I'm a strong believer in free trade and the free market so I think that China should definitely allow its currency to float on the currency markets. On the other hand, it would only serve to damage Chinese business for the most part so I don't see how they could justify it to their own people.

China's currency is China's business. No one else has any say in it.

On the other side, China believes that American currency ought to be valued higher. There is a definite effort on the American part to devalue the dollar to improve export strength... and when you're sitting on 1.2 trillion USD, that's got to be grating. I wish all countries would let the market determine exchange rates... but that's clearly not a realistic ideal.

China's artificially cheap currency is a good thing for every consumer in the western world. What do you think why DVD players and stuff are so ridiculously cheap?
The USA is pretty protective herself by the way ...

@everyone who says it doesn't have anything to do with us read this: http://www.iie.com/publications/testimony/bergsten20100916.pdf
That is a publication from the Peter G. Peterson Institute of International Economics on how to solve the China issue. Take particular note of points 3 and 4. If you want the underlying economic study that the above strategic recommendation is based on read (highly technical): http://www.iie.com/publications/pb/pb10-20.pdf

The only reason China managed to climb out of poverty is because it "cheated" with regard to free trade, much the same way the current industrial powers "cheated" in their day to become industrialized.

So I say the USA can fuck off and let China do what's best for China.

USA is dead and part of a bad past... let China supersede USA and see where that takes us, surely China won't be as militarily aggressive, lol(maybe, as a reclusive nation, it'll mind it's own business and be well liked- unlike the US?)

Not as militarily aggressive? China has claimed the entire South China Sea to be its territorial waters and just last month basically threatened Japan with war over some worthless rocks off Taiwan. Oh yeah, and there's also the whole we-just-might-invade-Taiwan-and-probably-will-if-we-get-those-anti-ship-ICBMs-and-the-US-Navy-doesn't-upgrade-its-surface-fleet. Even the most cynical critic of American foreign policy has to admit the United States has not fought a war for territorial gain for over a hundred years. China's sitting on at least four such probably wars (South China Sea claims, Senkaku Islands, Taiwan, and the Indian border). And let's not forget Tibet and Xinjiang.

When China decides to stop just acting like a cartoonishly evil corporation and start acting like a proper state which throws its weight around to achieve its goals, then the world in in for a period of dangerous instability. The international order which has kept stability since World War II has been built on American power and worldwide engagement. We'll miss it if it goes away.

anti-ship ICBMs? they sound awesome!

ASBMs, the name escaped me at the time.

http://www.defensereview.com/chinese-anti-ship-ballistic-missile-asbm-kill-weapon-flummoxes-us-navy/

Experts say if there were to be a war to happen, it would first begin based on exchange rates. Dominic Strauss-Kahn, head of IMF said, "“There is clearly the idea beginning to circulate that currencies can be used as a policy weapon. Translated into action, such an idea would represent a very serious risk to the global recovery. Any such approach would have a negative and very damaging impact in the long run.”
China also has the most possession of dollars in the world. If China were too fall, than USA and the world would have to face another world economic crisis. When Lehman Brothers were bankrupt, Asian powers played a big part in recovering the world economy back to where it should be. This is because of the different system Western and Eastern powers have. The economy of most Western powers are based on financial business while the economy of most Eastern powers are based on export business. As soon as Lehman brothers got bankrupt, major banks of the USA fell apart, but because of Asia, slowly Eastern powers are recovering to their normal state. Both countries need each other. Through fixed exchange rates china has been able to maintain a prosperous economy.

"Both countries need each other economically. Through this I think we can see that exchange rates through the free market has some major flaws, we couldn't have seen before. If China were to change their policy, than USA and the world will have to change their policies equal to the sacrifice China would make in changing their policy. The economic system needs reform. The gains of the free market aren't perfectly equal to all countries. Countries like Korea face a hard time when it comes to fighting exchange rates."

China will wrong-foot you every time.

Well, as long as I have enough currency for fried chicken an internets, I'm a happy camper.

You're pretty well screwed.

To me this whole issue has a relatively simple (from the ability to explain it standpoint) but politically difficult to implement solution. Namely, the US government needs to quit running a deficit and work on paying off its debt. If this happens, China will be unable to keep buying dollars to keep their currency value low (which they do in large part now by buying US government bonds), and the price of their currency will necessarily rise.

what would a world without exchange rates be like?

furball: Look what's happened to the Eurozone...

