Chinese Currency Debate

There was another bill submitted in Congress to punish China for pegging its currency. Personally I think China is pegging its currency, and that does give it an unfair advantage. But I think that declaring China to be a manipulator would be a mistake. I think that it could hurt the USA economically.

I think one reason these bills are no good is because they never seem to explain why China would benefit from floating their currency. Right now I think China is kind of like a shark. If a shark stops swimming it will die. If China does not grow quickly enough, it will have a lot of social unrest. So I can see why China pegs its currency.

I can see why it would be good for the rest of the world for China to float its currency. But I think people are basically asking China to implement a policy that would hurt China. Why should they do that? From what I can tell, all these bills that want to declare China a currency manipulator never explain how China benefits by floating. If you were China, would you replace a policy that benefits you today with one that will be bad for you know and might be good for you in some way at some undetermined point in the future? I think most people would not take that offer. Until floating the currency can be justified as being good for China, then I think it is a pointless debate.

Image from Wikimedia

Page created on 2011-11-05_16:23:16, last modified on 2022-02-16_15:56:04.

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