27 Sep 10
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http://www.realclearpolitics.com/articles/2010/09/27/a_trade_war_with_china_107310.html
The trouble is that China has never genuinely accepted the basic rules governing the world economy. China follows those rules when they suit its interests and rejects, modifies or ignores them when they don't. Every nation, including the United States, would like to do the same, and most have tried. What's different is that most other countries support the legitimacy of the rules -- often requiring the sacrifice of immediate economic self-interest -- and none is as big as China. Their departures from norms don't threaten the entire system.
China's worst abuse involves its undervalued currency and its promotion of export-led economic growth. The United States isn't the only victim. China's underpricing of exports and overpricing of imports hurt most trading nations, from Brazil to India. From 2006 to 2010, China's share of world exports jumped from 7 percent to 10 percent.
-snip-
If China won't revalue, the alternative is retaliation. This might start a trade war, because China might respond in kind, perhaps buying fewer Boeings and more Airbuses and substituting Brazilian soybeans for American. One proposal by Reps. Tim Ryan, D-Ohio, and Tim Murphy, R-Penn., would classify currency manipulation -- which China clearly practices -- as an export subsidy eligible for "countervailing duties" (tariffs offsetting the subsidy). This makes economic sense but might be ruled illegal by the World Trade Organization. A House committee last week approved this approach; the full House could pass it this week. Ideally, congressional action would convince China to negotiate a significant RMB revaluation.
I think the Chinese could be hurting themselves more than anyone with their practices, especially if the west sees massive inflation and many expect once the economy recovers. Ironically, the rapid inflation would be in large part due to Chinese economic policy and would hurt the Chinese holders of US paper more than anyone.
Nevertheless, does the West intend to idly stand by as China continues to manipulate its currency and artificially maintain their production supremacy?
On a related note, WHY does China care so much to dominate the World's production. It certainly has not helped to increase their standard of living any more so than an economy more based on consumption would. Does China believe that an export based economy is the shortest path to superpower status?
27 Sep 10
I do not expect a trade war. The Federal Reserve System is able to increase the money supply more without as much inflation (domestically) as would normally result because of the lower priced goods being imported from China. Some refer to this as exporting inflation.
China also holds too much of our debt for our government to piss them off. If they called in our debt all at once it would be very bad for our economy.
Check out Ron Paul's article "The End of the Dollar Hegemony" and you will have a better understanding of how the USA has been exporting inflation to the rest of the oil trading world.
http://www.lewrockwell.com/paul/paul303.html
27 Sep 10
Originally posted by Metal BrainIf they called in all our debt at once, they would destroy the dollar as a viable currency, crippling the US (and world) economy, but also making their notes worthless. It would be a classic example of cutting off one's nose to spite one's face.
I do not expect a trade war. The Federal Reserve System is able to increase the money supply more without as much inflation (domestically) as would normally result because of the lower priced goods being imported from China. Some refer to this as exporting inflation.
China also holds too much of our debt for our government to piss them off. If they ca ...[text shortened]... inflation to the rest of the oil trading world.
http://www.lewrockwell.com/paul/paul303.html
27 Sep 10
Originally posted by sh76The US has been breaking those rules throughout history. If anything, it made most of the 'rules' to suit itself.
China follows those rules when they suit its interests and rejects, modifies or ignores them when they don't. Every nation, including the United States, would like to do the same, and most have tried.
If the US and Europe scraped farm subsidies, then the developing world would not need foreign aid any more - and that is just one example of developed countries' unfair trade practices.
27 Sep 10
Originally posted by twhiteheadFarm subsidies are not any more unfair than government provided healthcare. And your general claim that ending farm subsidies would eliminate the need for all foreign aid is dubious and unsupported.
The US has been breaking those rules throughout history. If anything, it made most of the 'rules' to suit itself.
If the US and Europe scraped farm subsidies, then the developing world would not need foreign aid any more - and that is just one example of developed countries' unfair trade practices.
In any case, fairness is not the issue. No government has the responsibility to be fair to any other economically. The question is whether the US is justified in assessing tariffs on Chinese imports based on China's refusal to float its currency. Plainly, we are. Of course, whether it's a good idea is another matter.
