April 5th, 2010
12:42 PM GMT
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Hong Kong, China - While politicians and business leaders in the United States lobby for a stronger Chinese currency, many of the people who work in the manufacturing belt of southern China quietly hope their government will keep the yuan more or less where it is.

The Chinese government has been controlling the rate of its currency, the yuan, for years, mainly because officials believe a stable currency is key to supporting their exporters. However, now that China is the world's biggest exporter, more critics of Beijing's tactics are emerging in Washington. They argue Beijing is setting the yuan too low, keeping it artificially cheap, a policy that hampers American businesses and contributes to the U.S.'s trade deficit with China.

Yet at this shirt factory in Dongguan, the people are grateful for that stability. China's predictable currency rate has helped tens of thousands of factories to thrive here. The boss at this factory though acknowledges momentum is building for Beijing to loosen its reins on the yuan. He's preparing for the possible changes. His biggest question - how much more are American consumers willing to spend on clothes from China if the yuan appreciates? Because if the currency appreciates, he says he would need to pass on some of the costs.

Eunice Yoon looks at China's currency control

How much more would you be willing to spend?



soundoff (93 Responses)
  1. mj

    $0

    April 5, 2010 at 4:14 pm |
  2. dd

    I prefer to have cheaper clothes and other consumer products. Don't understand why some politicians are pushing for inflation. Is this their sneaky way to justify the inflation/budget deficit they have created? Should vote them out of office next time. By the way, I don't want to spend time to make clothes myself.

    April 5, 2010 at 6:40 pm |
  3. RW

    I never thought that increasing yuan would pass costs down to consumers!

    I don't want to pay MORE. wtf.

    April 5, 2010 at 8:20 pm |
  4. Harry Potter

    We know the Chinese goods are expensive for the quality they are providing. If the price goes up, I will better go for quality and use home made.

    April 6, 2010 at 3:17 am |
  5. SAE

    Unbelievable these comments... China is buying up huge amounts of US currency to keep the exchange rate at 7 Yuan to 1 US dollar. What does this mean? It means that US companies and consumers have huge buying power when it comes to Chinese goods forcing domestic suppliers out of the market. Forcing China to stop manipulating their currency and float it based on normal economic conditions, will level the playing field and allows you to buy that next T-Shirt from Walmart where the tag will say "Made in the US" instead of "Made in China".

    April 6, 2010 at 3:23 am |
  6. Heidi

    Not for crappy Chinese products. The only reason people buy their junk is because it is CHEAP. Cheap to buy, cheaply made. There is just no way I would pay a premium for it.

    April 6, 2010 at 3:29 am |
  7. dumbfounded

    Americans would have more money to spend if so many of our manufacturing jobs hadn't been moved to China.

    Cheap Chinese goods equal fewer jobs and less spending money here in the US.

    April 6, 2010 at 3:31 am |
  8. Jesse

    If the yuan goes up, we'll just be buying our cheap imports from India, Vietnam, Indonesia, etc.

    April 6, 2010 at 3:33 am |
  9. mr.dong

    You amelicans have to pay more soon. All your base are belong to us !!

    April 6, 2010 at 3:49 am |
  10. normal

    not a chance

    April 6, 2010 at 4:16 am |
  11. Omida

    My salary is 15% lower due to furlough now than what it was 2 years ago, and you ask me if I am willing to pay more for Chinese goods??!! Are you kidding me? I will cut even more! I haven't bought any new clothes or shoes in the last 12 months and I look fine with my old cloths washed and dried and ironed at home. We need to stop this buying madness. This is destroying us and our environment.

    April 6, 2010 at 4:22 am |
  12. twitter.com/mrweeks

    China goods are just as equal if not better than domestic goods. China is growing at pace America will never ever catch up too. I import millions of dollars in merchandise and enjoy the huge margins and savings in doing business overseas. They are the smartest people in the world. Im most certain that the computer you are browsing on was made in China. So don't knock it.

    April 6, 2010 at 4:23 am |
  13. Dylan Defalco

    raising the yuan's value will just make people fall for the "power of suggestion", how much do you think china's factories will improve their products?.........they wont i wouldn't pay i cent more

    April 6, 2010 at 4:26 am |
  14. offshoreMM

    An increase in the value of the yuan will have an overall negative affect on American citizens. Let's face it, the large population of low-income people are only going to suffer if the prices of the products within their reach increase. There are more than 39 million Americans living below the poverty line, trying to force the Chinese to increase the value of their currency will drive prices up for the poorest of the poor – the people who can least afford an increase in price.

