Forex Blog: Currency Trading News & Analysis.

June 1st 2005

US pressure on China is misguided

The US continues to pressure to China to revalue the Yuan, but to no avail.  Politicians spew protectionist rhetoric and cite the millions of jobs ‘lost’ to China because of its artificially cheap currency. Not all Americans, however, are pushing for revaluation. One think tank has observed that most of the pressure and propaganda originates from powerful lobbying groups, which represent American businesses losing market share to Chinese firms. Unfortunately, American consumers are not represented by equally powerful lobbying groups, which could potentially extol the virtues of an artificially cheap Yuan, which keeps prices low and inflation in check. Perhaps, after the Yuan is revalued and prices begin to rise (at Wal-Mart), politicians will recognize the fallacies in their politics. The Independence Institute Reports:

Government interference in the international marketplace can ultimately lead to a trade war among nations. In the 1930s, the Smoot-Hawley legislation that increased tariffs in the United States was followed by retaliation from other nations.   

Read More: Avoid Threatening China Over Its Currency 

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Posted by Adam Kritzer | in Chinese Yuan (RMB), Politics & Policy | No Comments »

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