How much will taxpayers shoulder?

[Zenda]

Fact: China's Yuan is undervalued relative to the US Dollar

"Scholarly studies suggest that the yuan is undervalued on the basis of purchasing power parity analysis.

The World Bank estimated that, by purchasing power parity, one United States dollar was equivalent to approximately ¥1.9 in 2004.
The International Monetary Fund estimated that, by purchasing power parity, one United States dollar was equivalent to approximately ¥3.462 in 2006, ¥3.547 in 2007, and is expected to be equivalent to ¥3.694 in 2008."

I was counting on some clear statements from the IMF, the WTO, and the GATT, but you show me a link where 'suggest' and 'estimated' make up the most negative claims. Not that I disagree with this. Finding tubes doesn't always mean there are WMD, as we all know ;)

Fact: Undervaluation helps the Chinese export producer and the US import consumer, and hurts the US export producer and the Chinese import consumer

Noone disagreed with this, afaik. But it works both ways, in more then one way.

The US could balance things by buying yuan currency, and pay for it in dollars. The acquired yuans could then be used to pay for Chinese imports. That's how it works in other nations. Unfortunately, this would require that the US administration prints dollars even faster as it does now, which is not without risk. Inflation could become hard to control. I suppose it's better for the USA to have China make up for all the differences, and have business continue as usual :glare:

Fact: China's currency controls make it impossible for money to flow freely in and out of the country, except subject to government oversight.

Products from China are paid for in dollars, and these dollars will find their way over there, wouldn't you agree? Since the Chinese can't control how much the Americans consume, they can't control the capital flow into the country. I don't know about the outgoing money, so you may be half right, there.

Fact: China has purchased a historically unparalleled number of US Dollars.

Yes, with the goods they produced :mellow:

That is not free trade in currency, and free trade is what the WTO exists to protect. China is a member of the WTO, and thus, is doing this contrary to its obligations.

You really think that other members of the WTO would say nothing of it, if it was all that clear?

This undervaluation is a kind of tariff on imports, and a subsidy on exports.

Like EU and US' import taxes and export subsidies, to be precise.

but we are saying that they have violated the spirit of "FAIR TRADE"

With all respect, but that sounds a little hypocrit. Besides, the USA has violated too much 'spirits' lately, and you can no longer expect the world to take such claims serious.

it is hardly illegal and well within their right

I'm glad to see that at least someone got my point :)