Obama says China must stop manipulating currency

[Snazzy]

Source: Reuters

Obama says China must stop manipulating currency
Wed Oct 29, 2008 4:53pm EDT
By Doug Palmer

WASHINGTON (Reuters) - China's huge trade surplus with the United States is "directly related to its manipulation of its currency's value," Democratic presidential candidate Barack Obama said in a letter released on Wednesday.

The blunt statement from the frontrunner heading into next week's U.S. election follows years of Bush administration refusal to label China as a currency manipulator.

It came in a letter to a U.S. textile group concerned about a surge in clothing imports from China when quotas negotiated by the Bush administration expire at the end of the year.

"China must change its policies, including its foreign exchange policies, so that it relies less on exports and more on domestic demand for its growth," Obama said in a letter to the National Council of Textile Organizations.

....



Read more: http://www.reuters.com/article/politicsNews/idUSTRE49S7FQ20081029

[dipsydoodle]

1. That will fall on deaf ears

in China.

Out of curiousity exactly who is that MAKES you buy Chinese goods in the USA ?

[Heywood J]

4. The fact that in most places and categories of goods

they're now the only items for sale.

[dipsydoodle]

5. If that were ttrue

then the same would also apply to the UK and Europe too and the fact is it doesn't apply.

[Snazzy]

10. Not sure if there is a UK version of Walmart

But that's certainly part of the problem, the big box stores. They force the choice right out of many markets.

Then add to that the notion that outsourcing everything under the sun is good, decent and what being a modern capitalist is all about. We have outsourced manufacturing significantly to China (and service to India). Leaves me often wondering what the US actually does, and that notion despite some 25 years of business for me.

(I have come to the conclusion recently that we manufacture financial bubbles, my best answer so far).

As a frequent tech buyer, I find it nearly impossible to buy things that don't have components from China--that must be true everywhere. Books have been written on how difficult it is to not buy China, although again from a US perspective I suppose.

Maybe you have an easier access to non-China products in UK, not sure. For the record, I note that I am still wearing two shirts I bought in Manchester maybe 15 years ago, long past the moment where US versions would fail to my modest laundry techniques. Perhaps you maintain a durable stock in durable goods.

[dipsydoodle]

12. UK's Walmart is Asda

which is a supermarket chain. There are other competing alternative chains too. In general our supermarkets don't carry the range of goods that one of your Walmarts would stock and certainly not as in the last Walmart I was in 6 years ago in KY. Everything in the EU which isn't produced here needs to show country of origin on the label - not sure if the same applies to the USA. Since you mention tee's or shirts I just looked at some Hanes Heavies I bought last week and they seem to be EU.

Sometimes I appreciate there's no choice left at all. I have numerous pairs of Jack Purcells for dancing - no tread at all so easy on which to bond chromed suede. They are only made in China these days.

The background to all this is bottom line profits for corporations. In theory most of the stuff out of China should be substantially cheaper rather than just the bit less that it is. The corporations take advantage of reduced labour costs overseas and then don't really pass those savings on.

And yes I agree in what you said about "financial bubbles" :hi:

[Snazzy]

14. country of origin for food just started last month

It has yet to become predominant in my area. No clue where my food comes from and they won't tell me. I suppose I could sue. Durable goods seem to have been labeled for most of my life, not sure what the authority is for that or how it works.

Emblematic for me are Levi's jeans, once a prized enticement for our cold war enemies for the quality of the "free" market (and nearly as symbolic as the statue of liberty); made in China since 2004.

The system is deep down broken. Wallstreet sucks out workman's pride (and non-financial jobs for that matter). But sticking to Levi's, what a horrible decision that I expect will fail them in the long run. Ship it to China and no unions, no concern for industrial environmental impact and so on. Short term gains for eventual suffering.

Globalize competitively on an even keel. Or don't. I'm happy to pay more for American products (or any quality products). I'm not alone in that, but the Wallstreet sentiment is cheap products can somehow bring massive returns. I suppose that only works when you have no choice.

Meanwhile Chinese stuff keeps showing up. I've got a magnifying lamp I mentioned I needed at a party. Someone bought me one, China. Transformer just dieing to 'splode and burn the place down. But hey, it costs $2 less than the product we used to make here, and the house hasn't burnt down yet. It's like a bubble, see.

