CCP can't always control the markets
We should add tariffs immediately to offset the currency manipulation. Yes - protect our producers. Skip the mealy-mouthed talk about "engaging" the Chinese in a "productive dialogue". Offset the currency variation. Protect our nation.
4
'Contrast that with the moves the Federal Reserve, the Bank of Japan and the European Central Bank took at various points in the last few years to loosen monetary policy and spur higher domestic inflation and growth. They have been controversial, and no doubt resulted in devaluations of their respective currencies, but the actions were carefully telegraphed, thoughtfully explained and explicitly aimed at domestic conditions rather than manipulating exchange rates.'
It's so hypocritical that it's laughable. I suppose some do cheat with a better style than others.
It's so hypocritical that it's laughable. I suppose some do cheat with a better style than others.
8
would you prefer that these export manufacturing jobs be located in China, rather than the USA? As a US resident, its in your self interest that US people have jobs, even if they only pay $15 or 20 per hour. And, the fed moved slowly, allowing markets to adjust, and businesses to plan.
3
The problem is economic pundits are not Sinologists
5
Given what the perpetual sub-1% growth in the Euro Zone and perpetual sub-2% growth in the U.S., do you think that maybe we should worry about our own backyard first?
As for the all of the frantic nonsense about inflation: where is the inflation going to come from? Commodity prices have crashed. The dollar is up 20% across an index of other global currencies. In a global economy, LOCAL productivity does NOT determine prices; GLOBAL PRODUCTIVITY does.