Currentlyone of the big issues out there is White House intends to force the appreciationof Chinese currency (RMB). But there’s concern that this practice mayviolate international trade rules.
According to the report, "WhiteHouse spokesman Carney in the regular press conference that theWhite House on the RMB exchange rate have concerns that the yuan needs toappreciate, but the Senate feel for the motion of the RMB exchange rateconcerns, worry will bring and the US do not conform to the internationalresponsibility of the problem. Carneysaid the White House has been to communicate with the parliamentary motion,identify any measures needed to meet the United States’ internationalobligations.
Senate vote afterthe announcement, the Chinese government immediately expressed strongopposition, the proposal emphasized the so-called “currency imbalance” as anexcuse to further upgrade the exchange rate, protectionist measures, a seriousbreach of WTO rules, China-US economic and trade relations seriously interfere.
U.S. Republicanleaders, House Speaker John Boehner 4 also stressed that legislation throughCongress to force other countries to deal with currency issues are verydangerous, not only much higher than the Congressional mandate, and results arequestionable. "
I don’t likepolitics, so I don’t want to talk about it, but I still want to express myopinion regarding the ethic and international trade point of view.
First, let’s havea hypothetical example. Party A is inbig financial trouble, so asked Party B to loan a lot of money to him. ThenParty B said, “You know what, the money you loaned me worth more than its facevalue, so I’m going to pay you back less. You get the same value anyway; and if you don’t agree with my decision,I’m going to force you.” If this is betweentwo people, any reasonable person will say it’s not ethical. If this is between two trading companies, anyjudge will rule the debtor has no right to do so; how come when it comes to twocountries, this is even an issue? If it were China borrowed so much money fromAmerica, will America agree with such a decision? I doubt it!
Internationally,people are already losing faith in US economy as a whole. Earlier in August, we were worried that US wasgoing to default. Devalue USD is not amean of default? How other countries aregoing to look at US as a country as far as the integrity goes? US governmentbond is really even worth AAA-? I don’twant to offend anybody, and I’m saying this is not because I’m a Chinese; I’m justsaying something that’s common sense.
Second,appreciate RMB means USD is going to keep losing value. USD to RMB has already gone from 100: 830 to100: 600 in a matter of just a few years. People here do not see the inflation in China. For example, a person makes 2000 RMB a month,but a 2010 Buick SUV costs about 500,000 RMB before tax. How many years a person is able to own acar? 20 years without eating anddrinking and saving every penny. If anAmerica earns 2000 USD a month, and the same car here costs $50,000, under thesame condition, it will only takes 2 years. My question is: is China really rich? How many percentage of RMB’s valueis actually bubble? Can they afford tokeep appreciating it more?
If USD declinesmore, then the next thing we’re going to see is the jacked up price in thegrocery store and everywhere else. It’strue that it will encourage the export, but US has more weight on the import thanexport, which means we’re going to pay more to import, and all the overseascosts, like the military.
Just my twocents, above solely represents my personal opinion, University of Maine hasnothing to do with it, thus, a disclaimer.