[JVS]

13. Tesco

And a lot of the shit there is not from the UK or Western Europe either. Polish goods are common.

[dipsydoodle]

17. I know Tescos are similar

but Walmarts actually own Asda which they bought a few years back.

Poland might not be regarded by some as classic western europe but its been an EU member since 2004.

[snappyturtle]

2. Good. K&R

[progressive_realist]

3. Well, I can't fault Obama in particular, but this idea is stupid.

It's a popular accusation from both the right and the left, but it's utter rubbish. There is no international law restricting how countries set their exchange rates. China is a sovereign nation and can do whatever it wants with its exchange rates. They aren't "cheating"; the USA just complains because the exchange rate mechanism China chooses to use doesn't favor us. Every country, including the USA, manipulates the value of its currency in various ways to meet policy goals.

[dantyrant]

8. Exactly.

Notice that our politicians are making this accusation as the G7 does everything in its power to plunge down the yen. It's absurd. China may have all sorts of economic problems right now, but its currency and financial system don't appear to be among them.

We need a more constructive dialog with the Chinese. This sort of hypocrisy isn't wearing well anymore.

[olddad56]

9. Bush has manipulated our currency so that it will soon be worthless..

that is how our government will be able to pay off our debt to China. In highly inflated US dollars.

[dantyrant]

11. Absolutely...

The Republicans, who have a very limited grasp of economics in the real world, believe that by devaluing the dollar we can gain long-term competitive advantage over the Chinese. Unfortunately, that's never worked in history -- those who try to inflate away debt are in for a world of pain.

[goforit]

15. Bada bing!!! Yep, it is the Bush's that have been anti-dollar/anti-American!

[amandabeech]

16. China must live up to its ascension agreements to the WTO.

Those agreements dictate what it can and cannot do without running into trouble, at least theoretically.

I believe that by now, China is supposed to be floating its currency, which it has not and probably will not unless everyone else decides to take action to force compliance.

Nice try, chump.

[progressive_realist]

18. The WTO has authority over exchange rate policies? Really?

There's no need for name-calling, but the fact is currency policies are almost entirely up to individual countries. The markets can push weaker countries to change exchange rate pegs when they have become unsustainable, but as of right now, the U.S., Japan, and China can basically do whatever they want without fear of repercussions.

If you have a link that shows China has some sort of international obligation to abandon the managed float of its currency, I would love to see it.

[amandabeech]

19. I'm too busy with volunteering for Obama to ready carefully the WTO rules

and that agreement, but I followed those negotiations carefully, and, yes, the currency issue was huge.

No need for name-calling, but unless you can back up your assertion with satisfactory sources I'm not changing my mind.

[kurt_cagle]

6. Chinese Currency Manipulation

Unlike most other countries, China does not "float" its currency. Instead, it pegs the currency to the US Dollar, with only a very minor variation (it's ostensible "float"). This means that for export purposes, the Chinese can take advantage of low-wage workers to produce products at a considerable markdown to what can produced anywhere else in the world. Bush periodically would rattle the cages of China in order to score political points, but Walmart and others liked them had no desire to see their cheap source of goods (and indirectly labour) compromised. This process is called dumping, and it can be truly disruptive to economies, because it causes both primary and secondary manufacturing in the dumped economy to dry up (which is precisely what has happened in the US).

Had China let it's currency truly float, it would probably be at or around the value of the Yen right now, making Chinese goods much less competitive abroad, and in all likelihood it would have meant that the latest financial crisis would have been nipped in the bud (the Chinese also used the favorable rate of exchange to purchase treasure bills, which of course were worth a great deal in terms of helping to boost the Chinese economy in the 1990s through today.

Letting the Remninbi float does not necessarily make a lot of sense to the Chinese, however, and it is one of those things that mixes sound business and political decisions. However, for the US, the only alternatives are ones that would have been unpalatable for a Republican administration (or possibly even a centrist Democratic one) - raising tariffs against China on imported goods. At this stage, however, Obama may be fairly sorely challenged to implement such, even though it makes a certain degree of sense ... the US has to rebuild its manufacturing and production capabilities, and it won't do it as long as the Chinese can supply goods for less.

[BunkerHill24]

7. Obama is right about this....

China manipulates it's currency in order to gain unfair trade advantages...and that's hurting America's manufacturing sector. Obama is right.