    Instead of moaning about factory jobs being exported to cheap labor countries, how about Americans go back to school and learn a skill that is viable in this modern age? Not only are the Indians and Chinese doing your factory work, but they are also overtaking you in IT, automobile production, medicine and technology. Will America be able to compete with anyone? Time to stop complaining and go back to school, learn a new skill and stop whining. That way when the American economy collapses, at least you will have the luxury of pointing your finger at someone else.

    April 6, 2010 at 4:27 am |
  15. David

    i am from china .as a chinese ,i am very proud of chinese great achievements.

    April 6, 2010 at 4:47 am |
  16. JesterJames

    lol, if you think Chinese made stuff are of poor quality, wait until you get load of the stuff made in India. There's a reason why Chinese products are taking marketshare in India and other 3rd world countries. It's because it is better quality and cheaper than the local products. That's saying something.

    April 6, 2010 at 4:47 am |
  17. bert

    i would only pay more when and if the quality was also higher. i mean you can buy a knock off "cramsiknight" and use it 2-3 times on your travels ands then throw it away. or you can pay 3-4 times more for the real deal "samsonite" and travel up to 20 times with it.

    you choose.

    so i think higher prices then the quality needs to go up.

    April 6, 2010 at 4:48 am |
  18. GS

    buy North American.....read the labels

    April 6, 2010 at 4:50 am |
  19. joe

    mr dong prosperity is niot forever thats why us gave to yur country so that can enjoy it but they can take it away the way they take it away from russia, yu need to trusrt yur self to play fair if for the usa yur product is not going to be here and atend to be just inside china, usa can do that too but they just let yu doit coz yu need it.

    April 6, 2010 at 4:57 am |
  20. Paul

    It is not a wise idea to appreciate yuan,it is not the critical factor of this issue

    April 6, 2010 at 5:12 am |
  21. Omida

    Buy less of the unnecessary stuff, i.e. most of the Chinese goods, save more, and build USA back from the ruins of decades of irresponsible spending spree!

    April 6, 2010 at 5:19 am |
  22. dd

    I recall that things were a lot cheaper in the 80s and the early 90s. Not only clothes were cheaper, but also other consumer products, e.g., $1 or so for a gallon of gas, $10K or less for a decent car. The talks then were to force Japan to raise the value of Yen to save our jobs. Yen did rise all right and so did prices for cars, gas, and clothes - and it did nothing to prevent Toyota from becoming number 1 or China from selling us more (oh yes) expensive clothes. The truth is that the dollar is getting worth-less. How did Japanese and Chinese keep inflation in check?

    April 6, 2010 at 5:29 am |
  23. Strangewalk

    Mr Weeks: How smart is it to completely destroy your own country's natural environment for the fast buck?

    David: Like having the world's highest rates of cancer and birth defects owing to your completely ruined bioshpere?

    Beginning right after China's entrance to the WTO, American industrialists and financiers began the most massive transfer of wealth and manufacturing capacity in all of history to China. This elite knew their actions would decimate the US manufacturing base and lead to massive unemployment, but because they could profit exponentially they didn't care.

    Americans need to get rid of their criminal government that assisted and encourged this process, and bring the factories back home. The Chinese need to allow the hundreds of millions of non-professional factory workers who are still held in Gulag labor bondage earning slave wages to ascend to the middle class and become consumers.

    April 6, 2010 at 6:06 am |
  24. designer

    I design products for production in Sri Lanka. We struggle with rising prices on raw materials like everybody else. If we need an additive to our products like bric brac, buckles, squeakers....yepp, Chinese. With a nearly endless number of national holidays and a less than gung-ho work ethic, Sri Lanka really struggles to compete. I don't like Chinese products at all, but do have to admit that the reason they have become the world's biggest economy is pure hard work. Now they are running around the world securing oil and mineral rights everywhere they can in order to keep it all going, while Western countries prioritize human rights issues(and so do I!). It is a difficult dilemma, indeed. We are doing fine, competing on service, language, design, smaller minimum order quantities..thank goodness.. It is all much, much more complicated than the value of the yuan.

