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Originally posted by mickey007 at 2010-6-12 16:40
The purpose of U.S.A to force Chinese Yuan to appreciate is neither to help China curb its inflation nor to help other nations increase their export. The rapid growth of China economy in the recent ...
You can continue to think that, but you are completely wrong. It isn't only the US who wants china to revalue the currency. It is also many other countries including some EU countries, South Korea, Brazil, and even some chinese government officials at the central bank of china. The currency is pegged to the US dollar. So, no matter what statistics you use, and people manipulate statistics all the time, it won't be enough to prove the RMB is or isn't undervalued. I agree that the RMB needs to float slowly as to keep from shocking the economy too much, but at the moment the RMB is most certainly not valued according to the market. It is pegged. That is a simple fact.
Of course, the US is interested in its own interest. China is also looking after its own interest when it pegged the RMB to the dollar. Your a little naive if you think the US can just let China get away with pegging the RMB for trade benefits. The US can and probably will retaliate with trade sanctions. It has nothing to do with being jealous of China's growth. In fact, the US had low tariffs on Chinese goods for over 15 years, which helped US companies come to china and export. However, this relationship can't continue. China needs to drop their tariffs on US goods, which were extremely high in comparrison with US tariffs on Chinese goods for the past 15 years. Then China needs to slowly revalue its currency and stimulate its domestic consumption. The US, on the other hand, needs to start saving more and stop spending. Only this will create a more balanced world economy, which will benefit everyone.
Wen Jiabao said that if China revalued the currency and stopped giving subsidies to exporters (a violation of WTO rules), many companies in China would close down. So, China is obviously, and this is the most obvious you can be, supporting their businesses with protectionist policies. If they are not competitive, they should adapt instead of seeking trade benefits through protectionism. But it seems like the Chinese want only US companies to compete without protectionism, while Chinese companies have all the protection they can get from the Chinese government and tax payers.
China always says they want a win-win solution, but most of their solutions are just a win for China, including the currency issue. China says one thing and does another.
In the end, China can decide its own currency policies. But, the Chinese shouldn't cry when the US retaliates. The US can also decide its own policies as well, including putting trade sanctions on China if they don't act.