USA and China on the verge of a trade war

USA and China on the verge of a trade war



After the streets of New York began to be filled with crowds of disgruntled American authorities, these same authorities decided to adopt, in their opinion, the only right decision - a law that supposedly should force foreign countries (primarily China) to play by different rules. The bill will concern the introduction of additional duties for goods imported from countries that artificially lower the rate of their national currencies. Surprisingly, the American parliamentarians (both Democrats and Republicans) spoke out quite harmoniously for this bill, which is extremely rare. Apparently, the situation in the American economy today is so unstable that the authorities are literally clutching at the first straw that came to hand.

Proponents of new duties on imported goods say that countries such as China do not just underestimate the real value of their national currency, but also by this understatement hit the US economy. The situation allegedly develops this way: China imports cheap goods to the United States, with Chinese companies supplying these products, a national American manufacturer is not in a position to compete, so its products are more expensive. Further, American companies are forced to reduce the number of jobs, since the products are uncompetitive. Local job cuts increase unemployment throughout the United States. According to official statistics in the fall, the unemployment rate in the United States rose to the value in 9,1%. This is a giant figure for a state that considers itself the main economy of the world. Informal sources call numbers much higher than 9,1 percent. So, on the posters of protesters on Wall Street, the figure about 18% often flashes! At the same time, unemployment in China is slightly higher than 4 percent.

It is this dissonance that makes the American parliamentarians decide to make rather dubious decisions. Of course, not everyone calls China the culprit for their problems, but anti-Chinese sentiments in the highest echelons of American power do exist.

However, many experts, both in China and in the United States themselves, say that measures aimed at increasing duties on imported goods are unlikely to revive the American economy. In addition, the Chinese Ministry of Labor declares that if Barack Obama signs the new law, the PRC reserves the right to take retaliatory moves. And it can already be safely called the most genuine trade war of the two economic giants of our time. Moreover, China is ready to make a complaint about the United States to the WTO, and this will also not positively affect the relations between the two countries.

Incidentally, a small trade “skirmish” between the United States and the PRC was not so long ago. The Americans imposed extremely high import duties on tires from the Middle Kingdom, and the Chinese responded with similar duties on the import of poultry meat from the United States. After that, both had to abandon their principles and recalculate the losses incurred.

However, now the situation is such that the United States will soon enter the election year. In this case, the American people need to somehow "cheer up." So the parliamentarians decided to find an external "trade enemy" in the face of China, which, it turns out, is to blame for all American problems. Representatives of the Democratic Party say that the Chinese deliberately keep the yuan to enter the US economy in the next crisis with all the ensuing consequences. These people are confident that the Chinese authorities should immediately raise the rate of the national currency by 30%, which is supposedly the true price of the yuan.
The official representatives of the People's Republic of China answer to this that they have repeatedly appreciated the yuan exchange rate for the last period of time, but the US economy has not changed this. And the government of the Celestial Empire is not going to go for a large-scale revaluation of the Chinese currency, since this will cause a real collapse of the country's economy.

Indeed, the yuan exchange rate over the past year has grown by more than 7%, but this is clearly not enough for the Americans. Of course, you can impose such goods on Chinese goods that will make them much more expensive than American products. But this will in no way solve the problem of unemployment. You can imagine how hundreds of millions of US residents will come to the store and see the "new" prices of Chinese goods. At this point, they are unlikely to think that America, represented by Parliament and President Obama, is taking care of them, trying to increase the number of jobs. And it is not necessary to guess, in order to understand that the increase in prices for habitually cheap Chinese goods may be the last straw that overwhelms the patience of an ordinary American.

Many financial experts warn the authorities against increasing duties on foreign goods. Firstly, this, as has already been said, will cause popular anger, and secondly, there will not be any increase in jobs. Reducing the number of jobs in China will not mean that the number of such jobs will increase in the United States. Analyst Nicholas Lardi from Washington is absolutely sure that the increase in the number of jobs will occur in China’s neighbors - Vietnam, Indonesia, and Korea. And so it does not benefit the American financial system.

