Forex Blog: Currency Trading News & Analysis.

March 15th 2005

US Manufacturers weary of Chinese Yuan

American manufacturers and labor unions are fed up with the Chinese government’s stubborn refusal to revalue the Yuan, which may be undervalued by as much as 40%. Manufacturers are declaring bankruptcy in droves, unable to compete with their Chinese counterparts, who have the advantage of being able to sell their goods for artificially low prices. This has caused the US trade deficit with China to balloon to $150 Billion. In addition, as many as 3 million manufacturing jobs have been directly lost to China, as firms outsource most of their production to a region where wages are lower. Many American firms have tried to lobby the US government to pressure the Chinese, but to no avail. Apparently, the current administration is afraid of the impact this applied pressure would have on diplomatic relations. There are alternatives, however, as the Miami Herald reports:

Various bills in Congress seek to address the issue. One would require negotiations with China and, if the currency isn’t re-valued, tariffs of 27.5 percent on Chinese goods to make up for the price difference. The China Currency Coalition, a group that includes more than 30 business and labor unions, plans to push for additional legislation on the issue.

Read More: U.S. Manufacturers, unions losing patience with China currency

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Posted by Adam Kritzer | in Chinese Yuan (RMB) | No Comments »

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