Currency Dispute Strains U.S.-China Relations

New York Times:

To the growing list of grievances between the United States and China, add one more: the Obama administration is reviving American pressure on China to stop artificially depressing its currency, a policy that fuels its persistent trade gap with the United States.

The administration has told Chinese officials that currency policy will be high on its agenda this year for economic talks with China, a senior official said on Wednesday. The White House is also weighing whether to designate China as a country that manipulates its currency, when the Treasury Department issues its semiannual report on foreign currencies in April.

Read the whole story: New York Times

Comments

[SteepleAston]

07:35 AM on 02/05/2010

China is getting too big for its pants. It should shut up and mind its own business. The US does not need lectures about the Dali Lama, while China bitches and moans at even the slightest criticism of its wide scale spying and Internet terrorism. Everyone knows it is keeping down the Renminbi to subsidize its exports because it is essentially a greedy mercantilist nation.

[noweknow]

02:49 PM on 02/04/2010

We need a united home front to fight external enemy.
First we must take care of the traitors on Wall Street.

[iceburg]

02:29 PM on 02/04/2010

Obama's administration did the right thing. We have to stop the robbery or the Communist China will take the US for their own.

[terry63]

02:09 AM on 02/05/2010

How much do we owe them? They could care less about our threats, Why should they, We have been making foolish decision's where China is concerned for year's. Sending them our job's and telling the American people not to worry about that, because those were jobs we didnt need anyway. Sending them our resource's, China is not ,nor has it ever been an allie, yet here goes our leadership like the fool's that they are and sell us out every day.
So we go borrow Billions upon billions of dollars with China as a creditor, What do you think they thought when they saw Obama, promising 200 billion a year in Copenhagen? They were probably laughing all the way back to their central bank!

[Amalek]

12:11 PM on 02/04/2010

Here is a primer on exchange rates:

If the Yuan strengthens against the US dollar two things happen:

1. Exports from the US to China become cheaper for the Chinese, so they should buy more from America. That should create jobs in America.

2. Exports from China to the US will cost more. Since most everything we consume is manufactured in China, prices will go up. A 20% change in the exchange rate basically makes everything at Walmart cost 20% more.

Americans should be divided on the issue. If you are looking for a job, you favor revaluation. If you are a consumer, you oppose one.

[wizegeye]

11:30 AM on 02/04/2010

I'm sure I'll get some heat for this comment, but so be it. I don't agree with everything Glenn Beck says and am not confortable with some of his tactics; however, he recently aired a show that presented some interesting information. I researched his main points and found the information he presented to be accurate. He discussed the history of the United States' rise to superpower status during the early part of 20th century at the expense of the British. He then paralleled that history with the current relationship between the US and China, and recent economic and global events. There are many common threads between these scenarios, and all Americans should be interested and concerned with where the current situation is going. It could dramatically change the influence the US has in the world even further. It also will likely make many Americans realize how much is taken for granted in this country.

[MarcusT]

11:45 AM on 02/04/2010

"It could dramatically change the influence the US has in the world even further"

Could? That ship has sailed.

[wizegeye]

12:23 PM on 02/04/2010

The ship may have sailed, but it also has quite a long journey ahead. As much influence as China has now, it can go quite a bit further, mostly at the expense of the US.

[Amalek]

11:59 AM on 02/04/2010

China had the most advanced economy in the world until the 15th Century. Spain had the 15th and 16th centuries. The Dutch, English and French had the 17th to the 19th. The 20th Century was America's. It is China's turn again. They might keep it for a while.

[wizegeye]

12:26 PM on 02/04/2010

If things don't changes, especially in the US, you are probably right. Even if the US rights the economic and business environments, it may not be enough at this point. Things are always changing, as you've duly noted.

[Pod-gers]

11:16 AM on 02/04/2010

LOL The US manipulates it's currency, we just do it a different way. That's one reason why the Chinese Econ students laughted at Geitner.

The US has an unaddressed Macro Economic problem, and blaming "jobs went south," "jobs went to japan," and now "Jobe went to China," is conter productive. So too, is the currency debate.

