12-16-2008, 01:52 PM
I don't know what to tell you either, then. This isn't a question about the poor quality of American goods, economic nationalism, exploited labour, Global warming, the leaders of America, or any of that.
My point is a simple one about the effects of what the Chinese are doing with their currency, keeping the Yuan within a certain (undervalued) range. If you doubt that they are doing this, then all I can say is look it up, there's pretty strong consensus on this point. The Chinese government, as always is tight lipped about it, as with everything.
This undervaluation is a kind of tariff on imports, and a subsidy on exports. We can't read minds, so we can only speculate as to the *intent* of this policy. Krugman thinks the Chinese just stumbled into it accidentally as part of an attempt to keep their economic ship on an even keel, and now don't want to mess up their unprecedented growth. It's as good an explanation as any. However, what we do know are the *effects*. Those effects are almost certainly against the rules of a body that China voluntarily joined, the WTO.
Did the US get itself into this mess? To some extent, yes, although it takes two to tango, as they say. Would the US benefit from an end to the policy? Maybe. It would lead to a better trade balance in exchange for less ability to borrow at good rates. The effects are understood by all parties. The Chinese government is well aware of how their currency policy is affecting their exports relative to domestic consumption, if only because the US has been shouting it at them for the last decade.
-Jester
My point is a simple one about the effects of what the Chinese are doing with their currency, keeping the Yuan within a certain (undervalued) range. If you doubt that they are doing this, then all I can say is look it up, there's pretty strong consensus on this point. The Chinese government, as always is tight lipped about it, as with everything.
This undervaluation is a kind of tariff on imports, and a subsidy on exports. We can't read minds, so we can only speculate as to the *intent* of this policy. Krugman thinks the Chinese just stumbled into it accidentally as part of an attempt to keep their economic ship on an even keel, and now don't want to mess up their unprecedented growth. It's as good an explanation as any. However, what we do know are the *effects*. Those effects are almost certainly against the rules of a body that China voluntarily joined, the WTO.
Did the US get itself into this mess? To some extent, yes, although it takes two to tango, as they say. Would the US benefit from an end to the policy? Maybe. It would lead to a better trade balance in exchange for less ability to borrow at good rates. The effects are understood by all parties. The Chinese government is well aware of how their currency policy is affecting their exports relative to domestic consumption, if only because the US has been shouting it at them for the last decade.
-Jester