WP: Foreign Currency Piles Up in China

[DeepModem Mom]

Foreign Currency Piles Up in China
Reserve Fund Soared to Record in 2005
By Peter S. Goodman
Washington Post Foreign Service
Tuesday, January 17, 2006; Page D01


SHANGHAI, Jan. 16 -- China's state media on Monday reported that the country's foreign currency reserves swelled by more than one-third last year to a record $819 billion as its factories churned out goods for markets around the world, heightening the likelihood of fresh trade tensions with the United States.

Coupled with news only days earlier that China's world trade surplus tripled last year, to $102 billion, the country's burgeoning foreign exchange reserves seemed certain to intensify demands that China increase the value of its currency, the yuan, the worth of which is linked to the dollar. U.S. manufacturing groups argue that China's currency is priced too low, making its goods unfairly cheap on world markets. Lawmakers in Congress have pressed a bill that would impose across-the-board punitive tariffs on all Chinese goods unless the country substantially raises the value of its currency.

"This could give the senators more meat for their argument," said Stephen Green, a senior economist with the bank Standard Chartered PLC in Shanghai.

Chinese officials braced for further conflicts with the United States, particularly as many economists anticipate that the country's trade surplus will widen. A flood of investment into industries such as steel, automobile manufacturing and electronics has erected too many factories and produced more goods than China can absorb, sending prices falling while encouraging Chinese firms to seek sales abroad. Diminished profits and slowing investment temper China's demand for machinery and raw materials, limiting the need for imports....

***

China argues that it is being used as a scapegoat in Washington for the decline of U.S. manufacturing: The flow of capital to lower-cost manufacturing areas is a global phenomenon that is transferring jobs not only to China, but also to Latin America, Eastern Europe, India and Southeast Asia. About two-thirds of China's exports are produced in factories that are financed at least in part with foreign investment, undercutting the notion that this country's growing trade is coming at the expense of everybody else....


http://www.washingtonpost.com/wp-dyn/content/article/2006/01/16/AR2006011600450.html?sub=AR

[coldiggs]

1. We realy need to do somthing about China. They are becoming more and more

dangerous.

[reprobate]

2. Right! Let's invade them. It worked so well in Iraq.

And don't say that too loud, you'll give the bushies ideas.

[coldiggs]

3. No I dont mean they are a military threat more economic. I think their eco

nomic policies amount to unfair trade practices. Plus why would the Bushies take out china that is were their budies get cheap labor.

[anotherdrew]

5. just say No to shopping at Wal-Mart - that would be step 1

then d anything you can to encourage a rebirth of on-shore manufacturing.

Anyway, the real threat they pose to us is that they will sell us enough cheap rope to hang ourselves with.

[reprobate]

10. Unfair trade practices? I don't know about that.

Seems to me that China is operating under strict Lessaiz Faire trade, which is just what the bushies want. It's a hands off trade policy, with the exception that it is dictated by the government of China. But the Bushies love it. And you are right, their buddies DO get cheap labor out of it.

Post Revolution II this idea of "free trade" will no longer be acceptable. The result of it is to pull down the living standards of everyone but the super wealthy.

I have to hand it to Mad George. He has managed to turn this long time capitalist and business owner into a radical socialist. And that's going some.

[hogwyld]

4. The 20th century was ours

The 21st century belongs to China. Let them be the world's policeman for awhile.

[coldiggs]

6. I think we still have a few decades left in us

[lagavulin]

7. Really? You do?

Are you taking bets on that? I doubt we have even a few years left in us (as a world superpower that is).

[Mandate My Ass]

8. I'm with you, lagavulin

Welcome to DU, we're always glad to have another member of the reality-based community join up. At the rate Bush is going wiht his scorched earth policies, a decade would be almost miraculous. :hi:

[hogwyld]

9. I'd be suprised

If we even make to the end of THIS decade. * still has basically 3 years left, and I don't think us or the world will survive him.