Saturday, October 8, 2011
The Tense Relationship
The United States and China have had a tense relationship for years. The Senate recently passed a bill that would penalize countries that manipulate currencies. The Yuan has been manipulated for years by the Chinese Government. It would make the United States levy taxes and other penalties aganist China. The Government is now focusing on China because lawmakers are worried about the United States' economy and the role in the elections. This is a major issue for manufactoring states that would be helped by the stopping of the manipulaction of the Yuan because they could sell more products. I think that it is not fair to the United States that China's munipulation of the yuan affects United States manufactoring and our imports. The yuan should not be manipulated.
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2 comments:
If the Senate passed a bill then it should not longer be a problem--seeing that the bill was put in place to "penalize countries that manipulate currencies." A year ago, however the manipulation of the yuan as a political issue was inevitable. In addition to this being a major issue for manufacturing states, I think it is also an issue for Obama and his pursuit to create jobs in order to win re-election in 2012. I also think that this issue goes both ways, in being that the US also manipulates currency. In my opinion, for example-- I think Ben Barnanke believes money grows on trees.
I think we need to consider the numerous possible repercussions that may come from passing this bill. Do we really want a strained relationship with China?
Tariffs on imported Chinese goods are more harmful than beneficial to the American society in that an imposed tariff will increase prices. And from the looks of it, many Americans won't be able to handle such price increases.
Moreover, a increase in the value of the RMB will not create/open up as many jobs as believed. The production of items that has components made in China will be more expensive due to this increase, driving up production costs. As a result, this will cause layoffs in attempts to balance out the production costs.
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