Chinese Official Says Exchange-Rate Controls to Continue 'for a Long Time'

Looks like trade deficit/jobs overseas to China will not end via classical economics - need for Trade change/WTO change is obvious.

http://ap.tbo.com/ap/breaking/MGATBMZKKRD.html


Senior Chinese Official Says Exchange-Rate Controls to Continue 'for a Long Time'
The Associated Press

BEIJING (AP) - China will keep its politically sensitive exchange-rate controls "for a long time to come," the country's chief foreign-exchange regulator was quoted Monday as saying, rejecting claims that its currency is undervalued and is costing American jobs.<snip>

"China's managed floating exchange-rate system conforms to the realities of China and it will continue for a long time to come," the official Xinhua News Agency paraphrased Guo Shuqing as saying in an interview. Guo is a deputy governor of the People's Bank of China and director of the State Administration of Foreign Exchange. <snip>

China has fixed the value of the yuan at about 8.28 to the U.S. dollar since 1994. The currency is allowed to fluctuate by a fraction of a percentage point in tightly regulated daily trading.

The Xinhua report of Guo's remarks gave no new details on when China might ease such controls. But his rejection of foreign criticism was unusually pointed. <snip>

China doesn't care about American jobs. But then, why should they? Clearly, our own pResident doesn't either. :mad:

is struggling under a huge load of non-performing loans, the Chinese claim. LThey say that if they let the yuan float and let capital flow freely, their banking system would collapse.

If this is true, then we should have the trade advantage of having a currently functioning banking system, which according to free traders, should enhance our economy. If the Chinese can destroy that advantage through currency manipulation, and we can't respond with tariffs, then the free traders' theory is violated.

I expect that there are many other examples.

The free trade theory seems to assume that every country is playing by the same rulebook and with the same basic societal values. Unfortunately, that doesn't seem to be the way that the international system works.

It makes me wonder what other bogus assumptions underlie the free traders' theory.

On edit: deletion of extraneous argument

I can't remember the guy's name, but he was out of Berkeley. My reading-between-the-lines assessment is that China will own the U.S. if this keeps up.

The commentator equated U.S. spending with alcoholism. We want more and more and spend more and more (govt. and consumers). Living well beyond our means. huge debt. China, on the other hand, saves and saves and lives well below its means. In addition to the $47 billion trade deficit (please correct my numbers if they are inaccurate), China owns 2/3 of our debt. And we continue to spend and dig ourselves a deeper hole that China keeps bailing us out of because we keep spending and spending and China keeps saving and saving. The commentator says: who's to blame? the alcoholic who keeps drinking or the enabler who keeps supplying the booze? In his final analysis, he said we need to take responsibility for our actions. but too bad there's not a 12-step program for a nation's fiscal irresponsibility--or something like that.

Did anyone else hear the report? did I get it close to correct? anyone who has a better grasp of how all this economic wrangling works care to jump in?

Peace!

There's a fellow you may have heard of by the name of Warren Buffet who agrees with that analysis.

Here's a link!

http://www.pbs.org/wsw/news/fortunearticle_20031026_03.html

here's the link to the Marketplace commentary:

http://www.marketplace.org/shows/2004/03/10_mpp.html

The guy's name is Robert Reich, and he says we (Americans) need to "sober up." :beer:

China, Japan, and others are financing our spending binge. The only problem is...if we continue our current behavoir...what kind of mess are we making for the future?

It may be that we need to do something other than "get tough with China" - but I think we need to address the trade problem somehow...and soon.