Wednesday, October 12, 2011

Protectionism? A Sign of Things to Come?

US Tries To Pressure China On Yuan

Okay the Bill will probably fail at the next stage, but the fact the US is l=leaning this way is interesting. The US Senate has voted through a bill that aims to aims to put pressure on China to increase the value of its currency, the yuan. Some lawmakers argue that the Chinese yuan has been kept artificially undervalued, giving the country an unfair advantage and hitting US jobs. The legislation passed the Democrat-led Senate 63-35, putting it through to the House of Representatives. However, the bill is unlikely to be passed by the House.

Posted by fubar @ 11:46 AM (1287 views)
Please complete the required fields.



6 thoughts on “Protectionism? A Sign of Things to Come?

  • mark wadsworth says:

    As a brighter mind than mine once pointed out, the Americans are totally schizophrenic on this. The Chinese depress the value of the Yuan by exporting stuff to the USA, and instead of demanding payment in USD and converting USD to Yuan (which would push up yuan and push down dollar), they recycle those dollars by buying Treasury bonds (they own about fifteen per cent of US treasury bonds, I believe).

    So

    a) some parts of the US government say “We need to issue and sell bonds, we want the Chinese to buy them (this keeps US interest rates down)” and

    b) other parts say “We want the Chinese to allow Yuan to value upwards (in other words, we want the Chinese to stop buying and possibly start selling US bonds)”.

    Reply
    Please complete the required fields.



  • The yanks are also spectacularly ignorant when it comes to understanding the Chinese mindset..

    ..if you want to get the Chinese to do something, the last thing you should try to do is bully them.

    When one of my Chinese suppliers screws up, I never tell them that – I always say I think the factory/designer/component supplier – always some other party.. – has made a bad mistake..

    To that they will readily agree and make amends. However, if you tell them directly that they have screwed up, they will argue that black is white rather than lose face and admit an error.

    As far as the value of the Yuan is concerned, the Americans should make warm noises about the Chinese economy coming of age, and to express hope that the Chinese will fully engage in the global financial markets, and help stabilise them.

    They should hold high profile meetings to showcase American exporters to China, such as Boeing, Deere & Caterpillar; and to drop broad hints that a more favourable exchange rate would benefit both nations.

    – But they must not talk down to the Chinese, or attempt to boss them around..

    Reply
    Please complete the required fields.



  • general congreve says:

    @1 – Completely accurate assessment of the situation. Shows what a debt-loaded corner they’ve backed themselves into. ‘Go left, no, go right, no, go left, no, go right, no, go left, no, go right etc. etc.’

    Reply
    Please complete the required fields.



  • general congreve says:

    @2 – Excellent post UT.

    Reply
    Please complete the required fields.



  • stillthinking says:

    Umm….
    At the moment the US government is basically distributing Chinese goods for votes. Thats what recycling dollars into treasuries means. The whole affair is in the hands of the US already so any idea of “pressuring the Chinese” is without foundation.

    Should the US government start accepting the idea of a fiscally responsible government and move towards a balanced budget, then those Chinese dollars can no longer be recycled into/soaked up by US treasuries and the dollar will drop and the yuan will rise.

    To get those Chinese dollars moving you have to deny them a safe home.

    Reply
    Please complete the required fields.



  • They could probably say the same thing about the GBP.

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>