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With China's economic bubble, is there a another big slowdown ahead?
China is going to keep appreciating its currency slowly; manufacturing the world's cheap consumer products is key to China's economic growth. Appreciating China's currency will only dampen its own economic growth.
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The beginning of the article seems to suggest that it's an international "no-no" to label another country as a currency manipulator. Anyone know why this us? Just etiquette?
ReplyDeleteI say just say it."These colors don't run!" -Ricky Bobby
Honestly I don't think etiquette has anything to do with it. I think that the sheer size of today's global economy as well as the inter-connectiveness between many countries does not allow for any one country to be considered a currency manipulator. There simply are too many other factors that go into such a manipulation.
ReplyDeleteMatt, you make an interesting point. The U.S. has been urging China to appreciate its currency for a while now, and its never seemed to be a priority for the Chinese government. Regardless of whether or not China is or could even be considered a currency manipulator, it seems that China is facing a bubble of its own. I'm more intrigued on how that bubble will play out in the future.
ReplyDeleteIt puts China at an unfair advantage to other countries because their currency does not reflect its true value, making China an idea place to export business. Basically, removing free market competition
ReplyDeleteThat's a good point Chris. China has been accused by developed countries besides the US of purposefully keeping their currency artificially low in order to boost exports (BBC News). This has led to concerns that China's currency policies have been partially responsible for the imbalances with trading partners.
ReplyDeleteI agree that etiquette doesn't really have anything to do with this. I read this article that talks about how China's trade surplus has been declining in recent years and that they expect their exports to slow down in the near future...For this reason I can see how China wants to keep their currency low in order to export more goods. However, this is hurting their global trading partners. To be honest, I think that most countries these days are more worried about themselves than their trading partners so they'll do whatever they think is right for their own country, and then whatever is right for their trading partners.
ReplyDeleteThis is an interesting post.
ReplyDelete