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What Americans Say about the U.S. Ultimatum Demanding China to Revaluate the Currency

27 March 2010

Democracyinamerica (民主美国网)
posted on Mar 25th 2010, 14:00

There's no way it would ever have been made in such terms when speaking of Japan. The Japanese were presumed to be equals who were capable of handling their own internal political affairs; tariffs were either a good idea or a bad one, but it was not considered to be the responsibility of Americans to manage a foreign government's relationship with its nationalist constituents. China's leadership, too, has become quite sophisticated in its understanding of foreign countries' internal political affairs over the past 30 years, and recognises that America's government operates within constraints imposed by constituent demands. With unemployment running at 10%, it is hard to tell laid-off manufacturing workers that America must tolerate Chinese currency manipulation that is effectively indistinguishable from export subsidies. The Chinese did not lose their cool over the (much less justifiable) tariffs on tyres that Barack Obama imposed last year; they are perfectly capable of recognising that America's tolerance for undervaluing the yuan has limits. But in any case, putting the crucial American-Chinese relationship on a sound footing requires that we treat them as equals, not as restive primitives easily swept away by their hatred of the "gwai lo" [western devils].




Central European:

Most of the Forbes 500 American giants are profitable just because of their Chinese branches. Quite concretely, GM was saved in the storm because of its profit-making Chinese branch. Punitive tax on Chnese goods? Check out McDonald's, Boeing, Apple, Microsoft, GM, Cisco, Intel and the rest in China. Who will be the beneficiaries of the trade war? Geely, Lenovo, Huawei, BYD and the rest of Chinese giants who can take the huge domestic and ever growing market over without their American rivals.

大多数在华美国500强都是盈利的。通用汽车就是因为中国子公司而躲过了这次金融风暴。想对中国进口货课以惩罚性重税?去问问麦当劳、波音、苹果、微软、通用汽车、思科,英特尔以及其他在华企业吧。他们能从中美贸易战中得到任何什么好处吗?吉利, 联想, 比亚迪以及其他中国本土品牌几乎会立即填补他们在越来越巨大的中国市场上留下的空白。没有美国人和他们竞争,他们的生意只会更兴旺。

Doug Pascover:

The arguments against protectionism have the rare virtue of truth and I'm a little puzzled that M.S. thinks the tire tariff went coolly. American exporters were harmed and it seems unlikely that an American got or kept a job as a consequence. Which is the best argument against taking a harder stand against China. Our leaders are no better than theirs for staying focused or serving the public good. From the current President to the congress, stupid ideas get a polish of zeal from foreign flags.

It's hard to make a case that China is importing U.S. jobs. They are beggaring Vietnam and Mexico and other low-cost manufacturers. Any politician who wants to campaign on protecting foreign low-wage workers from Chinese low-wage workers deserves credit. But anyone who claims to protect U.S. jobs from China by pressuring reminbi is being ignorant, mendacious or both.



Dan Martin:

Explaining the intricacies of financial markets, indirect subsidies, and undervalued currencies will NEVER get you reelected. But, tell that same voter an easy, somewhat xenophobic story about why China is stealing his/her job, then you will earn their support. With such a stark contrast between reality and political expediency, there is bound to be bad legislation as a result.

In the end, any tiff with China, no matter how justified, will hurt American consumers. Trade wars only benefit politicians; unfortunately, that appears to be the road the American electorate have asked their representatives to follow. I don't have a solution myself, but one thing is for sure: no good can come of this.




In the 80s, I think in many ways Japan was viewed -- at least subconsciously -- by most Americans as a de facto suzerainty. We have the right to feel angry if they don't let us station troops on their soil, but not the other way around.



You can't have your cake and eat it too, while American trade policy is ultimately up to Americans to decide, it’s also ultimately up to them to face up to the consequences of their own decisions. Considering Japan, Germany, Brazil, South Korea all run a trade surplus with China and almost all are experiencing economic recovery on the back of Chinese orders, its highly unlikely they will sign up to join Washington in their trade war, and now considering those countries plus China make up almost all of the world's exports, should China's action lower American purchasing power for those countries' product in general, US might find itself fighting on more than one front.



China's concerns are (1) stability and (2) continued employment in the exporting sector, which has seen massive losses. China was alone among Asian countries in avoiding the 1997 crisis because of its fixed currency. Opening the RMB up to outside influence is, to them, madness. Another revaluation will bankrupt thousands more factories.



Congress is good at blaming others, but when that attitude turns into the mentality that US problems requires the actions of others to fix, then it becomes a problem for the US itself.

Starting a conflict, be it trade war or real war, to save an economy never worked in the past and never will, for the simple reason that if your economy needs saving, you probably can't afford a conflict. The same applies today.




Econominer: "the most obvious evidence of RMB undervaluation - a large current-account surplus and a growing pile of FX reserves."

But as I wrote above, oil producing countries are accumulating huge piles of dollars and causing a large current-account imbalance. Does that mean the dollar is undervalued against the dollar?




American nationalists will always see China as geopolitical adversary over world hegemony, evil communist etc..... They dont see other countries with higher current account surpluses in that category.


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