China’s Currency Manipulation Destroys USA Industry
September 25th, 2009
The media oversimplifies the trade issue between the USA and China by pointing to American wages, but there are other factors at play that are at least as important. For example, China has manipulated its currency, the Yuan, for years setting it at an artificially low rate that gives its manufacturers a huge advantage when exporting to the USA.
This has been a big year for our dollar to weaken against global currencies, like the European Euro. The exception, which is mathematically impossible if currencies were allowed to float appropriately, is the Chinese Yuan. On January 1st 2009, the Yuan was at 6.83 against the dollar, the Euro was at .72. Now the Euro is roughly at .67, meaning its goods have become 4% more expensive against American-made products. For example, if BMW wants to make a car in Germany and ship it to the USA, in just this past year it would have to raise its prices by 4% just to stay even with relative currency changes due to the weakened state of America’s economy. The Chinese Yuan is now where? One would expect that with their massive trade surplus shipping to the USA their currency should strengthen significantly. However, it is still at exactly at 6.83 Yuan to one dollar! What are the odds!
This flagrant manipulation has their currency undervalued by at least 40%. So what? Some news sources were indicating recently with the tire tariff that the actual amount Chinese tire makers were undercutting the market was by 19%, sufficient to close many American tire plants force the layoff of thousands of workers – yet that difference was less than half amount the value currency manipulation. If China were fairly allowing its currency to float, its tires would have cost approximately 20% MORE than tires produced here in the USA.
No nation that allows flagrant currency manipulation should be allowed in the World Trade Organization or access to world markets. China is building up its own industry at the expense of the world, and jobs not just here in the USA, but around the globe. We simplistically talk about free trade, but ignore facts like there cannot be free trade where there is not free currency exchange. China is playing the game to win and we need to wake up.
Todd Lipscomb
Founder of MadeinUSAForever.com a source for products made in the USA
Friday, September 25th, 2009 at 6:14 amand is filed under Uncategorized.
You can follow any responses to this entry through the RSS 2.0 feed.
You can leave a response, or trackback from your own site.
Hear, hear!
Nice article.
How about a listing of American made tires?
I can send you some information on how to know if your tire was made in the USA.
To JimE85 i would like this info and with your permission i will share it and ihave about 100 close relatives ,i think we should make sime inch and a half stencils and paint it on china made tires that they sneak on our cars;mine were so bad i threw them in the recycle at 23000 miles and i can tell you i share this with everone i can