Post by blueneck on Dec 29, 2007 7:35:05 GMT -6
What happened to all the anxiety about Chinese currency manipulation?
No one doubts that China unfairly suppresses the value of its currency, chiefly by buying and holding foreign currencies — specifically the dollar and the euro. Several years ago the China Currency Coalition was formed by a range of industrial, service, agricultural, and labor organizations, to press the U.S. government to seek an immediate end to this Chinese policy. They estimate the undervaluation of the yuan versus the dollar to be at 40% below a fair exchange rate.
Or, in any case that's the last figure available on the matter from CCC. I don't know if I believe that number, but I agree with the CCC's overall concern and I endorse their effort. (China's social and industrial policies worry me much more than its fiscal philosophy, however.)
But, something else has been going on lately. The ongoing meltdown in U.S. financial stocks was prompted by the exposure of those institutions to defaulted home loans. Among the effects of their crisis has been an increase in inflationary pressure on the U.S. economy, and the most obvious indication of this has been a gradual but steady decline in the value of U.S. currency.
The trigger to the currency decline, however, is the shifting preference of foreign currency traders, including central banks, like China's. They're not buying as many dollars as they had been buying prior to the housing and financial stocks' reversals.
Oddly, about the time this situation began to unfold — June 29, to be specific — was the last time I heard anything new from the China Currency Coalition. That day the CCC offered their endorsement of Currency Reform for Fair Trade Act of 2007, a bill introduced to the House of Representatives at that time. There's not been much discussion of that effort in recent weeks, either.
Where have all the concerned voices been since June? It isn't as though there have not been opportunities for a statement. Late last month, China acknowledged its practice of widespread industrial subsidization, and agreed to end subsidies for its steel, wood products, and IT industries by January 1.
This week, the U.S. and China have had new discussions, part of the intermittent China-U.S. Strategic Economic Dialogue, aiming to broaden the economic interdependence of the two nations. If ever there were an opportunity to raise the ongoing issue of currency evaluation and its effect on U.S. industries, this ought to be it. But the CCC, among others, has not drawn the connection.
I don't believe the Chinese have quietly come into line on the matter of their currency legerdemain. I suspect, however, that the decline in U.S. currency — and the consequent improvement in U.S. manufacturers export opportunities — has taken the steam out of groups like the CCC.
Published Dec 12 2007, 03:00 PM by REB
community.forgingmagazine.com/blogs/editorsnotes/archive/2007/12/12/what-happened-to-china.aspx
First off - People ARE still talking about currency manipulation - does this guy live in a vacuum? As the dollar continues to devalue so does the juan since it is pegged so no matter how low we go they will always be lower. And since our manufacturing base has been hollowed out by outsourcing, what exports will really benefit from the devalued dollar?
And what about the section highlighted in bold -
This week, the U.S. and China have had new discussions, part of the intermittent China-U.S. Strategic Economic Dialogue, aiming to broaden the economic interdependence of the two nations. If ever there were an opportunity to raise the ongoing issue of currency evaluation and its effect on U.S. industries, this ought to be it. But the CCC, among others, has not drawn the connection WTF? Increased interdependence with china? what planet are these guys from? Does congress approve of this dialogue? have the people had a voice in this?
No one doubts that China unfairly suppresses the value of its currency, chiefly by buying and holding foreign currencies — specifically the dollar and the euro. Several years ago the China Currency Coalition was formed by a range of industrial, service, agricultural, and labor organizations, to press the U.S. government to seek an immediate end to this Chinese policy. They estimate the undervaluation of the yuan versus the dollar to be at 40% below a fair exchange rate.
Or, in any case that's the last figure available on the matter from CCC. I don't know if I believe that number, but I agree with the CCC's overall concern and I endorse their effort. (China's social and industrial policies worry me much more than its fiscal philosophy, however.)
But, something else has been going on lately. The ongoing meltdown in U.S. financial stocks was prompted by the exposure of those institutions to defaulted home loans. Among the effects of their crisis has been an increase in inflationary pressure on the U.S. economy, and the most obvious indication of this has been a gradual but steady decline in the value of U.S. currency.
The trigger to the currency decline, however, is the shifting preference of foreign currency traders, including central banks, like China's. They're not buying as many dollars as they had been buying prior to the housing and financial stocks' reversals.
Oddly, about the time this situation began to unfold — June 29, to be specific — was the last time I heard anything new from the China Currency Coalition. That day the CCC offered their endorsement of Currency Reform for Fair Trade Act of 2007, a bill introduced to the House of Representatives at that time. There's not been much discussion of that effort in recent weeks, either.
Where have all the concerned voices been since June? It isn't as though there have not been opportunities for a statement. Late last month, China acknowledged its practice of widespread industrial subsidization, and agreed to end subsidies for its steel, wood products, and IT industries by January 1.
This week, the U.S. and China have had new discussions, part of the intermittent China-U.S. Strategic Economic Dialogue, aiming to broaden the economic interdependence of the two nations. If ever there were an opportunity to raise the ongoing issue of currency evaluation and its effect on U.S. industries, this ought to be it. But the CCC, among others, has not drawn the connection.
I don't believe the Chinese have quietly come into line on the matter of their currency legerdemain. I suspect, however, that the decline in U.S. currency — and the consequent improvement in U.S. manufacturers export opportunities — has taken the steam out of groups like the CCC.
Published Dec 12 2007, 03:00 PM by REB
community.forgingmagazine.com/blogs/editorsnotes/archive/2007/12/12/what-happened-to-china.aspx
First off - People ARE still talking about currency manipulation - does this guy live in a vacuum? As the dollar continues to devalue so does the juan since it is pegged so no matter how low we go they will always be lower. And since our manufacturing base has been hollowed out by outsourcing, what exports will really benefit from the devalued dollar?
And what about the section highlighted in bold -
This week, the U.S. and China have had new discussions, part of the intermittent China-U.S. Strategic Economic Dialogue, aiming to broaden the economic interdependence of the two nations. If ever there were an opportunity to raise the ongoing issue of currency evaluation and its effect on U.S. industries, this ought to be it. But the CCC, among others, has not drawn the connection WTF? Increased interdependence with china? what planet are these guys from? Does congress approve of this dialogue? have the people had a voice in this?