{"id":5760,"date":"2011-01-18T20:19:09","date_gmt":"2011-01-19T01:19:09","guid":{"rendered":"http:\/\/ssgreenberg.name\/PoliticsBlog\/?p=5760"},"modified":"2011-01-18T21:06:18","modified_gmt":"2011-01-19T02:06:18","slug":"deals-yuan-in-focus-as-chinas-hu-visits-u-s","status":"publish","type":"post","link":"https:\/\/ssgreenberg.name\/PoliticsBlog\/2011\/01\/18\/deals-yuan-in-focus-as-chinas-hu-visits-u-s\/","title":{"rendered":"Deals, yuan in focus as China’s Hu visits U.S."},"content":{"rendered":"

On Reuters web site you find the typical article about the Chinese leader’s visit, Deals, yuan in focus as China’s Hu visits U.S.<\/strong><\/a><\/p>\n

Currency concerns took center stage in Washington.<\/p>\n

Senators Sherrod Brown, a Democrat, and Olympia Snowe, a Republican, sent a letter to Geithner promising to introduce legislation to “address China’s unlawful practice of currency manipulation.”<\/p>\n

“China’s actions to subsidize its exports through currency manipulation pose both immediate and long-term challenges to American manufacturers and workers still recovering from the economic recession,” they wrote.<\/p>\n

Their letter came after a group of senators said on Monday the United States had to pass legislation to punish China if it fails to allow its currency to rise in value.<\/p>\n

The Congressional Steel Caucus of lawmakers from steel-making states urged Obama to tell Hu that “American patience for its unfair and illegal trade practices, and its exploitative and anti-competitive policies, has run out.”<\/p><\/blockquote>\n

I haven’t yet figured out exactly what illegal thing China has done by pegging their currency to the dollar or by only letting it rise by 3.5% over the last year.\u00a0 If the Chinese let the value of the yuan rise precipitously against the dollar, large numbers of Chinese workers would be thrown out of work as their exports would drop as precipitously.\u00a0 I can’t imagine why the Chinese government would think this would be a good thing for the Chinese government to do.<\/p>\n

Moreover, the Chinese are very large holders of U.S. Government debt.\u00a0 Why would the Chinese government want to devalue the debt owed to them?\u00a0 They could offer to dump that debt on the open market before they revalued their currency.\u00a0 I am not sure that the U.S. government would like that policy.<\/p>\n

In fact, China is now suffering some level of inflation because of the growth of their economy.\u00a0 If they could divert some of the goods being exported to satisfy the needs of their domestic economy and allow more foreign goods in to supplement the supply, they might be able to tamp down inflation. (Of course that doesn’t necessarily help the inflation in the one thing that cannot be imported, and that is real-estate.)<\/p>\n

To the degree that\u00a0 China makes the above suggested shift, they could afford to let the value of the yen rise at the same rate as the shift was being made without the huge sudden rise in unemployment.\u00a0 However, The United States would be hard pressed to convince the Chinese that this revaluation of the yen ought to occur on a timetable that is best for the U.S.<\/p>\n

Now all the U.S. has to do is to let the Chinese revalue our debt that they hold which is now denominated in dollars into debt denominated in the yuan, and China would probably be very receptive of our ideas.\u00a0 Of course we would be fools to allow\u00a0 such a change.<\/p>\n

I don’t think it helps our cause to act all upset and threatening because they are looking after their own best interests.\u00a0 We don’t pay much attention to them getting upset over our looking out for our own interests.\u00a0 Perhaps it is time to drop the charade, be honest with the American people, and just negotiate on realistic terms.<\/p>\n

\n

I have just tried to do a modicum of research on the legality of the Chinese currency manipulation<\/q>‘<\/p>\n

In WikiPedia we have the article on Currency Intervention<\/a><\/strong><\/p>\n

Under normal rules[says who?<\/a><\/em>]<\/sup> of international trade, the Chinese central bank should sell its dollars on international currency markets and buy yuan in exchange, resulting in a self-correcting system: the U.S. dollar weakens and the Chinese yuan strengthens, until equilibrium is restored and the trade gap closes. However, in order to avoid this situation (which would decrease Chinese exports), the Chinese central bank “bends the rules”[says who?<\/a><\/em>]<\/sup>: they slow the appreciation of the Yuan, or in some cases effectively peg the CNY against the USD.<\/p><\/blockquote>\n

The super-scripted “says who?” refers to WikiPedia’s deprecation of using unsupported attributions.<\/p>\n

I found an article, No legal basis for labelling China as currency manipulator<\/strong><\/a>, posted on the Chinal Daily web site.<\/p>\n

“I find it very hard to be able to come to the conclusion that China is a currency manipulator,” said Robert Howse, an expert on international trade law and professor of international law at New York University.<\/p><\/blockquote>\n

With this attribution, you can decide whether or not you find the web site credible and\/or whether or not you find\u00a0 the New York University expert credible.<\/p>\n","protected":false},"excerpt":{"rendered":"

On Reuters web site you find the typical article about the Chinese leader’s visit, Deals, yuan in focus as China’s Hu visits U.S. Currency concerns took center stage in Washington. Senators Sherrod Brown, a Democrat, and Olympia Snowe, a Republican, sent a letter to Geithner promising to introduce legislation to “address China’s unlawful practice of […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[166],"tags":[],"class_list":{"0":"post-5760","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-stevegsposts","7":"czr-hentry"},"_links":{"self":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/5760","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/comments?post=5760"}],"version-history":[{"count":3,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/5760\/revisions"}],"predecessor-version":[{"id":5763,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/5760\/revisions\/5763"}],"wp:attachment":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/media?parent=5760"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/categories?post=5760"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/tags?post=5760"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}