I think we (the USA) should just nuke china. That should solve the problem. I think nuking is our foreign policy when it comes to annoying Asian countries..... :)

An economic war is distinct from other, political or strategic wars.
Anyone but a few academics understand the two ( 2 ) economic wars between the Netherlands and Britain?
The Dutch destroyed a flotilla of English ships by surprise use of fireships.
A fine novel by the author of Parkinson's Law, C. Northcote Parkinson, explains fireship's Last use in Battle

This should answer a lot of questions.

http://the-diplomat.com/2010/10/12/china-is-weaker-than-it-looks/

go china!!

usa can suck my dick

The US only suck on large items. Like a country or the citizens.

What is with the anti-US hate some members of this community have? At any rate the major issue with China through its intentional currency manipulation is that it is directly harming the U.S economy. From the second link I posted above is the statistical analysis that for every 10% the Yuan appreciates against the U.S dollar the U.S current account balance would improve by $22 Billion dollars. From the first publication I linked, it in short states that if China allows the Yuan to appreciate 20-25% against the Dollar over the next two to three years as they did from 2005-2008 it would add approximately 500,000 jobs in the U.S, mostly in manufacturing with above-average wages.

I was just making fun of the tiny size of alamothe's external reproductive organ.

People should hate bankers, not the US.

> There is a definite effort on the American part to devalue the dollar to improve export
> strength... and when you're sitting on 1.2 trillion USD, that's got to be grating.
I think this is a good point, China loses out for a lot of reasons when they devalue the dollar and although most people focus on exports that's not the only reason, and that's also why it's probably not right to call it an internal Chinese issue because it is intended to prop up the dollar

In other news the Australian dollar reached parity with the US dollar for the first time yesterday; good news for buying things from overseas, bad news for everything else though. Crazy that 1 AUD has gone from 0.60 to 1.00 US dollars in the space of 2 years

The U.S.A. is too chickenshit to go after ANY nation possessing the wherewithal to defend itself.

Poor defenseless nations are more their speed.

Cowards.

The Canadian dollar too. Fells like they really want parity.

Would all you anti-American demagogues rather have the alternatives? Either the much more illiberal and oppressive China becomes the preeminent world power or, more likely, there is no global leader and the world enters a dangerous period of instability. What do you think has kept the peace in Europe and Northeast Asia for almost 70 years? A powerful and engaged United States. What has prevented Arab-Israeli Wars from escalating into general regional conflicts and the possible use of nuclear weapons? A powerful and engaged United States. What has created the international order of institutions like the IMF, World Bank, United Nations, and the various treaty conventions which have gone a long way to make international relations and business more predictable and made human rights a global priority? A powerful and engaged Untied States.

America is far from sinless by any standards, and has done a lot of truly awful things, but the truth remains that the world is better because it is strong and is the strongest. Is a world where states like Russia and China are setting the tune with just as much sway as the United States really a better one? Is a world where states like Iran and Venezuela can introduce nuclear weapons into areas of the world where treaties have explicitly forbade them really be a better one? You all shouldn't let your biases cloud the reality that any realistic alternative to the current system is much, much more dangerous. Unfortunately, I think it will be time which proves me right.

Venezulea? really? better add them to the "axis of evil" :)

Invictus - on what basis do you get to assume USA has a right to nuclear weapons and nobody else does? Just shows up your biases and prejudices. A Thinktank with a million years couldn't prove you right.

all i can say is that China is NOT those small and poor countries the USA like to invade and then brag about freedom and liberty and 'our way of life'. China is a serious country...

if China "allows the Yuan to appreciate 20-25% against the Dollar" then people in China would lose jobs, and if you value a US citizen's job more than China citizen's job then I'd say that you're a racist. also, there is a free market because you can buy and sell yuan as you please

@alamothe

wow you are truly stupid. If the discussion was about Russia, rather than China, would you have still said "and if you value a US citizen's job more than Russia citizen's job then I'd say that you're a racist." ? If not, then why? Is it because you only see people from China for their differences? And you expect everyone else to share your small-minded views about race, and therefore if they value the citizens' well being from their own country over that of one that you mentally categorize as being a different race, then they MUST be racist? There's just no other explanation in your tiny little mind is there?