The result is this: if the American president decides to sign a bill to increase duties, then this can turn into a serious confrontation between the two economies, and if he does not, he will need new decisions, which are not yet in American power heads. As the players say: get a "fork".
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  1. Varnaga 11 October 2011 08: 25 New
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    I have a question for knowledgeable people, how does overvaluation affect the economy and how does this compare with our ruble?
    1. Vadivak 11 October 2011 11: 10 New
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      Well, if this explanation suits you

      Money must be provided with goods (GNP) produced by that country. GNP growth means a general satisfactory state of the economy, an increase in industrial production, an influx of foreign investment in the economy, and an increase in exports. The increase in foreign investment and export leads to an increase in demand for national currency from foreigners, which is reflected in the growth rate. Therefore, an increase in GNP contributes to the growth of the exchange rate.
      From here ----, overvaluation of the exchange rate negatively affects the level of production, unemployment, real GNP.
      1. Alexander Shilov
        Alexander Shilov 11 October 2011 14: 18 New
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        The answer is to the point.
    2. danilatrg 11 October 2011 11: 47 New
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      Varnaga, the conversation is about the undervaluation of the renminbi, and not about overvaluation.
      artificially lower their national currencies.


      There is such an explanation.
      Imagine that a spoon in China costs 4 yuan + say 2 yuan for delivery to the United States.
      Imagine that a spoon in the USA costs 3 dollars.
      And the real dollar exchange rate is equal to 2 yuan. The real rate is formed in the market due to internal and external demand for the yuan, as Vadivak explained.

      We get that a spoon from China to the USA costs as much as an American spoon 3 dollars = (4 yuan + 2 yuan) / 2 yuan per dollar.

      And now we will artificially lower the yuan's rate by making the yuan not worth half a dollar, but its quarter, i.e. 1dollar = 4 yuan. It turns out that a spoon from China will cost not 3 dollars as before, but 1,5. It is clear that no one will buy an American spoon.

      Artificially lower the course by setting this course, say the Central Bank of China without reference to a real exchange.

      The rate for the ruble is set according to trading on the MICEX at the exchange rate USD / RUB_TOM at 10: 00 in the morning of each day. So our course is quite floating. The only thing there is - the Central Bank smooths out fluctuations in the ruble exchange rate by selling dollars when the ruble falls and selling rubles when the ruble is growing rapidly.
      1. Rawling4851
        Rawling4851 11 October 2011 13: 17 New
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        What prevents American manufacturers from selling their spoons also at $ 1,5? Unprofitable? So maybe not the courses matter?
        1. danilatrg 11 October 2011 14: 06 New
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          There is a concept of cost, which includes the cost of labor. A labor resource, in relation to production, is the whole salary that was given to those who produce a spoon. It is clear that in China they pay less, wages are lower there, which means the cost of a spoon is lower.
          Here you are right Rawling4851.

          But in addition to this, China really understates the value of the renminbi; this is recognized not only in the United States. Another thing is that this does not strongly affect the US economy (maybe). Here they argue.

          China, by the way, will then rake itself off if it really underestimates the course. Any bubble (and this situation is a bubble) will burst, and the more it is inflated (the longer the course is kept low), the worse the consequences will be.
  2. Civil 11 October 2011 08: 34 New
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    One can imagine how hundreds of millions of US residents will come to the store and see the “new” prices of Chinese goods. At this moment, they are unlikely to think that America, in the person of Parliament and President Obama, is to take care of them,


    we have exactly the same) especially in relation to manufactured goods, since our own industry was ruined even before the Chinese
    1. danilatrg 11 October 2011 11: 54 New
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      I agree. But besides the agreed ruin of industry in 90 by all sorts of assholes, it is worth noting the inability of this industry (of those who were not stolen) to compete with China or anyone else.
      1. Alexander Shilov
        Alexander Shilov 11 October 2011 14: 30 New
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        The ruble exchange rate, according to my calculations, is overstated by about 200-220%. What kind of competition between our manufacturers and Chinese can we talk about in this situation?