    April 6, 2010 at 6:31 am |
  25. pt

    -$100. I try to avoid made in china goods.

    April 6, 2010 at 6:45 am |
  26. Daniel

    I am grateful for inexpensive Chinese products. I don't chose products based on their origin – but on their value to me. It seems ironic and hypocritical to me that the US complains when China has a trade advantage, but it was OK when the US did. I don't think the value of their currency as maintained by the Chinese government is the principal reason why we import so much from China. I think it is simply because they have many advantages, such as inexpensive labor and a disciplined work force.

    April 6, 2010 at 7:08 am |
  27. Bob

    Having spent several months in China I have come to the conclusion that increasing the yuan would only have a huge negative effect on the world economy. People from the West will see even more inflation and less buying power. Bottom line USA

    April 6, 2010 at 7:39 am |
  28. Bob

    Cont. Bottom line USA needs to get back to manufacturing base companies and put people back to work.

    April 6, 2010 at 7:40 am |
  29. lili

    to be honest i think that some of you guys really got to the real question of this all. it's not about the yuan, its about the US scared of losing it's foothold on the international market. so lets look at a few things that pretty much everyone knows already.

    a, china has had a pegged exchange rate for a long time (china is more stubborn than you can ever imagine)
    b. things from china are generally cheap (both in cost and quality...but you pay for what you get)
    c. labour is cheap in china (but can you imagine how many jobs would be lost if factories close. to be honest a bad job is better than none at all)
    d. the income gap in america is large, but even larger in china
    e. american politicians are corrupt, but their chinese counterparts are more so
    (e.1/2 americans are extremely capitalistic, but the chinese are more so... actually the chinese even think that their country is socialist...haa)
    f. chinese work their asses off and save shit loads of money... americans buy stuff and end up in debt
    g. americans are the second largest polluters of Carbon per capita in the world... china is not the only one with environmental problems
    h. chinese have too many treasury bonds for the US to go poking around in their business... end of story for now

    April 6, 2010 at 8:03 am |
  30. Pat

    Not a cent more. I avoid Chinese products as much as possible. Don't want to support the Communist dictatorship. The Western consumer & companies are creating a Frankenstein monster.

    April 6, 2010 at 8:07 am |
  31. ZZZ

    From the coments , we can see that the US gorvenment has a opposite tghougt about the China currency ! A Chinese

    April 6, 2010 at 8:14 am |
  32. ZZZ

    From the coments , we can see that the US gorvenment has a opposite thougt about the China currency with normal americans ! A Chinese

    April 6, 2010 at 8:15 am |
  33. YY

    Chinese goods is much better than any countries in Asia
    made-in-China means less spending

    April 6, 2010 at 8:28 am |
  34. Tomaz

    Chinese economic strength is based primarily on unfair business practices, of which the under appreciated yuan is a part. It doesn't take a gift of foresight to see that will eventually have to end. The sooner it ends the less painful will it be for all involved.
    It could already be too late, in fact.

    This practice is not unfair just to US and Europe, but also to all developing countries who can't compete with China as a result. This is simply abhorrent.

    April 6, 2010 at 8:42 am |
  35. realistic

    China is supplying to the US what the US is asking for.
    The pace is set by Wallmart, Target etc. They taught the Chinese how and what to produce so.... if exchange goes up the cost will go up. Perhaps CFO's should reduce their bonuses to compensate for the increase.

    April 6, 2010 at 9:28 am |
  36. Sowah

    Before the world's market was widely open to Chinese imports, products were durable. All products I used to buy had labels like made in Italy, made in Spain, made in Japan, etc. Nowadays most products have the label made in China. Many times, I had to return these products within weeks because they become defect within this period. I would then have to wait for weeks until the returned product come back from repairs. And when you're not lucky and the product becomes defect outside it's guarantee period, you have no other option than to throw it away. I'm tired of all these cheap crappy made in China stuff. I think if the Yuan goes up, Chinese crap would become a bit more expensive and home made goods can compete better with them. That would mean more availability of home made good quality goods. And I'll stop whining.