You only see Chinese people as being in the racial group of "Asian". What if I value a black american's job more than a Chinese? Is that still racist? what if I value a Chinese-American's job more than a white Canadian's? still racist?

fucking idiot

@Phil - wouldn't go that far - the point is quite valid.

This issue has been brought up a number of times over the last few years because the US feels the Chinese policy of holding down the value of the Yuan undercuts them - this isn't an accident! By keeping its currency down, China maintains control of the global export market, and yes in doing so damages foreign economies. It may be anti market, but why should the Chinese care about that?

Also, far more worrying are the trends occurring. In a number of industries China has been stepping up the level of development of their products. I know that's not the right way to word it, so I'll explain with a generic example.
In the past, China was selling raw or pre-processed materials. Then they started making components, and stopped selling the raw product. This meant international companies relying on the Chinese for their resource had to accept the components and close their own component factory.
Then, the Chinese manufacturing improved and they started making larger components, and again the other company had to buy what was on offer since there were no viable alternatives for selling the smaller component.
This cycle has been going on in a number of sectors, although the one I'm thinking of in particular is a strategically key chemical supply.

That's not what I'm saying at all, fiedler. Venezuela is working with Russia and Iran to start its own nuclear weapons program, even though the Americas apart from the United States and Canada is a nuclear-weapons-free zone. Likewise, Iran has signed the Non-proliferation treaty so its weapons program is also illegal. This isn't about the United States exercising some sort of dominion over who gets to have nukes, it's about international law meaning something.

http://www.carnegieendowment.org/publications/index.cfm?fa=view&id=22568
http://www.foreignpolicy.com/articles/2010/10/05/chavez_s_secret_nuclear_program
http://en.wikipedia.org/wiki/Nuclear_Weapons_Free_Zone

like when the United Nations votes that an invasion of Iraq is illegal? that kind of international law?

IMHO, within 5 years, America will be speaking out of the other side of its fat ass, if that makes any sense to you all.

What makes sense is that Chile took over the mine after the disaster and excluded the allegedly culpable business owners.
Now look at what happened with BP in the Gulf of Mexico.
Not that there's anything wrong with that, ho?

@Invictus
Yes, USA has been able to keep the peace around the world. But, that peace only exists in the strongest countries. USA preaches the right for equality and freedom to all humanity. I think we can change that part to "all USA citizens!" Let's just say, USA isn't fair. But it would be the same if another country were the world power. That's why, the system needs reforms. That would mean, the world would need reforms all together.

@kreilly89
You are correct, but I think maybe you have to see things a bit around. If China were to abide to the world economy, or USA economy, than it would be China's economy which would be directly harmed.

"If we were to make world policies and reforms, how should it be done? Or are there any other solutions to creating world harmony in terms of economy? This is why the G20 has been created. But there are many shouts against the G20 because it is only meant for the harmony between these 20 countries. The weaker countries are not included. "

anyhow, who can wage war with USA anyways..

*the* USA. Not just USA

I'd never dispute what I think you mean by the "strongest countries" (not basket cases like much of Africa, Afghanistan, and the like), but my point was about INTER-state wars, not just any old conflict like you are probably thinking of. America is far from perfect, but we'll miss the security it brings to much of the world if the United States is displaced.

@Furball: China is a communist country that violently represses its citizens, has robbed the U.S of the textile, furniture, and other manufacturing industries, and is intentionally flooding our market with inferior products through their currency manipulation. They have done far, far more harm to us than good for themselves, and they deserve to be embargoed by the U.S, and the rest of the developed nations until they stop killing other countries' economies by using currency manipulation to price developed nations out of the market.

Are they really still communist? I think that's disputable. Also they're not doing anything that the US government doesn't approve of. You think things over there are hard now just wait to Chinese products disappear and you have to pay more for everything. Then let's see what you think about China.

It's pretty funny to see America criticize China for protectionist measures. That said, even though China's rise will make me, an educated North American born Chinese person, a hot commodity, I still can't help but agree that despite America's numerous sins it was a healthier hegemon than I would imagine China to be.

@Ebay: Look up the Great Firewall of China, look up the censoring of information on any negative information during the Olympics, look up the Urumqi riots. Then come back, and explain how China isn't a modern day Soviet Union in terms of repression. Then include in that a political system that prioritizes increasing exports through currency manipulation, and allowing their working class to remain at a low standard of living. And is also willing to directly harm other countries' economies, and their populaces to improve their economy.