Chinese PM pushes back as U.S. currency bill looms

[Francesca9]

Source: Reuters

(Reuters) - Chinese Premier Wen Jiabao pushed back on Wednesday against U.S. pressure to revalue the yuan, as U.S. lawmakers threatened to penalize China for keeping its currency artificially low.

Wen, who is due to meet U.S. President Barack Obama in New York on Thursday during the U.N. General Assembly, said in a speech to U.S. business leaders the yuan exchange rate had no relation to U.S. trade deficits and should not be politicized.

Read more: http://www.reuters.com/article/idUSTRE68L5K120100923

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It is pitbull obama time!

[AdHocSolver]

1. The Chinese premier is correct. The problem is U.S. trade policy, not the yuan.

The U.S. trade deficits are due to corporate cartel trade agreements such as NAFTA, and the WTO, the IMF, the World Bank, the Federal Reserve's (a banking cartel) monetary policies, and a tax code which rewards outsourcing jobs.

Revise trade policies, revise the tax code, impose import quotas and tariffs on common goods that used to be manufactured here so that companies which want to manufacture such goods in America can compete on a level playing field with the big multinational corporations which actually control U.S. trade.

The Chinese are being scapegoated to deflect attention away from the real culprits: the multinational corporations.

[JDPriestly]

2. Put import duties on clothing, toys and other manufactured goods.

That can be done via Value Added Taxes -- as it is in Europe.

[cliffordu]

3. That is exactly right. Perfect.

:applause:

[HEyHEY]

6. Uh, no, why do you think it is so delicious for them to want to outsource?

It's because of China's currency suppression. That's why its attractive for corporations to go overseas in the first place. You can't say that it's all because of US policy and corporations.

China purposely keeps its currency low in order to draw jobs away from other countries. If they want to play on a global stage, it's time to stop thie protectionism (Because they love accusing the west of it) and open up the currency.

[Jeneral2885]

4. Dani Rodrik's view

see Dani Rodrik's http://rodrik.typepad.com/dani_rodriks_weblog/2010/09/is-chinese-mercantilism-good-or-bad-for-poor-nations.html

[pampango]

5. Krugman: You may see claims that China’s trade surplus has nothing to do with its currency policy...

"If discussion of Chinese currency policy seems confusing, it’s only because many people don’t want to face up to the stark, simple reality — namely, that China is deliberately keeping its currency artificially weak.

The consequences of this policy are also stark and simple: in effect, China is taxing imports while subsidizing exports, feeding a huge trade surplus. You may see claims that China’s trade surplus has nothing to do with its currency policy; if so, that would be a first in world economic history. An undervalued currency always promotes trade surpluses, and China is no different.

And in a depressed world economy, any country running an artificial trade surplus is depriving other nations of much-needed sales and jobs. Again, anyone who asserts otherwise is claiming that China is somehow exempt from the economic logic that has always applied to everyone else."

{snip}

"It’s true that the dollar would fall if China decided to dump some American holdings. But this would actually help the U.S. economy, making our exports more competitive. Ask the Japanese, who want China to stop buying their bonds because those purchases are driving up the yen."

http://www.nytimes.com/2010/09/13/opinion/13krugman.html?_r=1&ref=opinion

[HEyHEY]

7. Bingo n/t