U.S. declines to name China a currency manipulator
24 replies, posted
[url]http://www.reuters.com/article/2012/11/27/us-usa-china-treasury-idUSBRE8AQ19V20121127[/url]
[quote=Reuters]The Obama administration on Tuesday said China's currency remained "significantly undervalued" but stopped short of labeling the world's second-biggest economy a currency manipulator.
In a congressionally mandated semi-annual report, the U.S. Treasury noted that yuan had risen 12.6 percent against the U.S. dollar in inflation-adjusted terms since June 2010. An official said it was up 9.7 percent on a nominal basis through Tuesday, when it closed at a record high.
Although Beijing keeps the yuan, also known as the renminbi, in a tight trading band, the Treasury said China did not meet the legal requirements to be deemed a currency manipulator. The label is largely symbolic but would require Washington to open discussions with Beijing on adjusting the yuan's value.
The Chinese government had "substantially" reduced its intervention in foreign exchange markets since the third quarter of 2011 and loosened capital controls, the Treasury said in the report, which examines the currency practices of major U.S. trading partners.
"In light of these developments, Treasury has concluded that the standards ... have not been met with respect to China," it said. "Nonetheless, the available evidence suggests the renminbi remains significantly undervalued."
During the U.S. presidential campaign, Republican candidate Mitt Romney pledged to label China a manipulator on his first day in office to show he would be tougher on the United States' chief economic competitor than President Barack Obama.
Many U.S. businesses and lawmakers complain that China keeps the value of its currency artificially low to gain an advantage in trade.
But an international consensus is growing that the yuan is closing in on its fair value after about a decade at an artificially weak level. The International Monetary Fund softened its language on the yuan in July.
[B][I]YUAN AT RECORD HIGH[/I][/B]
The yuan closed at a record high on Tuesday as the central bank's reluctance to let the currency rise more quickly limited trading activity.
The People's Bank of China limits currency moves by allowing the yuan to rise or fall by only 1 percent from whatever rate the central bank sets that day.
It has been 18 years since the U.S. Treasury has designated any country a currency manipulator. China was so labeled five times from May 1992 to July 1994.
Charles Schumer, the No. 3 Democrat in the Senate and a longtime critic of China's yuan policy, said the Treasury should label China a manipulator to be able to impose penalties on it.
"It's time for the Obama administration to rip off the band-aid, and force China to play by the same rules as all other countries," the New York senator said in a statement.
But the U.S.-China Business Council, which represents about 240 American companies that do business with China, applauded the latest decision.
"The exchange rate has little to do with the U.S. trade balance or employment," council President John Frisbie said. "We need to move on to more important issues with China, such as removing market access barriers and improving intellectual property protection."
The Treasury said further appreciation of the yuan would help China balance its economy toward consumption by giving households greater purchasing power.
The report also called on China to reduce its "exceptionally high" foreign exchange reserves and to publish data about its intervention in currency markets.
The Obama administration also used the report to keep pressure on South Korea to limit its intervention in foreign exchange markets.
South Korea says it intervenes to smooth the volatility of its won currency, but it has gone into the market throughout 2012, the Treasury report said. In July, the IMF said the won was undervalued by up to 10 percent.
"We will continue to press the Korean authorities to limit their foreign exchange interventions to the exceptional circumstances of disorderly market conditions," the report said.[/quote]
Man, it's not like we've known this for years.
Mitt Romney found dead
I don't really know enough about world issues to pick a side. All I get is American media. Behind that my second biggest news feed is facepunch.
How can anyone with a straight face declare that China is alone a currency manipulator when the United States also tries trying to devalue the dollar?
[QUOTE=NoDachi;38618024]How can anyone with a straight face declare that China is alone a currency manipulator when the United States also tries trying to devalue the dollar?[/QUOTE]
I think we're succeeding, actually.
It is better to deal with China's undervalued currency than to confront our biggest economic partner on the issue.
If there is anything to learn, it is that it is difficult to artificially devalue or overvalue your currency. It will revert to its actual value eventually, no matter what the government tries to do. Though I could be wrong; the only governments to fail due to currency manipulation were all poor South American ones.
we know it, the reason why we're not is because it would be a rather provocative move
[quote=The Economist]But Mr Romney seems too ready to bomb Iran, too uncritically supportive of Israel and cruelly wrong in his belief in “the Palestinians not wanting to see peace”. The bellicosity could start on the first day of his presidency, [B]when he has vowed to list China as a currency manipulator—a pointless provocation to its new leadership that could easily degenerate into a trade war.[/B][/quote]
BUT THEY ARE.
[img]http://static6.businessinsider.com/image/4c92361b7f8b9a545f210100-425-249/chart.jpg[/img]
[editline]27th November 2012[/editline]
Look at that flat part, that's when they went for fixing the currency up and down depending on the economic environment.
I could land a plane on that.
Rather not call out the people we owe a lot of money too.
[QUOTE=Soldier32;38619086]Rather not call out the people we owe a lot of money too.[/QUOTE]
China doesn't really have a lot of the US debt. But China is a great economic partner in a lot of areas really.
