From Bloomberg:
Obama can't serious think that China would revalue its currency to accommodate America's wishes. No, China has its own problems to be worrying about.Jan. 28 (Bloomberg) -- China took Barack Obama’s views on the yuan seriously. So seriously that it is doing the exact opposite of what the U.S. president would like.
China let the yuan fall the most in a month on Jan. 23, right after Timothy Geithner, Obama’s pick for Treasury secretary, relayed Obama’s campaign position that China was “manipulating” its currency. The reaction was China’s way of telling the new U.S. leader what he can do with his foreign-exchange views.
What should currency traders do now? Is a trade war brewing between the world’s No. 1 and No. 3 economies? Is the yuan about to strengthen? Will Obama risk the ire of the most populous nation to make good on his protectionist campaign-trail rhetoric? Perhaps the answer is for everyone to relax.
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Obama's rhetoric surely is in preparation for the protectionism he's about to implement.
I can't quite comprehend why he, or any American consumer, has problems with China's manufacturing. I understand that a young Chinese boy or girl is assembling the products instead of an American man or woman. But America doesn't want to pay a lot of money for cheap goods. Americans thoroughly enjoy Walmart's shelves being full of cheap products made by the Chinese.
America cannot have it both ways. I'm going to get a kick out of the sky-rocketing prices that Obama is going to try to fight after he enacts his protectionist policies.
I suppose in the long run that getting cheap crap to be more expensive will help ween America off its addiction to consumption. That would be a good thing.
But I can't imagine the coming protectionism fulfilling its intended purpose: creating more American manufacturing jobs.
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You know what trade policies I'd like to see to help the US economy? Some basic respect from the Chinese when it comes to enforcing intellectual property rights.
The millions of Chinese people (and foreign visitors ;) ) who buy and sell counterfeit movies, music and video games cost the American economy billions of dollars each year.
China can't have it both ways, either - they want the benefits of unfettered access to other countries' markets without costs of having to pay a fair price for their own imported goods.
Here's an article supporting you view, Pat:
http://business.timesonline.co.uk/tol/business/economics/article5606308.ece
I agree with Pat. I think its helpful to mention how it costs the economy money though which I don't think is often emphasized enough. Most of the people buying fake $15 Nike's instead of $100 ones might not actually have gone out and purchased the authentic versions so in that sense it's not directly costing Nike that amount of money, but it is tarnishing their brand by a presumably lower quality and possibly less aesthetically pleasing copy.
Also, it hurts innovation; why exert the blood, sweat and tears to come up with new features if they will just be immediately copied? It really hurts those who invest in research and development.
The most serious intellectual property example (which doesn't apply as much to China since they'd rather use herbs) is prescription drugs, a good debate that will continue to be in the forefront with Canada, India (massive Generic manufacturers), Africa (AIDs drugs), etc. How does one reward intellectual effort and yet also provide reasonable access? In Africa I think the drug manufacturers have done pretty well with the AIDs meds. It does bother me that an Indian company can just copy a chemical formula that took hundreds of people 10 years and countless trials and risk to bring to market with countless failures in order to get to that point.
Oh, and as far as currency. If it was gold based non-fiat, neither of them would have any power to do anything. They couldn't manipulate it, couldn't artificially inflate it, etc.
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