27 Sep 10
Originally posted by sh76Do they export health care to the Third World? What a strange comparison.
Farm subsidies are not any more unfair than government provided healthcare. And your general claim that ending farm subsidies would eliminate the need for all foreign aid is dubious and unsupported.
In any case, fairness is not the issue. No government has the responsibility to be fair to any other economically. The question is whether the US is justified in ...[text shortened]... to float its currency. Plainly, we are. Of course, whether it's a good idea is another matter.
Farm subsidies are a disgrace and should be abolished immediately.
27 Sep 10
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Originally posted by KazetNagorraOf course they do. Indirectly. Whatever the government did not provide in terms of drugs and healthcare equipment might otherwise have to be imported. Whatever providers are paid by the government might otherwise choose a different profession, opening the healthcare provider jobs for immigrants or migrant workers who might send parts of their salary back home.
Do they export health care to the Third World? What a strange comparison.
Food stamp type programs prevent people from potentially having to purchase imported groceries.
Every time the government gives stuff to its people, it potentially displaces the need to import goods or services.
Unless to do so would break a negotiated agreement, there is no morality or lack thereof in government subsidizing anything for its own people. It's all a matter of wisdom or lack thereof only.
27 Sep 10
Originally posted by sh76No, they don't. The amount of health care people receive abroad is negligible. Foodstuffs can be imported and exported much more easily - besides, there is no real purpose for farm subsidies other than to get votes from farmers at the expense of billions of taxpayers' money and the blood of thousands of innocent people.
Of course they do. Indirectly. Whatever the government did not provide in terms of drugs and healthcare equipment might otherwise have to be imported. Whatever providers are paid by the government might otherwise choose a different profession, opening the healthcare provider jobs for immigrants or migrant workers who might send parts of their salary back home. ...[text shortened]... ment subsidizing anything for its own people. It's all a matter of wisdom or lack thereof only.
27 Sep 10
Originally posted by KazetNagorra"blood of thousands of innocent people"??
No, they don't. The amount of health care people receive abroad is negligible. Foodstuffs can be imported and exported much more easily - besides, there is no real purpose for farm subsidies other than to get votes from farmers at the expense of billions of taxpayers' money and the blood of thousands of innocent people.
Maybe ease a bit on the drama there, KN, eh?
Nobody owes it to any other country to tailor their economic policies to the best interests of people in such other countries.
27 Sep 10
Originally posted by sh76Certainly not, but they do owe it to their own people to make sensible policies, and there is simply no argument in favour of farm subsidies.
"blood of thousands of innocent people"??
Maybe ease a bit on the drama there, KN, eh?
Nobody owes it to any other country to tailor their economic policies to the best interests of people in such other countries.
27 Sep 10
Originally posted by sh76sh76: Nobody owes it to any other country to tailor their economic policies to the best interests of people in such other countries.
"blood of thousands of innocent people"??
Maybe ease a bit on the drama there, KN, eh?
Nobody owes it to any other country to tailor their economic policies to the best interests of people in such other countries.
That's true. So the Chinese don't. If they allowed the value of the yuan to rise, their exports would cost more and they'd sell fewer of them. Internally, tens of millions of Chinese every year stream into their cities from the countryside looking for higher paying jobs. If they don't get them, there is the possibility of massive social unrest. Their leaders don't want that, so they follow a policy to avoid that (analysis courtesy of Reich's Aftershock, p.73).
We should follow policies that help our workers get higher paying jobs, too, but we don't.
27 Sep 10
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Originally posted by no1marauderI agree. The Chinese don't owe it to us to float their currency. But by the same token, we don't owe it to them to allow complete and free importation of Chinese goods to the US. If we want to demand, as quid pro quo for allowing their imports without tariffs into the US, that they float their currency, we have every right to do that as well. If they refuse, we have every right to take steps such as imposition of tariffs on Chinese imports.
sh76: Nobody owes it to any other country to tailor their economic policies to the best interests of people in such other countries.
That's true. So the Chinese don't. If they allowed the value of the yuan to rise, their exports would cost more and they'd sell fewer of them. Internally, tens of millions of Chinese every year stream into the e should follow policies that help our workers get higher paying jobs, too, but we don't.
Such a policy would also, of course, help our manufacturing industries.
