Originally Posted by eric242340
Whilst i am not an economist and dont profess to be, why is the US government threatening to slap imports duty on so many chinese goods. And why is China so slow to appreciate the RMB? Another question in my mind is ; why the US dollar has fallen allarmingly against the RMB, but the British pound has gained strength?
Hope there is a financial brain out there that can answer this.
Real value of currency is measured by goods and services. For instance, a taxi ride from PVG to downtown Shanghai is 150RMB, which is $20US. A similar ride at SFO is $60US. So the real value between the two should then be 3RMB to $1US, not 8RMB to $1US.
Originally Posted by bgoin
I am not an economist, but as long as the RMB is low, cheap Chinese goods can come to the USA and Americans will buy (Wal-Mart), if it was higher less goods will be bought which will mean that Chinese workers will be out of a jobs and the communist party will have yet another problem to deal with (more unemployment and no system in place to deal with that, like unemployment insurance). Also the fact that 70% of the companies in china are actually owned by the party, what (party members) would want to break what looks like a good thing.
This is precisely right. Chinese government wants political stability and growth, even with all the expense of trade deficit, which is basically a discount of goods sold.
In the mean time all the exportable goods from the US are doing very well, telecom equipment, airplanes and equipment, agriculture product, mainly due to the high level of US$ in foreign hands.
I am not an economist either but these phenomena are easy to see and understand.