China's currency valuation good for the USA?

[The Kin]

This really is a grey area but if China is pegging its currency below what the actual market value would be if it were floated, then doesn't that mean that the US can then purchase Chinese economic goods (labor, resources, land, capital) at a bargain. But since economics is a zero-sum game than does that mean America's gain is China's lost.

Yes I know the jobs argument and China has cost the US millions of jobs. However is that not good capitalism? If China can produce something more efficently than Americans, then naturally the market will shift to that efficentcy.

Me wonders if it were not for China we would be seeing hyper inflation in this country. Since the yuan is well below fair-market value an economics is a zero-sum game, does this not mean that America is benefiting from importing from China?

Just a thought...

 

[theTaoTrader]

Quote from The Kin:

This really is a grey area but if China is pegging its currency below what the actual market value would be if it were floated, then doesn't that mean that the US can then purchase Chinese economic goods (labor, resources, land, capital) at a bargain. But since economics is a zero-sum game than does that mean America's gain is China's lost.

Yes I know the jobs argument and China has cost the US millions of jobs. However is that not good capitalism? If China can produce something more efficently than Americans, then naturally the market will shift to that efficentcy.

Me wonders if it were not for China we would be seeing hyper inflation in this country. Since the yuan is well below fair-market value an economics is a zero-sum game, does this not mean that America is benefiting from importing from China?

Just a thought...

The under-valued Yuan benefits some (shareholders) in the US and hurts others (labors). The same can said in China.

Some estimation puts some 30% of the value of Chinese import actually goes to US companies that have their factories in the China. There are some Chinese brands in the US but most goods sold here are made in China by US companies. Washington politicians care more for shareholders but they are good at putting a show for labors.

Chinese Yuan might be re-valued 5% higher. That will move some jobs from China to Vietnam or Mexico. They are not coming back to the US.

 

[sKaLpZ]

Well, The Kin, it's a good point but...

When other currencies "float" in the open forex market, the laws of traders and trading set and regulate the parity value (highs and lows) for all major nations.

Maybe it's not fair either because we're just trying to make a buck in the forex and there is a lot of over-reactions, under-reactions, emotion, greed, fear, stupidity, panic, manias, etc., that effect currency prices.

Perhaps the world would rather have parity values set this way.

China, on the other hand, that is a major nation, has a 100% artificial parity value for its currency.

It is therefore viewed as not good for the other nations/players (read unfair advantage).

If we could get the yuan in open trade then it would force China to deal with its own economic inefficiencies... to keep up with the (forex) market's inefficiencies.

 

[theTaoTrader]

Quote from sKaLpZ:

Well, The Kin, it's a good point but...

When other currencies "float" in the open forex market, the laws of traders and trading set and regulate the parity value (highs and lows) for all major nations.

Maybe it's not fair either because we're just trying to make a buck in the forex and there is a lot of over-reactions, under-reactions, emotion, greed, fear, stupidity, panic, manias, etc., that effect currency prices.

Perhaps the world would rather have parity values set this way.

China, on the other hand, that is a major nation, has a 100% artificial parity value for its currency.

It is therefore viewed as not good for the other nations/players (read unfair advantage).

If we could get the yuan in open trade then it would force China to deal with its own economic inefficiencies... to keep up with the (forex) market's inefficiencies.

Under-valued Yuan is unfair to US labor that competes with Chinese workers but is good to US companies that offshore to China. That’s why I don’t see much would be changed - Except that a floating Chinese currency is the best way for the US to defeat the “Chinese Threat”. Japanese economy went bad after Yen was forced to appreciate 20% in 1980s. But China is no Japan. They are not going to have Yuan appreciate 27% as Washington demanded and see their economy destabilized. So I don’t see much, if at all, would be changed in the Yuan/Dollar exchange rate.