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Originally Posted by jorgelito
1. Trade - the deficit
Both the Us and EU have accused the Chinese of dumping(?) "artificially" cheap exports (textiles) and have proposed measures to counter that.
Unfortunately, I can't really make heads or tails out of the current information we have on it (sorry).
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By 'artificially' keeping their exports lower than most other countries, the chinese economy leads by virtue of cost. If things are cheaper to make in china, business will go to china.
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Originally Posted by jorgelito
2. Currency
China has been accused of keeping the Yuan "artificially" low
I don't have expertise in this area, but from what I do understand, this could go either way. A while back, Greenspan himself said there wasn't any "real" problem with the peg, but a few days ago changed his mind. Makes me a bit suspiious, perhaps he was pressured to say so?
The issue for me is, even if the Chines float the Yuan, there's no guarantee what will happen.
a. If the Yuan goes up, US companies will simply source elsewhere (i.e. - Bangladesh, Vietnam etc.)
b. If the Yuan goes down, then the US has "egg on its face" in the sense that its contention proved wrong and then made things worse.
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by pegging the yuan to the fluctuation of the dollar the yuan has way more power than would be anticipated in the early stages. To address your a and b, if the yuan is allowed to fluctuate according to free market economics it would level the playing field between all nations of the WTO. As it stands now, by pegging the yuan, china has an unfair advantage by always keeping their prices low at the expense of the free market.
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Originally Posted by jorgelito
Unfortunately, some people think the Chinese are responsible for Americans lsoing their jobs. I used to think this too (embarrassed). But that simply is not true. The reality is, that jobs ill continue to be outsourced, go overseas. If not China, then elsewhere.
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In this, you are correct. With a global economy, lower prices will prevail. This has its advantages and disadvantages, of which, most people could care less about the disadvantages until it affects them directly. very sad.
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Originally Posted by jorgelito
3. Military
In the current era of unipolarity, the US enjoys undisputed sole superpower status. I personally do not believe China is anywhere close to even challenging that.
For example - military spending - US, by far, I mean really far outspends China. The Chinese are at best, 50 years behind the US assuming the US does not progress (Sorry, I don't have the source handy).
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If china spends half of their budget on military, as does the US (round about figures) but china's military expenses are 1/4th of the US, it wouldn't take long for china to become a major world power at all.