I don’t know what I think about the issue that Lindsey Graham keeps going on about:
Graham Responds to Chinese Government Criticism of Senate on Vote over Currency Manipulation
WASHINGTON – U.S. Senator Lindsey Graham (R-South Carolina) made this statement in response to criticism from the Chinese government’s Central Bank, Foreign Ministry and Ministry of Commerce over Senate legislation to crack down on Chinese currency manipulation. (Articles below.)
Last night, the Senate voted to proceed to debate on legislation cracking down on Chinese currency manipulation. The procedural vote was 79-19. The Senate continues to debate the legislation today.
Graham said:
“China’s threats to the United States Senate should fall on deaf ears. We should be examining their business practices, not their rhetoric. China should be rewarded and engaged when they play fair and we should push back when they continue to cheat.
“The Chinese government’s criticism of our efforts to bring about long-overdue currency reform is ill-advised. We all want a healthy trading relationship with China, but their business practices – from intellectual property theft to currency manipulation, has created an unhealthy business relationship.
“China’s pegging of the yuan to the dollar and keeping it consistently undervalued continues to create a competitive advantage for the Chinese. China has too big of an economy to allow them to continue creating an unfair trade advantage. Chinese currency manipulation has resulted in 2 million jobs being lost in the United States and over 40,000 in South Carolina. China must stop cheating.”
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How would I know? Like I’m an international currency expert or something.
I know what my gut reaction is — to be mad at the Chinese for being all unfair to us and everything. But what does my gut know about fair currency policy?
From what I hear, what they do is fairly standard practice for developing economies. And they DO have a developing economy — a humongous, planet-eating developing economy, but still…
That’s it. I just exhausted by expertise on this.
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OK, here’s one to prime the pump…
Over on Twitter, Chris Haire of Charleston City Paper had this to say about my post:
” I don’t know WHAT I think about the ‘Chinese currency manipulation’ thing … um, It’s a better album than ‘Chinese Democracy'”
Can’t argue with that. Although I think the second side is uneven…
It’s serious business, just as selling goods extra-cheaply overseas to corner the market is — it’s unfair.
Just because you’d rather figure out your top baseball movies doesn’t excuse a serious news-person from applying himself.
Just sayin’
Lindsey’s right on this one!
It’s not like we didn’t do it for 150 years…
This will end when George Soros figures out how to break the buck connection. Until then, it’s not like the US can do more than whine. Or engage China in an arms race…yeah, that would work. Hmmm
Graham sounds like a spoiled brat when he talks about playing fair. Whaaaaaa! They’re just not fair. I’m going to tell mommy. Much whinning about very little. The Chinese have lent us trillions to fight useless wars all over the world. Let’s get that part of the equation right before we start with minor distractions like the Chinese currency.
I think Sen. Lindsay is right about this one, but there’s nothing he/we can do about it. Let’s tend to those things we can make better.
Mind if an economist offers some information? The Chinese economy is undergoing a period of rapid growth and they are managing their internal rate of inflation to maintain price stability for domestic reasons. The ripple effects is that they also export lots of stuff to other countries at below equilibrium prices. To the Chinese their domestic population is more important than us. Not an unexpected response.
Now do we really want to pick a food fight with the nation that supports our debt? Second do we want to start a trade war? I don’t think so.
I believe it is prudent and responsible for the US gov’t to continue to talk to the Chinese about other techniques of managing domestic price inflation. But they are a big and dis-coordinated economy and its easier said than done.
What the economist said…
See, I actually have thought about this more than Kathryn thinks. I actually am aware of the considerations to which our economist friend refers. Which is why I’m not entirely ready to go with my Mom-and-apple-pie, All-American gut on this…
… which, as you know, is the kind of gut I have…
The only way to manage international relations is the asymmetric response; just as in personal relations.
Head to head is just conflict generating. The answer lies in redrawing the situation. There is never one reality. Too many make that mistake and see only their own perspective.
Not sure I follow Lynn. If the Chinese keep their currency at below equilibrium rate wouldn’t that tend to drive up the cost of imports and hence reduce competition thereby increasing prices? It would help their businesses sell more abroad but that would do nothing to manage inflation since there would be less stuff to sell at home along with less foreign competition. At least that’s the way I see it. This is a very complicated situation and Lindsey should probably just let the experts figure it out. Cheap Chinese goods cut both ways.
Don’t we have enough repression in this country without seeking out foreign countries to bash. Now the feds are going to crack down on marijuana dispenseries in California. My God when will the madness of the failed drug war end?
From USA Today:
http://content.usatoday.com/communities/ondeadline/post/2011/10/feds-order-all-calif-medical-marijuana-outlets-to-close/1
Bud: to understand how nations manage domestic inflation think about currency as if it were a good. The Chinese aren’t allowing their currency to fluctuate in value against the international currency the dollar. This means the Chinese don’t have to create (print)more money (inflation). What they are doing is exporting cheap goods and but not exporting cheap money. Lynn
When you go against equilibrium, as the Chinese have chosen to do, that can only work so long. Ultimately they’re going to have to accept high inflation, low standard of living or some combination. Equilibrium will prevail, one way or the other.