The American Assault on China’s Currency

For weeks, I’ve been watching the brouhaha about China manipulating its currency and taking jobs from Americans.

The truth is those jobs were lost due to American Wall Street banking greed. After all, China’s currency policies have been around for decades. The housing bubble burst in 2008. Without the economic collapse, many of those lost American jobs would still be there in spite of what China does with its currency.

It’s always interesting to watch politicians and pundits play to the mob. Looking for a scapegoat to the truth, Senator Charles Schumar (D-NY) leads 130 other lawmakers who want to punish China, and Tristan Yates wrote at Pajamas Media that America’s Socialists are bulling China’s socialists.

People Protesting

On April 13, Obama reacted to the pressure by saying it’s in China’s interest to let the market determine the value of the yuan, but he also said he would not hold Beijing to a deadline for action. “I have no timetable,” Obama said at a press conference following a nuclear summit. Source: Market Watch

Since I’ve traveled to China often and love the buying power my American dollars have when I convert them into yuan, I’m not going to follow the mob demanding currency changes in China. Prices for most essential goods in China are low allowing those living near the poverty level a means to survive.

If China caves in to these demands, what we are looking at would be a reevaluation of the yuan so the exchange rate would be 5 to 1 instead of 7 to 1— a small change for the world but a huge impact for more than a billion people.

China has kept the exchange rate steady for years. If China’s currency controls were lifted and prices shot out of control, many in China might starve. For sure, there would be more unrest and riots, and China’s government doesn’t like that.  What government would? I’m sure President Obama is not happy about the Tea Bag people running around shouting slogans about big government and so called Obamacare.

In China, “Thousands of workers have lost their jobs and many have taken to the streets to demand unpaid wages.… Street protests and demonstrations at local government offices have been a daily occurrence in many townships in the region… More such protests are on the cards in coming weeks and months.” Source: Green Left

If push comes to shove, who do you think China will attempt to appease—some overweight, out-of-work American several thousand miles away or tens of thousands of Chinese workers who also lost jobs and have families to feed and rent to pay? I guess it depends on how far a rock can fly.

The real reason behind bashing China over currency is politics.  Many Americans unjustly blame China for jobs lost in the US. Although China’s currency policies may be partially to blame, America’s high level of consumption leading to high consumer debt, deficit spending and protectionism is also to blame. Source:

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Lloyd Lofthouse is the award-winning author of the concubine saga, My Splendid Concubine & Our Hart. When you love a Chinese woman, you marry her family and culture too.

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6 Responses to The American Assault on China’s Currency

  1. I appreciate the thoughtful reply.

  2. Lloyd – thanks for the article mention, much appreciated. Administration analysis aside, my own view is the USA should not trade with China because it legitimizes the Chinese government. I certainly understand that there are others who want to stop trading or impose tariffs on China for specious economic reasons. I’m not sure what can be written on this blog, but let me just say that I read the reprinted HRW letter in the Washington Post just before the Olympics and it had a profound affect on my thinking about China engagement.

    • Tristan,

      From what I’ve been learning, it would appear that China and the United States are so intertwined at this point, to stop trading with China would require that the American Government pass a law that would force the private sector to get out and that would have catostrophic consequences that would shake the globe. GM would probably collapse. They are selling more cars in China than the US and making a nice profit. Even if GM went out of business in the states, they could continue to operate in China since they have assembly lines there. Wal-Mart would crash and burn–maybe not a bad idea. McDonald’s, Starbucks, Pizza Hut, KFC, etc would all lose revenue. McDonald’s has almost 2,000 outlets in China. However, if that did happen, the Chienese would probably be healthir for it so maybe that would be good too.

      Since 300 million Chinese smoke, American cigarette compaines are making most of their profits over there. Another bad thing, so I wonder who really is the beast here.

      When they say American compaines buy 300 billion in products from China, all of that money does not go to China. A good chunk of that money stays in the states. The buying company makes a profit. The longshoreman in our ports that unload it get paid good money and the list goes on. The money spreads out over the supply chain.

      America wouldn’t be able to use high tech weapons to wage wars. China is the only nation on the earth that refines the rare earth elements that it takes to make these weapons work. China also is the only source for the rare elements that go into hybrid car batterires. No other nation has invested in the industry necessary to refine these elements and the list goes on. Although Apple has manufacturing plants scattered around the world and in the US, they say that most of their products are assembled in China.

      Then China buys about 80 billion in products from the United States. In addition, China supported the United States from an economic collapse by buying hundreds of billions of Treasury Notes so the US had the money to keep the economy going without printing empty money. China cannot afford the US to go under and the US cannot afford to break the business ties that now bind our two nations together.

  3. Quite so.
    The US should stop trying to blame the rest of the world for it’s own problems and start realising that many of the problems the rest of the world faces are due to things that happen in the US.
    Sure every country/government makes mistakes, but the US never seems to take responsibility for its own actions.
    Let he who is without sin cast the first stone.

    • To Honorary New Wife (I think that’s what it says — correct me if I’m wrong)

      It isn’t just the country that doesn’t appear to accept blame for its actions. When students fail or do poorly in school, parents seldom accept the blame. It’s the teacher’s fault. I taught English for thirty years and journalism for seven in the public schools. Each day, I had five classes for about one hour a class. Since I taught high school, every student that came into my class had spent about ten years in school and had around 50 teachers by the time I got them but they had the same parent/s since birth.

      Yet, when a student that arrived in high school reading below third grade level couldn’t work in an on-grade level textbook and failed, it was the teacher’s fault—not the parents. I never heard a parent accept the blame. I did have parents (several times) remove their kids (who usually didn’t do the reading assignments, do the “homework” and earned a FAILING grade in my class) from my classroom to another teacher who would “give” their child a high passing grade without any change in the child’s study habits. After all, it was my fault as the teacher that their child wasn’t learning.

      Only once did parents request their child go into my classroom. These parents home taught their son for his first nine years in school and when he entered high school, they asked the counselor to place him with the most demanding, toughest teacher on campus. Then they came at my invitation and sat in the back to see what kind of a teacher I was. Satisfied, they left their son with me. Four years later, he was the editor for the school paper and went on to be an anchor for one of the big network TV stations in Southern California.

  4. […] This post was mentioned on Twitter by Lloyd Lofthouse. Lloyd Lofthouse said: The American Assault on China's Currency: […]

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