    April 6, 2010 at 10:10 am |
  37. elenore

    Go to the dollar store,everything is still a dollar no matter where it's made,price of products increase all the time.Things are much more expensive now than just ten years ago why?Multinational Companies don't pass the SLAVINGS onto you but their shareholders which is like less than 5% saving than using US or North American Workers.China pollution is our pollution we share one earth.By the way ever notice how any jobs their are now pay less wages and benefits,because China workers are cowards and won't demand better living wages and benefits and environment.Walmart owners are some of richest people in the world do you really think they pass that money to consumers? get out of here.Unemployment is ridiculous,I want to be employed even if things cost more and guess what when Americans are unemployed tax payers are paying for them to get Benefits either from Unemployment or Welfare so how do you want to pay for your fellow Americans.Have them earn their way or pay through taxes which could be spent on other things like your kids education which is becoming worse everyday and the longer and higher unemployment goes on the less money for local and State governments.So you are actually paying for cheap products from China through your tax dollars, you are already paying more to buy crap your kids and you don't need anyway.By the way other 3rd world countries are more free to buy our products in return than China Communist dictators whose citizens have no money.

    April 6, 2010 at 12:27 pm |
  38. dd

    I figured out why business leaders in the United States lobby for a stronger Chinese currency: they want Americans to sell ourselves cheap (and politicians who do the same are working for business interests). Let us suppose that the dollar devaluates 40% (that is how much stronger for the Yuan to be, and also for other third world currencies, otherwise, it won't help to save our jobs), if all works out as well as advertised, our pays will raise 10% in dollar terms (current unemployment rate) - but overall we will take a 30% pay cut relative to the rest of the world. Sneaky politicians and business leaders!

    April 6, 2010 at 4:27 pm |
  39. JLW

    The increase in value of the Chinese Yuan will only give minimal help to the U.S. In order for the U.S to have real strengthen in its economy it needs to reduce its balance of payments and create jobs. This can only be accomplished if incentives are offered to business, especially manufacturing, in order expand and increase employment, reduce taxes and offer incentives for exports.

    Management, labor and government must change and not be adversarial but become flexible and willing to work together in order to lower costs and become competitive. Under current conditions and policy in Washington this will never happen.

    April 6, 2010 at 5:21 pm |
  40. vays

    A common (mis)conception is that products made in China is cheap because they're "cheaply" built. This couldn't be farther from reality. Nowadays you can walk into the most department stores and find plenty of goods made in China. They're cheap because of 1) the lower cost of labor; and 2) the economy of scale of China now being the world's largest manufacturing base. The exact same products, if built in US, will cost significantly more, and you can bet every penny you have that the additional cost will be passed on to us consumers.

    And for those who argue that Chinese-made goods can be easily substituted with Vietnamese-, Indian-, or whatever country-made, I would argue that it would take years for any of these countries to match China's maturity and economy of scale.

    April 6, 2010 at 10:16 pm |
  41. cdf

    only the dumpest people buy goods made in China

    April 6, 2010 at 10:25 pm |
  42. Raja Iqbal

    Buy value , not where its made of,i thonk if chinese govt is taking currency measures for the good of their country and people they are doing a great job.
    china is just a cheap labor market ,foreigners manufacturers gave them all the ideas from marketing to fashions.If you want quality products they raise their manufactuing costs so best way is ask for quality chinese prices will go up.

    April 7, 2010 at 1:27 am |
  43. oohkuchi

    I bought a Chinese hammer for two dollars the other day. Twenty years ago I would have paid ten times that much. For that I am grateful, and I do not believe that 1% of the borderline xenophobes and economic illiterates moaning here about Chinese 'crap' would want to go back to that. That issue is closed. The manufacturing is never coming back.

    So what would happen if that two dollar hammer suddenly cost two dollar fifty? Nothing. Even a doubling in the dollar price would not turn people away from Chinese made basic goods. Despite the many duds, they're still just too good value. The net effect would be an own goal–slightly high living costs for all. Nothing more.

    April 7, 2010 at 6:45 am |
  44. hachimada

    I cannot understand the comments like "when Chinese products are getting expensive I will stop buying those craps". The truth is you can buy "made in Italy" NOW! Provided that you don't care spending 200$ more. Actually, I buy shoes "made in Italy" all the time, and I don't have to complain the quality of products "made in China". But unfortunately it's not the case for most consumers, for them it will be bad to see an increased price.