I understand the issue is FAIR TRADE, but China is not the problem, the US is the main manipulator of trade issues, I wonder why we don;t hear more about the USs issues with Canada, Mexico, and Europe. Oh, I do understand, China Bashing is based on latent racism, and the only racism still permitted in polite society in America.

Today, Japan is losing jobs to Indonesia, China is losing jobs to India, and Taiwan still runs sweat shops in the So Pacific.

Obama should stop Bashing China, and focus on correcting our messed up economic policies.

[shanghaislim]

11:45 AM on 02/04/2010

BINGO

[Captai]

12:40 PM on 02/04/2010

Correct. Again.

[LilPuppy]

11:10 AM on 02/04/2010

Another example of American government hypocracy. How many trade agreements have they violated and reneged on in their interest.... several with our country alone (Canada..we would love to scrap and renegotiate NAFTA , can you say $ 5 a gallon gas)

[alysheba 3]

01:35 AM on 02/05/2010

Not just the gas,but how about the Softwood Lumber Industry.

* On May 27, 2003, the World Trade Organization (WTO) issued a non-binding ruling in Canada's favour with regard to U.S. anti-dumping duties. The decision was appealable to a NAFTA panel.[3]

* On August 13, 2003, a North American Free Trade Agreement (NAFTA) Chapter 19 panel ruled that the tariff is too high, although noting at the same time that the Canadian lumber industry is subsidized.

* On January 19, 2004, the WTO Appellate Body (AB) issued a final ruling with respect to the countervailing duty determination. The AB decided largely in Canada's favor (WTO Dispute 257).
http://en.wikipedia.org/wiki/United_States_%E2%80%93_Canada_softwood_lumber_dispute

[MarcusT]

11:09 AM on 02/04/2010

The dollar has depreciated 30% against the Euro last year. Do they honestly think China is going to allow that game to be played against them?

[shanghaislim]

11:47 AM on 02/04/2010

......exactly. Why would China do something that would negatively affect their economy to make America happy?

[Amalek]

12:06 PM on 02/04/2010

Given the Yuan is pegged to the dollar, that also means the Yuan depreciated against the Euro,at a time when it should have gone the other way. The Europeans ought to be howling.

Bush destroyed the US dollar with his reckless wars and out of control spending. China continues to buy US dollars because we are her best customer, so they have shared the pain of the decline.

But when the Yuan appreciates, Chinese imports will cost more. Are people really ready for 20% price increases at Walmart?

[thestargazer]

10:30 AM on 02/04/2010

These disputes are ridiculously funny.....The U.S. and China can only talk as both are terminally attached to each other and either is as dependent on the other for success!

[Captai]

12:35 PM on 02/04/2010

China has already decided to cut USA loose. Its just a matter of how quick they can spend the 2T USD they have making deals and buying the things they need to grow their economy.

[MakemegoHmm]

09:36 AM on 02/04/2010

NOT ONE MEDIA OUTLET MENTIONED THE 4.3TRILLION DOLLAR LIEN ON THE TRAESURY FROM CHINESE AND BRITISH MONARCH .

[chromodynamics]

11:35 AM on 02/04/2010

Probably because loony tune conspiracy theories don't qualify as news.

[TryToBeFlexible]

09:32 AM on 02/04/2010

Not saying China is a villain, they are just looking out for their own people.

Also, nothing wrong with the USA doing the same. Simply put, we should put a huge tariff on goods from countries that don't let their currencies float freely against others. Or who do any of a number of things to block imports, and subsidize their exports. These are unfair trade practices, and as a sovereign nation, we have the right to impose import taxes on the goods of any nation. We used to do that, and it helped build us from a backward undeveloped third world colony into the first and foremost industrialized nation in the world. I think we have done our part to help develop the rest of the world through "free trade". Let's get back to taking care of our own. "Free trade" only benefits the owner's of huge corporations. It harms virtually every other American.

