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Have we noticed that on every presidential debate, the competing GOP candidate most likely will use China as a punching bag, promising to take a tough position if elected, and if he does get elected, the tough position never materialize?
Anyone who is educated enough should know the US government will NEVER officially label China as a currency manipulator, and therefore engages a full fledged trade war with China. The two economies are too entwined now and that will never help growth or unemployement in the US (imagine what the CEOs of GE, GM, Ford and Walmart will say).
Additionally, the US is losing the justification to do so. In 2011, China's overall trade surplus has declined from 10% a few years ago to merely 2.8%, only slightly higher than Japan and Korea (about 2.1%), and much lower than countries like Switzerland, Singapore etc. Addtionally Japan and Germany consistenly run surplus with China. If China's surplus is ONLY high with the US, not the rest of the world, maybe the issue comes from the US itself, but not the valuable of the Yuan? Internationally, it is a concensus that a persistent surplus over 4% may be an indication of devalued currency.
US would also need China cooperation in dealing with Iran and North Korea.
I feel GOP keeps promising this just to satisfy the emtional needs of the rednecks. In the end, times have changed and it is not 1971 any more, when the US can simply dictate the EU and Japan to revaluate their currencies. EU and Japan did, but the US didn't win anything, except one of the worst recession in the 70s.
Yup.
China is having deep problems right now domestically.
Their 2010 census showed they have a population 1,339,724,852. That is 1 billion more people living in China than live in the U.S., and those billion Chinese want their share of the wealth that has flowed into the nation over the past 20 years.
Their politburo runs the country in a very delicate balance of Communism and Capitalism. The only way the politburo is going to satisfy their population's demands is an increase of elections, and they cannot keep their currency artificially low much longer or hyperinflation will set in.
Once the yuan is allowed to float in international currency, just as the dollar, the pound, and all the other major currencies of the world already do, much of their advantages will disappear.
Their exports have to travel much longer distances than those of the other major importers into the U.S. Only their falsely under-valued currency keeps their expenses under control in that area as well. The shipping companies aren't taking the hit- the Chinese workers are, and they are not happy about it.
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