When President Obama meets with Chinese President Hu Jintao this week, one of the top items on the agenda will be resolving a dispute over how China sets the value of its currency. If Obama gets his way, it could spur U.S. exports, but it could also mean higher prices for American consumers.
For over a decade, China has held down the value of its currency, the Yuan, in relation to the dollar. That helps keep the cost of the goods Americans buy from China low and the price of American goods sold in China high. The cheap Chinese currency has helped open a wide trade imbalance between the two countries. In 2010, China’s trade advantage with the U.S. was more than $252 billion.
The Obama administration has made stopping China’s currency manipulation a central focus of the president’s push to increase American exports.
“China still closely manages the level of its exchange rate and restricts the ability of capital to move in and out of the country,” Treasury Secretary Timothy Geithner said is a speech last week. “As the [International Monetary Fund] has said consistently, these policies have the effect of keeping the Chinese currency substantially undervalued.”
On the surface, it’s a positive for American consumers. Nearly every product-- from candy to electronics to bicycles – is cheaper in the United States if it’s imported from China.
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4 comments:
Also means less goods from US are imported by China and fewer US jobs at the above worldwide average wage rate expected by US workers.
Will the BOE start teaching Chinese to our kids so they can be ready for jobs when they graduate?
The Chinese Government (Communist) protects the Chinese economy from manipulation of the American Central Bankers.
They work FOR THE CHINESE PEOPLE.
has he done anything that won't cost us?
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