Countering Chinese Mercantilism

Chinese mercantilism, centered on currency manipulation, is a fraught, even taboo topic. It provokes intense arguments related to free trade, as well as uncomfortable recognition of America’s new interdependence with —or dependence on—China. Yet the issue is vital for understanding U.S. economic performance. Neither the Bush nor Obama administrations worried much about China’s intervention in support of its trade advantage, but in the 2016 election, trade issues and the collapse in U.S. manufacturing employment figured prominently.

Economists estimate that China’s currency was undervalued against the dollar by 30 percent from 2003 to 2013. By intervening massively in currency markets—up to $2 billion a day in 2007—China kept the yuan priced artificially low.  This was tantamount to a form of mercantilism—intensive government intercession in support of maintaining a trade surplus—using a cheapened currency, which achieves an attractive price for export goods while keeping prices high for imports. Though many argue about Beijing’s actual motives, China ran a trade surplus at nearly 10 percent of GDP, while the U.S. floundered during the financial crisis.

Source: for MORE

This entry was posted in Features by OyiaBrown. Bookmark the permalink.

About OyiaBrown

Please send me, as a comment to this page, any old material you have for inclusion in The Daily Joke Alert - to help enable us all to have our fancy tickled regularly! Never mind the state it's in as I tidy everything up prior to publication. Don't let good material go to waste - and so much does. In the interests of the environment we should always try to re-cycle everything, especially jokes. You know that makes sense! You may find some historical stuff here, but this does not really matter as humor is fairly timeless.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s