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.
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: Politico.com
Discover Why is China Studying Singapore?
If you want to subscribe to iLook China, there is a “Subscribe” button at the top of the screen in the menu bar.