The United States is a currency manipulator too. Anyone who doesn't realize that we're going to continue to intentionally inflate our price level to effectively owe China less has their head in the clouds.
[editline]27th November 2012[/editline]
[QUOTE=NoDachi;38618024]How can anyone with a straight face declare that China is alone a currency manipulator when the United States also tries trying to devalue the dollar?[/QUOTE]
We're not trying to completely devalue the dollar, the consequences would be disastrous.
And for what, a few more exports? Many would argue that deliberately devaluing our currency would be self defeating despite the few benefits it would have.
[QUOTE=Soldier32;38619086]Rather not call out the people we owe a lot of money too.[/QUOTE]
Or what?
PS we owe hardly any of our debt to China
[editline]27th November 2012[/editline]
[QUOTE=Strider*;38620014]The United States is a currency manipulator too. Anyone who doesn't realize that we're going to continue to intentionally inflate our price level to effectively owe China less has their head in the clouds.
[/QUOTE]
How much do you THINK we owe China?
Answer without even googling. Then google it, and smack yourself.
[QUOTE=scout1;38620163]How much do you THINK we owe China?
Answer without even googling. Then google it, and smack yourself.[/QUOTE]
Irrelevant, inflating our price level is always an option to owe any country less in real terms.
I called out China because they are the country we're discussing in this thread.
China is still the largest foreign holder of our public debt.
[QUOTE=Strider*;38620257]Irrelevant, inflating our price level is always an option to owe any country less in real terms.
I called out China because they are the country we're discussing in this thread.
China is still the largest foreign holder of our public debt.[/QUOTE]
So if a county (theoretically) held 1% of our debt you think it'd be a good idea to devalue our currency?...
[QUOTE=scout1;38620372]So if a county (theoretically) held 1% of our debt you think it'd be a good idea to devalue our currency?...[/QUOTE]
How did you come to this conclusion? It has nothing to do with devaluing the currency. We can maintain some inflation and still have our currency appreciate relative to other countries. 100 dollars will buy you less domestically in ten years then it will today. Thus that 100 dollars we owe China today won't be worth as much when we eventually get around to paying it back.
It's not as though China is stupid, they undoubtedly realize this and have given us loans inflationally adjusted. But if it ever gets too bad (which it won't) then yes, we can deliberately induce high inflation which likely [i]will[/i] cause currency devaluation depending on the price level growth of other countries.
This is what the Germans did in retaliation to French economic aggression and the Treaty of Versailles.
[QUOTE=Strider*;38620468]How did you come to this conclusion? It has nothing to do with devaluing the currency. We can maintain some inflation and still have our currency appreciate relative to other countries. 100 dollars will buy you less domestically in ten years then it will today. Thus that 100 dollars we owe China today won't be worth as much when we eventually get around to paying it back.
It's not as though China is stupid, they undoubtedly realize this and have given us loans inflationally adjusted. But if it ever gets too bad (which it won't) then yes, we can deliberately induce high inflation which likely [i]will[/i] cause currency devaluation depending on the price level growth of other countries.
This is what the Germans did in retaliation to French economic aggression and the Treaty of Versailles.[/QUOTE]
So... yes. Inflation is a function of time. Well, damn we all knew that, it's a natural result of our monetary systems. So we're holding on to paying back our debt as long as possible so the natural inflation will get them? I don't understand. You seem to have said we were actively devaluing to combat them, but if all you're saying is that inflation exists... well whoop de fucking doo.
So a country that manipulates its own currency decided to not accuse another country of manipulating its currency.
Okay... whats the point?
[QUOTE=scout1;38620519]So... yes. Inflation is a function of time. Well, damn we all knew that, it's a natural result of our monetary systems. So we're holding on to paying back our debt as long as possible so the natural inflation will get them? I don't understand.[/QUOTE]
Inflation is not a function of "time".
And no I'm not arguing that natural inflation will "get them", I said as much. I'm arguing that if not now, then if/when we ultimately find it necessary.. our Federal Reserve will deliberately raise inflation past what lenders have expected.
This can be achieved without devaluing our currency, we just have to do it as soon as China's or the world's average price level begins to rise.
I have no doubt that we have plans to combat them, but we'll do it much more deceptively.
[QUOTE=scout1;38620163]
PS we owe hardly any of our debt to China
[/QUOTE]
we owe practically the entire nation to china
not legally, of course, but metaphorically...ya know since we get so much cheat labor from the chinese and it supposedly makes out way of life possible.
[QUOTE=yawmwen;38620632]we owe practically the entire nation to china
not legally, of course, but metaphorically...ya know since we get so much cheat labor from the chinese and it supposedly makes out way of life possible.[/QUOTE]
By that measure China owes us everything too, as one of the largest markets for their economic output
[QUOTE=scout1;38620787]By that measure China owes us everything too, as one of the largest markets for their economic output[/QUOTE]
yea we are like two lovers that cannot live without each other
we are like a modern day nation states version of romeo and juliet.
But do we suicide in the end?
of course, you saw romeo and juliet correct?
[QUOTE=Killer900;38621758]of course, you saw romeo and juliet correct?[/QUOTE]
Who's the Romeo and Juliett in this setting, then?
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