    There are many reasons why "made in China" products are popular in all parts of the world. Hatred doesn't solve any problem.

    April 7, 2010 at 7:25 am |
  45. hachimada

    On the micro-level, currency exchange rate has very little to do with international trade, since all international trades are based on pricing in US$ (or other "hard currencies"). US consumers would naturally think that the price will stay the same, as echoed in an earlier comment in this forum. But that would mean the profit margin in Chinese side is further squeezed, which is unlikely due to new labor law and increased income level there.

    The likely scenario is either the US importing companies accept higher price in US$ and then pass on the increased cost to US consumers, or look for products made by another country. The latter scenario is unlikely in short term since it would require years of investment on infrastructure and training of workers to become competitive on mass production.

    The worst scenario on Chinese side would be that some factory owners may find ways to further abuse their workers since the US importing companies refuse to accept higher price in US$, leading to zero profit if the work condition is maintained.

    So on the political frontier, the pressure on Chinese currency will have negative impact on human rights situation. Maybe that's exactly what US would like to see?

    April 7, 2010 at 7:50 am |
  46. ramus

    These speculations are absolutely pointless. If the Yuan appreciates, the Chinese workers will get more dollars for each Yuan earned and will be willing to work for less in terms of Yuan while keeping the dollar prices at the same level..... The only problem here is that the Chinese are willing to work for much less than the Americans and no exchange rate will change this in the long run.....

    April 7, 2010 at 3:23 pm |
  47. gbxk86a

    For people who complains about Chinese "crap", they should know China does not only export cheap goods to USA. The IPOD I bought six years ago was manufactured and shipped directly from Shanghai, China. People have to understand raising yuan value potentially can hurt China, but will hurt USA also. The computer you buy, the TV you buy and the furniture you buy, (not just clothes) will also rise in price. An alternative to hold down inflation is to start importing from other cheap labor nations, which likely will produce worse "crap". This is not going to help the trade deficit at all. Shifting production back to USA, assuming we are all patriotic and willing to pay for higher price made in USA, will raise the price several-fold. Inflation will devastate all of us. Wish the politicians really think this through.

    April 7, 2010 at 7:08 pm |
  48. slowday

    A lot of people here have complaint that China is taking away the market for Domestic goods. But does not buy China mean buy American? Is your next HDTV going to be anything else other than Samsung, Sony, Toshiba or Philips? Which none are American.

    America's out sourcing is due to its own capitalistic philosophy of free market economics. If not to China it would be to other developing nations. Developed nations like the U.S will export material and services whie developing nations will produce cheap labor. The wealthy will always pay the poor to do their work.

    Quality of generic goods will always be you get what you paid for. If a chinese worker is being paid 50 cents an hour for a Nike that you paid 100 bucks for , imagine the price for that same shoe if the worker is being paid 5 bucks an hour due to inflation.

    April 7, 2010 at 10:10 pm |
  49. Stew

    First, products made in China are made to at least two different quality standards – the products for local use are so bad that no American would want them – the export designed products are produced to US mandated standards, so if you have a problem with quality, take it up with Walmart et al.
    Second, if the RMB increases, so will the price of every product imported by US consumers.
    Third, if Americans had saved more and spent less, the Chinese wouldn't have to fund our insane debt.
    Fourth, Write your congress person and demand that we lift the silly export restrictions on US products so that the Chinese will buy from the US – instead of Europe.

    April 7, 2010 at 11:22 pm |
  50. yizhang1985

    Chinese goods is much better than any countries in Asia
    made-in-China means less spending.i agree on it

    April 8, 2010 at 1:24 am |
  51. grew123

    I DONT GET IT MAYBE SOMEONE CAN EXPLAIN IT TO ME.YOU DONT WANT TO PAY ANYTHING FOR YOUR GOODS BUT YOU WANT TO BE PAYED 25 DOLLORS AN HOUR FOR SETTING IN AN OFFICE.DOING WHAT.GOOD LUCK AMERICA.GET A LIFE AND TAKE A CLASS IN ECON 101.

