Quote:
Originally Posted by Baraka_Guru
Their standards are rising, though.
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My apology for not being clear.
There is a cost associated with China keeping the value of their currency lower than it should be. That cost is imposed on the Chinese people. That cost is only one component of a large string of variables that go into that nation's market interaction with the rest of the world and their national standard of living. They are subsidizing our consumption - those buying their products get a discount, and the people of China pay for that discount one way or another - but generally it is reflected in the national standard of living. There is no doubt their standard of living is increasing, but there are other factors in play.
China, by manipulating their currency, is making a long-term "gamble" (for lack of a better word). If they get the rest of the world "hooked" and committed to production from China as the rest of the world minimizes their ability to produce, they can effectively reduce competition and the possibility of competition gaining an exceptional ability to control prices in the markets they control, that -C turns to a +C with the rest of the world having limited or a sluggish ability to rspond. We need political leaders mindful of this kind of long-standing market penetrating strategy. We do have a few people in Washington putting pressure on China for their currency manipulation, my preference would be we put more pressure on China in this regard. I think this is a better approach to addressing outsourcing, and trade imbalances.