[jmpurser]

09:23 AM on 02/04/2010

Well, at least we're having a "dispute" about it. For the last 8 years they got to ram our planes, steal our tech, and laugh at us as they stole our wealth on top of that.

The Chinese aren't our biggest problem but it's one that MAYBE we can deal with before the "corporations are people too!" ruling wipes us off the face of the earth.

[Captai]

09:41 AM on 02/04/2010

Steal your wealth? Hardly. More like you p/$$ed it away on wars of aggression and and highly leveraged lifestyles. Now its time to pat the piper and you get mad. Sad. So sad.

[jmpurser]

09:45 AM on 02/04/2010

Oh we did that TOO.

But China has been manipulating their currency specifically to maintain a massive trade surplus with us and any nation who WASN'T playing currency games.

[Pod-gers]

11:20 AM on 02/04/2010

Steal our wealth? LOL The US has 700 military bases and installations overseas. Not in China, mind you. I suggest you look to the Military Industrial complex of the good ol' USA for those who have stolen our wealth.

[wizegeye]

11:46 AM on 02/04/2010

As of March 31, 2008, U.S. armed forces were stationed at more than 820 installations in at least 135 countries. Just updating your figure; although, I don't necessarily agree with your point.

[jmpurser]

01:00 PM on 02/04/2010

Again, yes we did that TOO.

That doesn't meant he Chinese aren't thieves. The fact that they're stealing from idiots means they might not be stupid thieves.

[thomashusted]

09:02 AM on 02/04/2010

The US government better be careful they may get what their asking for and the outcome would not be very pretty! I guess they want to debase the US$ even more somehow thinking that will produce jobs?? Of course China is the bad guys now for actually producing something of value and saving money while buying US debt/t-bills. They must be getting desperate in wanting to scapegoat China for the US economic problems which were self created in the first place.

[vippy]

08:16 AM on 02/04/2010

Is our government stupid? First they get themselves into this mess and then they want other countries to adjust their currency so we don't look so bad LOL.

[jalaroc]

09:35 AM on 02/04/2010

The chinese yuan (currency) is fixed by the government so that it is always lower than the dollar. this makes exports cheaper and imports more expensive, which protects china's home grown industries and puts OUR manufacturing at a continual disadvantage. If I'm not mistaken, it's also a violation of WTO regulations. If the dollar rises, the yuan may rise, but never more than the dollar, if the dollar sinks, the yuan sinks. This is done to give China a HUGE advantage on the world markets because the dollar is the primary exchange currency, it virtually assures that chinese goods will always be cheaper than any goods produced using U.S. dollars as the means of capitalization. It is also a prmary reason why we have such large trade gaps with China.

[Captai]

09:43 AM on 02/04/2010

Of course you ignore the damage inflicted on the planet by the dollar hegemony resulting from Bretton Woods.

[vippy]

11:23 AM on 02/04/2010

May I ask who forced us to do business with them?

[wizegeye]

11:42 AM on 02/04/2010

Actually, you have it backwards. The US wants China to stop artificially valuing its currency just below the dollar. Instead, the US wants the global market to dictate currency valuation.

[Captai]

08:08 AM on 02/04/2010

China the arch villain again? Sad. So sad. Its never that USA is debasing its own currency by printing so much and monetizing so much more debt. Noooooo. Even sadder is USA's silly idea it has any position to bargain from.

[wizegeye]

11:37 AM on 02/04/2010

China's rising global economic influence and its effects isn't just a problem for the US. A number of other countries are making internal economic decisions based on China's "preferences." Many of these countries, including the US, were instrumental in creating the current environment; but that doesn't mean they shouldn't push back. Take a look at recent events in Australia regarding the government's decision not to increase interest rates in that country. We can debate who's to blame all day long, but we shouldn't ignore China's growing influence and how it effects us. Those who ignore history are doomed to repeat it.

[Captai]

12:32 PM on 02/04/2010

USA in its current version will nt be around much longer. Not because of the Chinese or any other outside influence but because of the decisions USA made and continues to make. USA p/$$ed away its future. Man up and deal with it. Quit blaming the world.