    April 8, 2010 at 2:24 am |
  52. greystoke

    i dont want anything from china,but i would pay alot more for made in north america!!!!!keep our jobs and our money where it belongs,at home!!!!! chinese products are crap in general anyway!!!!!!

    April 8, 2010 at 2:30 am |
  53. Jack2468

    The bottom line is that China can do what they want to do. They don't need the US to stick it's nose in their business. The fact is, the US dollar is close to collapsing and US politicians are trying to find a way to dig themselves out of the hole. The US owes more money to China than any other country. The US is desperate to save it's own face before the nightmare becomes reality.

    CNN is also the police of any posting and challenge them to let freedom of speech be open.

    April 8, 2010 at 3:42 am |
  54. Dreamer

    Odds are even if goods are made in the US, the workers in those factories would probably be Asians or Mexicans. No difference really if the factory is located in China or in the US, as the output would be the same. You are only paying for the wage difference.

    April 8, 2010 at 11:56 am |
  55. SK

    I m from HK. What a stupid policy and thought of US government! To force RMB to appreciate is useless and it will only make US people to buy expensive stuff!! How about the poor people? How they can live without cheap Chinese products? Even RMB appreciate, supply of US goods must not be able to increase because definite the "COST" for US goods is too high!! How it can support? How we just pay USD$2-3/hour to hire US workers?? Totally bullshit if the human cost is too high for lower cost product!!

    Financial Tsunami proved US people & government used to spend money but without saving, now the only solution for US is to print notes and issue more bonds and then let the world to repay debts of USA. And now US blame China for its currency is too low? How ridiculous it was!!! Think about it US people!!

    April 8, 2010 at 6:00 pm |
  56. monsterZZZ

    Seems like many people believe if the price of Chinese goods goes up, people will turn to local products and jobs will be created. Are you kidding? If Chinese goods become expensive, you turn to India goods, Africa goods, cheaper goods with even lower quality!
    There is NO WAY local consumer goods production will come back. Can you imgine yourself sitting in a sewing line for 10 hours a day to make 50 bucks a week?

    April 9, 2010 at 3:58 am |
  57. mjh

    Appreciation of Chinese yuan will not only hurt US consumers for higher prices, but also have negative impact on US jobs and economy

    Though many products are marked as " Made in China", it is actually designed, developed and the brands owned by American companies, which is in higher food chain and generates higher profit margin, higher pay jobs, and contributes more tax revenue here in US. For long, American competitiveness comes from innovation, technology, and creativity in services, and it will not be able to compete in the fields of labor- intensive, low profit – margin mass manufacturing with the countries like China, India, Vietname, Mexico regardless what kind of foreign exchange rate is

    April 9, 2010 at 5:25 am |
  58. helenecha

    Try to make some changes from poor consumers to the riches on the designing of the clothes may be lucky for China in U.S. market while the Yuan appreciates.

    April 9, 2010 at 6:09 am |
  59. m

    I am going to follow all the conrtibutors on this page!

    April 9, 2010 at 7:02 am |
  60. Econo

    THIS IS PERFECT!!

    The textile industry in the west might still get a shot to be once again become competitive!

    Do you realise that if we only paid 12% more on textiles, they can be competitive again?!

    This is great to fight unemployment! If you're against it, you're a stupid selfish greedy nitwit and I hope you lose your job because your job has just been shipped to CHINA!!

    April 9, 2010 at 12:28 pm |
  61. Downs

    A very politically popular thing the Americans are doing these days is to shout anti corporate American and "Buy American" slogans at the same time.

    Does anybody even think how these two work together ? You hate corporate American, they go elswhere, then where do you "Buy American" ?

    April 9, 2010 at 5:39 pm |
  62. AK

    I ponder, I thought we are in a free market, one wants to buy a product, and demanded an increase in price.

    April 10, 2010 at 12:15 am |
  63. maddog49

    The way that our Federal Reserve Bank keeps increasing the money supply, price inflation ought to be rampant. Remember all those toxic mortgage-based securities that made the Bush administration feel obligated to bail out the banks in 2008? The news media stopped reporting about them in mid-2009. The problem seemed to disappear by itself. That is because the Federal Reserve quietly mopped up all those toxic assets by creating new money out of thin air!

