McCain knows that China manipulates its currency, but thinks that ...
- From: "CKinSF <ck_in_sf1@xxxxxxxxxxx>" <CKinSF <ck_in_sf1@xxxxxxxxxxx>>
- Date: Wed, 21 May 2008 07:50:43 +0800
McCain knows that China manipulates its currency, but thinks that ...
By Howard Richman(Howard Richman)
We need to conclude the ongoing free trade negotiations with Thailand and
Malaysia, and then expand these benefits to other ASEAN states, which together
constitute America's fifth largest trading partner. India's economy may grow
faster ...
<http://jews4huckabee.blogspot.com/2008/05/mccain-knows-that-china-manipulates-its.html>
Tuesday, May 20, 2008
McCain knows that China manipulates its currency, but thinks that talk can
change that
Senator McCain has been advertising that his economic plan will be to negotiate
new trade agreemenst in order to increase US exports. Here is what he said about
trade with Asia on February 23, 2007:
As China, Japan, and the European Union pursue closer trade ties with the rest
of Asia and among themselves, the United States should set the standard for
trade liberalization in the region. We need to conclude the ongoing free trade
negotiations with Thailand and Malaysia, and then expand these benefits to other
ASEAN states, which together constitute America's fifth largest trading partner.
India's economy may grow faster than China's in 2007, illustrating the
importance of securing greater U.S. market access to this economy of a billion
consumers. A new economic partnership initiative with Indonesia would help spur
growth and strengthen market institutions in the world's largest Muslim country.
And the U.S.-South Korea Free Trade Agreement, which is currently under
negotiation, promises not only economic benefits - South Korea is our seventh
largest trading partner - but political ones as well: a bilateral FTA will help
give economic ballast to our strategic relationship and thereby strengthen
America's security posture in Asia.
Completing FTAs with Thailand, Malaysia, and South Korea, in concert with the
agreements we have already struck with Australia and Singapore, should set the
stage for an ambitious Pacific-wide effort to liberalize trade. Such efforts
have very tangible impacts. As this audience knows well, wheat farmers in
eastern part of this state, fruit and vegetable growers throughout Washington,
manufacturing giants like Boeing and software titans like Microsoft - all of
them benefit from and depend on foreign markets. By concluding bilateral and
regional trade agreements, by revitalizing the Doha round of global trade talks,
and by ensuring that America stands on the cutting edge of global commerce, we
can ensure that the benefits of open markets reach all 50 of our states.
And to talk about the Asian economies is to speak of China. I know some of our
citizens fear the specter of Chinese economic growth, worrying that it will
result in the loss of American jobs and the inability of our economy to compete.
Others take the opposite view, trumpeting China's vast market potential, low
labor costs, and exports, which allow American manufacturers to move up the
value chain. America benefits from China's economic growth. But by the same
token, its rising prosperity also raises legitimate expectations that China will
behave as a responsible economic partner.
As Chinese businesses 'go global,' we must insist that they operate in an open,
fair, and transparent manner, with sound, internationally-accepted standards for
corporate governance. We should push Beijing to adopt a market-determined value
for its currency, ensuring that trade is conducted on a level financial playing
field. We need to convey to China that its go-it-alone approach to locking up
energy supplies is unlikely to be either effective or sustainable, and that its
environmental stewardship cannot fall prey to its economic ambitions.
In these cases, there is significant room for economic cooperation. The U.S. and
China have a mutual interest in developing new and diverse energy supplies,
improving energy efficiency, and developing environmentally sustainable energy
alternatives. U.S. trade and investment in China's undeveloped rural areas can
help create the broad-based growth Chinese leaders seek. China's rapidly aging
society would benefit from U.S. private-sector involvement in building health
care and pension systems, while Beijing's steps toward banking and financial
reform will, if fully implemented, create new business opportunities for
American companies. Finally, China's desire to construct a "knowledge economy"
implies a mutual interest in protecting intellectual property and preventing
counterfeiting.
As important as all these steps are, the future trajectory of our economies lies
not only in effective economic policymaking, new business opportunities, and the
management of financial risks. Security and economic growth are intimately
connected, and a threat to peace is a threat to prosperity. The overarching
security challenge in Asia today is to preserve and extend American leadership,
and to do so in a way that promotes the emergence of freer and increasingly open
societies.
I have boldfaced the relevant passage in the above quote. It shows that over a
year ago, Senator McCain realized that China was manipulating its currency in
order to steal American industry, but he thought that this strategy was a very
small issue. Moreover, he didn't realize that every one of the Asian countries
that he was mentioning were following the same strategy.
Apparently, he did not understand that these currency manipulations are the
lynchpin of their mercantilist strategies, designed to increase their exports
and restrict their imports with the United States so that they can steal our
industries.
If all he is going to do is "push Beijing" to end this practice, he won't even
succeed with China. His policy will end in failure, just as President Bush's
"jawboning" ended on March 20 2008 in complete and utter failure when China
stopped lowering the dollar's exchange rate with the yuan, as shown by the graph
at the following website:
http://www.x-rates.com/d/CNY/USD/graph120.html
Incidentally, this quote suggests the possibility that McCain doesn't even
realize that the yuan-dollar currency exchange rate is already determined by
markets. If it weren't, there would be a currency black market. The Chinese
government buys a massive amount of dollars in order to manipulate the prices of
the two currencies. It may be true that he doesn't understand economics.
The key is not flexible exchange rates. The key is a gradual end to Chinese
government dollar purchases. The Japanese government allows a completely
flexible exchange rate between the yen and the dollar, but still manages to
manipulate that exchange rate by buying massive amounts of dollars.
The only way to prevent all of the Asian currency manipulations, as well as
their other restrictions on their imports of American-made products, is to
impose Import Certificates on every country that has been accumulating dollar
reserves. Otherwise, the mercantilist governments would continue to manipulate
exchange rates in order to expand their exports while limiting their imports
from the United States.
Howard
Posted by Howard Richman at 9:47 AM
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