The Informed Reader - Why a Yuan Revaluation Wouldn’t Help the U.S.. some interesting points on how a cheaper chinese yuan might not even help US manufacturing.
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this post was added on thursday december 20th 2007 around 3pm. it was added to the link category and was tagged: business, china, economy, usa
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China’s main competitor on light manufacturing is not the US, but other country in south Asia such as Vietnam, Bangladesh, Pakistan and Turkey. As heavy manufacturing goes, China is exiting that market altogether as they switch from a net exporter to a net importer due to demand and decreasing government subsidy because of energy cost. A Yuan revaluation now would actually screw us big time by adding the expense to those who are paying for sub prime mortgages, adding inflationary pressure thus taking away one key instrument of the fed as they can’t cut rate on a high inflation economy, adding the possibility for a recession. I don’t think it’s a good thing, esp right now. “China” is just an easy target that the public understand.
Just like the Chinese toy incident. When 90% of the toy comes from China, of course 90% of the problem is going to come from China. Many of the problem was due to design flaw and not lack of manufacturing standard. But it makes the news easy to understand when it’s titled “another China problem”