The US-Sino currency battle is on (again!)
The US-Sino currency battle is on (again!).
On Monday, the US Senate voted to engage in a week-long debate on China’s currency, the renminbi. The vote passed 79-19 in a rare show of bi-partisanship because, hey, if there’s one thing we can all agree on, it’s that foreigners are to blame for America’s problems.
The focus of this talk shop is whether China artificially suppresses the value of its currency (ANSWER: Yes) and whether the US can or should do anything about it (ANSWER: Fat Chance).
You see, the US can threaten to impose punitive tariffs on Chinese exports all it wants. But are you really going to piss off a major buyer of US Treasuries, which you so desperately need to sell to finance your burgeoning budget deficits?
No need to answer, Uncle Sam. That was a rhetorical question.
China has allowed its currency to strengthen 7% since 2010 in an orderly revaluation, but it’s not going to subject the renminbi to market forces overnight because it’s worried about social unrest (and thus the Communist Party’s hold on power) should inflation or unemployment get out of hand.
You don’t need to be US-Sino relationships expert to understand all this. But what do we know? We’re just animators from Taiwan. Watch the video.