China Continues to Subsidize Lower Prices for Consumers
Turning aside growing congressional anger over low everyday prices, President George W. Bush's
administration today will reject demands that it formally accuse
Beijing of subsidizing lower prices for U.S. consumers.With U.S. lawmakers gearing up to punish China for using Chinese funds to subsidize low U.S. consumer prices, Treasury
Secretary Henry Paulson is expected to use a semiannual currency
report, to be released today, to reinforce his calls for Beijing to
allow prices in the U.S. to rise faster....
OK, I confess I fibbed a bit. The actual article reads:
Turning aside growing congressional anger over the
U.S. trade deficit with China, President George W. Bush's
administration today will reject demands that it formally accuse
Beijing of "manipulating" its currency to give Chinese companies an
edge over American businesses.With U.S. lawmakers gearing up to punish China for
keeping the yuan artificially weak against the dollar, Treasury
Secretary Henry Paulson is expected to use a semiannual currency
report, to be released today, to reinforce his calls for Beijing to
allow the yuan to rise faster. But Mr. Paulson won't brand China a
currency manipulator despite congressional demands that he do so.
But it means the same thing as my version. Thanks to Congress for looking after us consumers. Our Chinese sister publication Panda Blog addressed these issues from the Chinese perspective a while back. In short, the Chinese are wondering what we are complaining about:
Our Chinese government continues to pursue a policy
of export promotion, patting itself on the back for its trade surplus
in manufactured goods with the United States. The Chinese government
does so through a number of avenues, including:
- Limiting yuan convertibility, and keeping the yuan's value artificially low
- Imposing strict capital controls that limit dollar reinvestment to low-yield securities like US government T-bills
- Selling exports below cost and well below domestic prices (what
the Americans call "dumping") and subsidizing products for exportIt is important to note that each and every one of these
government interventions subsidizes US citizens and consumers at the
expense of Chinese citizens and consumers. A low yuan makes Chinese
products cheap for Americans but makes imports relatively dear for
Chinese. So-called "dumping" represents an even clearer direct subsidy
of American consumers over their Chinese counterparts. And limiting
foreign exchange re-investments to low-yield government bonds has acted
as a direct subsidy of American taxpayers and the American government,
saddling China with extraordinarily low yields on our nearly $1
trillion in foreign exchange. Every single step China takes to
promote exports is in effect a subsidy of American consumers by Chinese
citizens.This policy of raping the domestic market in pursuit of exports
and trade surpluses was one that Japan followed in the seventies and
eighties. It sacrificed its own consumers, protecting local producers
in the domestic market while subsidizing exports. Japanese consumers
had to live with some of the highest prices in the world, so that
Americans could get some of the lowest prices on those same goods.
Japanese customers endured limited product choices and a horrendously
outdated retail sector that were all protected by government
regulation, all in the name of creating trade surpluses. And surpluses
they did create. Japan achieved massive trade surpluses with the US,
and built the largest accumulation of foreign exchange (mostly dollars)
in the world. And what did this get them? Fifteen years of recession,
from which the country is only now emerging, while the US economy
happily continued to grow and create wealth in astonishing proportions,
seemingly unaware that is was supposed to have been "defeated" by Japan.We at Panda Blog believe it is insane for our Chinese government
to continue to chase the chimera of ever-growing foreign exchange and
trade surpluses. These achieved nothing lasting for Japan and they
will achieve nothing for China. In fact, the only thing that amazes us
more than China's subsidize-Americans strategy is that the Americans
seem to complain about it so much. They complain about their trade
deficits, which are nothing more than a reflection of their incredible
wealth. They complain about the yuan exchange rate, which is set today
to give discounts to Americans and price premiums to Chinese. They
complain about China buying their government bonds, which does nothing
more than reduce the costs of their Congress's insane deficit
spending. They even complain about dumping, which is nothing more than
a direct subsidy by China of lower prices for American consumers.And, incredibly, the Americans complain that it is they that run
a security risk with their current trade deficit with China! This
claim is so crazy, we at Panda Blog have come to the conclusion that it
must be the result of a misdirection campaign by CIA-controlled
American media. After all, the fact that China exports more to the US
than the US does to China means that by definition, more of China's
economic production is dependent on the well-being of the American
economy than vice-versa. And, with nearly a trillion dollars in
foreign exchange invested heavily in US government bonds, it is China
that has the most riding on the continued stability of the American
government, rather than the reverse. American commentators invent
scenarios where the Chinese could hurt the American economy, which we
could, but only at the cost of hurting ourselves worse. Mutual Assured
Destruction is alive and well, but today it is not just a feature of
nuclear strategy but a fact of the global economy.
Jamie:
China is a growing economy and becoming more integrated in the global economy,a solid and productive relationship that is -- where the benefits to that relationship are fairly shared by citizens in both countries is wanted.