        In 2006, I managed to write about this to President Putin. I proposed two solutions to the problem: to lower the ruble exchange rate or raise import duties on imported goods by a factor of inflation since 1998 (to those positions that we could successfully produce ourselves). After a year and a half correspondence with the Ministry of Economic Development, I was solemnly promised that duties would be raised and that they had begun to compose a list of goods for which duties should be raised.
        As a result, the Ministry of Economic Development has not done anything so far. All my attempts to write about this again to Medvedev and Putin were unsuccessful: they ignored the letters.
        1. danilatrg 11 October 2011 17: 04 New
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          Alexander, and where are the calculations from? I agree that it is necessary to develop the domestic market and internal cooperation, the only way we have a future. But the current market rate. You cannot form a course manually.

          Of course, I want to develop domestic industry, not export, for which I want an even lower ruble, but you can’t inflate a bubble. Otherwise, we get the second Soviet industry grown in a greenhouse, which will die again at the first exit to the open world.
  3. Hannibal
    Hannibal 11 October 2011 10: 50 New
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    Cool, I get the impression that the Americans are so used to just printing money in the right amount that they forgot how to earn it ... Instead of cutting costs, they start to invent some kind of idiotic duties ... It turns out that a Chinese tape recorder cost $ 15 . and with new fees of $ 45, this is a "brilliant" job creation policy.
  4. Ion coaelung
    Ion coaelung 11 October 2011 11: 12 New
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    In the United States, there are more Chinese than blacks, what if most of the bottom join the current protests? Once again, I am convinced that the authorities controlling the United States intentionally aggressively set up both their population and other countries with their decisions and actions, thereby provoking conflicts both inside and outside. The internal conflict is already clearly gaining momentum, and the external is also in line. Falls into the pit and pulls all who are possible. Ultimately, who will be enriched? Money just doesn’t disappear anywhere!
  5. Motherland
    Motherland 11 October 2011 11: 55 New
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    US soon awaits the fate of the USSR if you intervene
    1. Dovmont
      Dovmont 11 October 2011 15: 31 New
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      Well, get involved! It is high time.
  6. Artemka
    Artemka 11 October 2011 16: 19 New
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    I heard that the United States will fall into six parts, and soon within two to three years.
  7. aleleo_aleley
    aleleo_aleley 11 October 2011 20: 27 New
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    In the USA, the leading industries related to the use of solar energy cannot compete with China: http://www.ases.org/index.php?option=com_content&view=article&id=1516&Itemid=23

    The trade war of the USA and China directly concerns us. Chebarkul boy Slavik predicted:

    “When the Americans and the Chinese are on the brink of war, then the Americans will be scared of China at the last moment and set it on us. The war will be such that where there will be bloody battles, and somewhere without a single shot they will take: we will fall asleep by the Russians, and wake up in the morning * by the Chinese *.
    Christian churches and Muslim mosques are slightly redone (roofs
    they’ll do it in Chinese), they will put a dragon in front of the entrance, which, instead of a bell, will be a dull lingering sound to gather people for worship. Resists will be killed or hanged. Slavik said that the Chinese will kill our men and boys and sterilize our population.
    Then, for the first time in the world, the Americans will use a new psychological weapon against the Chinese that affects only this race, and drive them away, but the effect of this weapon will be such that even in China, it can never be normal. "
    1. esaul 12 October 2011 09: 05 New
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      Aleleo, what is the next story about the messiah? The site was not mistaken?
  8. APASUS 11 October 2011 21: 13 New
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    This is all the election crap! Previously, the Americans were scared by the power of the USSR, now it’s China’s turn. Is China the main production hall for the USA, since the USA can crush its manufacturer?