There is a Strategic and Economic Dialogue between the United States and China in Beijing starting Monday. So far we have seen the United States wimp out on truly confronting China on currency manipulation. Both Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner are attending.
U.S. and Chinese officials have stressed that the meeting in Beijing will not be dominated by the yuan.
There are some rumblings by Clinton on the economy:
"In the coming days, officials at the highest levels of our two governments will be discussing issues of economic balance and competition," Clinton said in a speech given in a vast hangar at Shanghai airport, referring to the Beijing meeting.
"Transparency in rule making and standard setting, non-discrimination, fair access to sales to private sector and government purchasers alike, the strong enforcement of intellectual property rights are all vitally important in the 21st century global economy," Clinton told the audience of U.S. and Chinese business executives.
"American companies want to compete in China," she said, standing in front of a Boeing 737. "They want to sell goods made by American workers to Chinese consumers with rising income and increasing demand."
Meanwhile CBS MarketWatch reports:
Chinese and U.S. officials have agreed, to the new basket-tracking framework for the yuan, but have yet to work out details such as the size of a potential one-off revaluation, as well as the pace of future gains, Lu said.
Chances of a one-off revaluation, such as the 2.1% rise when Beijing ended its formal peg to the U.S. dollar in July 2005, are unlikely this time, Lu said, although he didn't rule out the idea Beijing could agree to a small concessionary rise.
A basket of currencies? Is this China's agenda to remove the U.S. dollar as a reserve currency? About a year ago, this was a hot topic, so did we get this move with no announcement, indirectly, through Chinese currency re-evaluation?
Check out this op-ed, by Xie Xuren, the China Finance Minster:
A large portion of exports from American companies with direct investment in China has turned into China's trade surplus with the United States. But a significant part of China's trade surplus has become its investment in Treasury bonds and other dollar assets, shoring up the long-term stability of the U.S. economy. This economic relationship is one of mutual benefits.
Right, the two economies are beneficial, so don't mess with us on currency manipulation. We buy up your debt while selling you stuff that used to be made in the United States so you can continue to buy stuff even though we have your industries, jobs and income. Veiled threat by the Finance Minister?
Also, be aware the crash of the Euro is cutting into China's exports. Proof that China's currency manipulation does indeed affect trade balances and why China refuses to float their currency, currently estimated to be anywhere from 22% to 40% undervalued.
the latest is China wants this to be "quiet"
as in a. they aren't going to do anything about their currency manipulation and b. the executive branch should stop Congress from passing an across the board tariff against China for currency manipulation.
China really doesn't need to cheat on their currency ...
Chinese businesses already have so many advantages such as:
- dirt cheap labor
- no social security / medicare tax
- few regulations in terms of pollution and workplace safety (just checkout the dog food, toothpaste, tires, drywall, ... they export to the US).
- few labor rules/rights
- ... and so on ...
No US worker can compete here. That worker would be better off on welfare.
So why then must China also cheat on their currency?
Also, I don't think it's just a coincidence that Hillary Clinton is from Arkansas, WalMart is headquartered in Arkansas, WalMart has profited hugely from outsourcing to China, and it was Bill Clinton that pushed China PNTR through Congress resulting in an avalanche of US outsourcing to China.
China has socialized health care
China has socialized, 100%, universal health care. They have a socialized pension system.
I think, since Hillary is now Secretary of State, you should be looking at the Obama administration and their agenda, not lose ties to Bill as wife, and working as a Walmart lawyer.
Currency manipulation comes in heavily, allowing China's final exports to be priced much more cheaply than what should be in reality.
See 2.4 million jobs lost from 2001-2008, directly attributable to currency manipulation. China also has a dynamic VAT, which they change continually, depending upon market conditions. A VAT, not to be confused with a flat tax, is an at the border adjustment tax. (although a VAT is highly regressive).