September 14, 2007, 9:29 amChinese leaders plan eventually to let the yuan trade freely on world markets. But acting too abruptly will hurt China's frail banks and cause financial turmoil.
So I think let the yuan trade freely on world markets would be better.
But the U.S. deficit with China reflects that US need export more to China.Demand for many US products in China are very strong,but there are few, if any, effective methods for US SMF's to access Chinese buyers and meet the demand. AC-Ali enables US businesses to list their company and product descriptions in English. AmeriChinaB2B will translate these descriptions in Chinese and put them on its China Business platform http://www.acb2b.cn. which attracts a large number of Chinese importers and distributors looking for American products to import to China. Welcome to AmeriChinaB2B(http://www.acb2b.com/ ) to begin your business trip of China.
antijap:
Dear Sir,
Remember Pearl Harbor !
Buy American !
Boycott Japanese goods and capitals!
BIG3 must mean GM, Ford, and Chrysler !
Very sincerely yours,
October 18, 2007, 9:08 pmEV:
The problem with having their subsidissing exports to the US is that it makes it harder for US businesses to compete. Which translates to fewer manufacturing jobs in the US. Which means that these people that are being subsidised by the low exports are the same ones getting put out of work by them. One need only look at the rust belt to see one effect of this.
December 2, 2007, 11:27 amW. Raymond Mills:
Yes, U.S. economy looked great compared to Japan and Germany when finance system was allowed to run rampant. But bubbles burst. At the moment, Japan and German economy look to be in great shape while U.S. economy is in the pits.
Germany is still frightened by the memory of the inflation that preceded Hitler. Japan is still firghtened of the stock- property bubble of 1990.
Because of realistic fear, they have not allowed the fianancial sector to do as it pleases.
Result = a solid economy. They produce products that can be sold on the international market. They are in great shape to maintain their high income status in the global economy while the U.S. is declining. Soon we will be a country near the middle of percapita income.
The trade surplus is the reason for their current satsifactory condition and the trade deficit is the reason for U.S. problems.
Spain once was the country that was living off the produce of other countries (due to the silver and gold taken from the Americas). Those countries supplying the produce (England and France) became powerful while Spain declined.
A countries wealth depends upon what it can produce and sell. The U.S. is in trouble because we enjoyed spending the wealth created by previous generations and artifical financial games.
I agree that it is not the responsibility of China to rescue the U.S. We must imitate Japan and Germany and begin to live within the means created by our productivity.
July 7, 2008, 6:39 pmPayday Loan Advocate:
Last Tuesday, October 7th, the second presidential debate that took place in Belmont University in Nashville attracted over 60 million viewers. Instead of coming to a more firm deliberation on how to improve the well-being of the United States and all of the American citizens who inhabit it, more questions have raised about how exactly these presidential candidates intend to better our obliterated economy. Frequent questions asked about the $700 billion Wall Street bailout were left unanswered. People are upset and even fear that it would not work and are in search of reassurance and a solution. It seems like their main focus is basically to criticize each other in hopes of rounding up a larger number of followers than the other. Their proposed intentions are based on completely irrelevant issues. Let’s take Barak Obama’s stance on payday advance lenders for an instance. He categorized them as “predatory lendingâ€- effectively sanctioning the industry. This is not an issue that is downheartedly affecting our economy. As the real economic problems are ignored, they spend more time finding and using the pettiest affairs to add spice to the banking production.
October 16, 2008, 3:30 amPost Courtesy of Personal Money Store
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Payday Loan Advocate:
On Wednesday, October 14, 2008, the eyes of the world were fixed on Hempstead, New York and the third and final U.S. Presidential Debate. Sen. Barack Obama of Illinois entered the arena with an eight-point lead according to an average of national polls as compiled by CNN, and it appeared that he was content to sit on that lead. Sen. John McCain of Arizona took advantage of Obama’s laurel resting and brought the fight to him regarding the younger candidate’s policies, judgment and qualities of character. When Obama did adopt a more critical stance regarding the economic policies of the past eight years, McCain was quick to point out that he is “not President Bush.†He stated that he would enact an “across the board spending freeze,†take a hatchet to some programs and use a scalpel on the remainder once the dust settled. Obama’s stance sounded more conservative; he would “go through the federal budget page by page, line by line†in order to close programs that aren’t working as they should. Both candidates claim their economic plans will bring needed change to a broken America, but will it leave consumers with the ability to choose where and when they’ll have access to payday loans? That remains to be seen. Just because Americans see themselves as living in “the land of the free†doesn’t mean that interest groups (i.e. banks and credit unions) want them to have the freedom to choose.Post Courtesy of Personal Money StoreProfessional Blogging TeamFeed Back: 1-866-641-3406Home: http://personalmoneystore.com/NoFaxPaydayLoans.htmlBlog: http://personalmoneystore.com/moneyblog/
October 22, 2008, 1:30 am