Wednesday, October 31, 2012

Discussion Board 10/29/2012
Do you think it's a good idea to label China as currency manipulator? How Do the U.S. turn the situation in their favor


  1. Tim Shoji:
    This is another one of those examples where the public outcry is motivated by a general lack of understanding in the benefits of trade. So what if China manipulates the RMB exchange rate? What people often fail to recognize is that cheaper goods benefit the U.S....Americans can buy things at a cheaper price! As an intellectual exercise, let's suppose that China was the WORST currency manipulator in the world, where all goods from China are practically FREE. Wouldn't Americans love FREE stuff? I'm waiting for the day when a presidential candidate gets up on stage and says "that's absolutely fantastic that China is manipulating its currency. On behalf of Americans, we thank you. Please continue supplying us with cheap things. In fact, please consider giving us thing for free. Thank you."

  2. Mengyao Kong:
    I am tired this kind of argument between governments and countries. All these parties trade with each other get their own benefit. If the currency is relatively low, they export more import less. That's the easiest economic principle. Both sides have their own perspectives. However, I believe if any of them doesn't make money in trade, none of them won't trade. They are just never satisfied with their slices of the pie and forget what the total welfare from the trade. Also, the inflated chinese currency is not good for the exports in China, however, it increases the number of students who seek education opportunities overseas.

  3. Xiao Zhong:
    First, I agree with Tim and Ford that a trade war with China would definitely not be a good thing for US, at least for American consumers. Either higher prices (from appreciating RMB) or trade retaliation would make Americans suffer given that Made in China are so popular among consumers here.

    What’s more, if China can be labeled as “currency manipulator”, then the truth is that those who are saying so are trying to manipulate. As we can see from past years, China has been under great pressure from US government to appreciate RMB, which may seemingly stimulate US export and narrow its trade deficit. However, it is not free given that American people bear the brunt.

    Let’s imagine if China appreciates RMB then what would happen: China would be trapped with smaller exports (which is a key driver for China’s economy), lower growth, lower interest rate and low inflation. Would other countries benefit from China’s slowing down? I don’t think so except that some politicians may have something to boast about.

    Finally, with the change in Sino-US economic status from Big V.S. Little Brother to both powerful economies, such threatening as labeling China as “currency manipulator” seems meaningless. Though Chinese government would still be under great pressure from US out of some “political” reasons, it is not afraid of the so-called sanctions so much as before.

    In conclusion, calling China “currency manipulator” is just like “playing house”—I am not happy with what you did and I require you to listen to me...well, at least we can learn a lesson here: the world is changing all the time and you’ll never know whether the puny boy you have bullied before can grow into a strong man in the future.

  4. Zhishuo Zhang:
    I agree with all of you on the trade issue. However, if you think about the good side of the RMB appreciation for US, the deficit will be cut atomaticlly...without doing anything....and for those who invest in Chinese currency, they can make huge profit by simply transfer their money into RMB 10 years ago and change them back once China was labeled as currency manipulator. Who can say that this isn't what wall street people want to do? The off-shore market can make that happen even for huge amount. To sacrifice the benefit of overall american (Higher price), to gain profit for small portion of people, that is the only logical intention I can think of. A little bit like conspiracism though.

  5. Pian Li:
    Every country has its own strategy and right to protect the profits of its civilians. Now China still relies on exports and imports. If RMB appreciates, its imports and exports will suffer a lot. Less countries will buy the goods from China because it is more expensive. If it happens, unemployment rate in China will rise. Of course, this is not Chinese government wants to see. So the government holds the RMB. As a result, it is unreasonable to criticize that China is a currency manipulator. If US is in such a situation, it will do the same thing as well.

    But on the other hand, China should adjust its social structure. If it relies on its exports and imports forever, the RMB will never get appreciation. Then the rely on imports of resources will be less. We do not have to pay as much as previously pay to get the same amount of resources. Also appreciation of RMB will enlarge the demand of the imports goods. Chinese people can get benefit from the apprication to consume more luxury goods.

    Thus, China should balance the benefits and drawbacks on the appriciation of RMB. This action is not related to any conspiracy. It is a wise policy that takes the benefits of its civilians into consideration.

  6. Tian Tan:
    First, China has appreciated its currency a lot through 8:1 USD:CNY to 6.24:1 recently. USA wants China to appreciate more and faster, which is unreasonable since it will change China's economic structure dramatically and cause serious social turmoil.

    Second, the World Factory is moving out from China to other countries with even cheaper labor cost. So the problem is not about China, it's about America. How can USA adjust itself to the new era. American workers don't want to work at weekends while workers at Vienam, India work like dogs!

    Third, for China, it's time to appreciate RMB gradually. Shift economic emphisis from export to consumption. And China will use appreciated RMB to buy more resouces from abroad, which is very meaningful in the future.

  7. Amine Bensaid:
    Romney's argument is one of the the reasons many people believe that he does not have the enough foreign policy experience. Why would any politician want to label the country that saved the U.S. in the financial crisis as a currency manipulator. A country that has a track record of not listening to anyone that criticize it. The obvious reason for this move is to reach out to those voters who do not fully comprehend the implications of a bad foreign policy, and of course above all the job recovery. By attacking China, Romney wishes to make people believe that he can get those low skill low pay jobs that china took from the U.S.

    To sum up, like this article stated; many countries in the world are manipulating their currencies for various reasons. Labeling China as a currency manipulator could be one of the biggest mistakes the republicans could make, especially since the world economy is still recovering very slowly (or not at all i.e. Europe).