The world appears to be divided between nations that have spent too much and those that save.
In China, people that hold onto money are called “Iron Roosters”. In the US, we call people who save stingy or skin flints or other insulting terms. The average saving rate among Chinese is about 40%, while the average family in the US carries several thousand dollars in credit card debt.
According to the Wall Street Journal, the US is among the ‘Have Nots’. In G-20 Deal to Curb China is Weakened, Evan Ramstad and Bob Davis said that “China, Japan and Germany all have surpluses; the U.S. has a deficit.”
However, the US is not alone. “Australia, Canada, Britain and France, all of which have current-account deficits, lined up with the US” to pressure China to let the value of the yuan rise.
The US and other Western nations that have overspent need to export more products to other countries and import less. For this to happen, the US dollar must be worth less than the Chinese yuan to pressure U.S. consumers to stop buying products made in China when prices for those products become higher than what is manufactured in America.
This means that countries with money in the bank want to rely less on exports for growth and more on homegrown demand instead of buying more products from the debt-ridden nations.
Germany’s current account surplus is about 6%, Japan’s 3% and China is at 4.7%. The U.S. is running a 3.2% deficit, which should be no surprise.
It appears that China won this round and will not loosen controls on the value of the yuan yet. The US went into the G-20 summit in South Korea wanting to punish China for US consumer appetites to buy cheap foreign made goods.
Instead, little was accomplished.
It’s all about the national interest of each nation, and China and America have opposing interests.
If America wins, China loses.
In fact, whoever, wins this global currency war will be the stronger for it. The question is, Will the Iron Rooster win or the Buy Now Pay Later nation?
See Democracy’s Economic Roller Coaster
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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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Posted by Lloyd Lofthouse 
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