    So, why isn't price inflation rampant? It is because the Chinese not only buy up much of U.S. debt, they peg their curreny to the dollar. When Ben Bernanke inflates the dollar, they inflate the RMB to keep the exchange rate 6.5 RMB to 1 dollar.

    There are millions of new middle class yuppies in China – young, educated, hard-working, capitalistic in spite of their government. Their pay has risen a lot this past decade, but it is common for such people to save for years to buy a high rise condo only to see the price skyrocket out of their reach.

    What is happening to them is that because their economy is growing at 8% annually, much higher than that of the U.S., their economy absorbs the price inflation that would otherwise hit the U.S. economy.

    The arm twisting by the Obama administration to have the RMB gain value would be laughable if it weren't suicidal for us Americans. The buying power of those Chinese yuppies would increase, as would that of lower paid factory workers. They could buy a lot more of the goods that their country makes. Meanwhile, American consumers would lose buying power, as Chinese made clothing, shoes and appliances become more expensive in the U.S.

    We Americans don't have enough goods-producing factories to reduce the trade deficit even if American goods become cheaper worldwide. Due to heavy federal government regulations, the cost of doing business in the U.S. dissuades the building of new goods-producing factories. Moreover, the Treasury bonds sold to the private sector siphons away capital that could be used to build these new factories. If you think American industry is bogged down now, wait until the Value Added Tax is implemented ostensibly to reduce the deficit! I expect the federal tax revenue to decrease as it did in California after state tax increases about 12 months ago. Existing businesses will reduce production, move away or shut down.

    China is already trying to reduce the amount of U.S. debt that they buy. About $4T of our National Debt is short term and thus rolls over in the next couple of years. I expect there to be a shortage of buyers for the new Treasury bonds, causing Bernanke to monetize the debt. With the RMB floating instead of being pegged to the dollar (which Obama presently wants), the additional trillions of dollars added to the money supply will make price inflation in the U.S. take off.

    The Federal Reserve won't be able to raise interest rates very much in the face of price inflation because doing so would force the Treasury to pay more interest to its bondholders. Thus, instead of having higher interest rates check inflation, Obama is apt to resort to price controls. Many businesses would be unable to pass on their spiraling costs to consumers, and would have to shut down. This is how high inflation causes shortage of goods and increased unemployment.

    Poor people and people living on entitlements would be hurt severely, as the money loses it value. What good does it do to have money if it buys you little or nothing?

    The United States must end its dependency on foreign countries to fund its overspending, to eat its inflation. Deficit spending must end. This means all spending must be cut back! No more crony capitalism, with its sweetheart deals and bailouts for big business! Military presence outside the U.S. must shrink dramatically. Welfare should be harder to get so that only the neediest receive it. There should be fewer departments in the executive branch.

    The free market was unjustly blamed for the 2008 mortgage crisis. It was a matter of slapping the label, "free market" on an economy dominated by big business getting into bed with government. In a truly free market, there is no strong relationship between big business and government.

    If America were a goods-producing nation with an annual trade surplus and a balanced budget, we wouldn't need to care what the exchange rate between the RMB and dollar is.

    April 10, 2010 at 9:02 am |
  64. Kerry

    US blame China for its currency is too low? How ridiculous it was!!!
    Push the RMB to increase, who will pay the bill. of course, the normal consumer. In a world where most of the products are made in China, it is so stupid to boycotts MADE IN CHINA.

    April 10, 2010 at 12:25 pm |
  65. MJ2

    Good luck to all Americans. Please make your own phone, TV, clothes, computer, etc.
    Haven't you learn anything from your car companies?

    April 10, 2010 at 7:56 pm |
  66. Mike

    An appreciation of the renminbi won't be good for US citizens.

    And some of the discussion here reflects not only a lack of understanding of how economics and trade actually work, but a lack of understanding of what the Treasury Dept. is even claiming to be trying to accomplish.

    Hint: most of the "made in China" products sold in the USA aren't Chinese brands. Rather, they're brands like Nike, Adidas, Walmart's store labels (Puritan, etc.), Panasonic, Phillips, Sanyo... some of these are American companies, others are companies in other developed economies (Europe, Japan). What they all have in common is that none of these companies are going to move a significant number of jobs from China to the USA. They'll either pay a bit more for Chinese manufacturing, or they'll buy from other developing-country manufacturers. And in the first instance, the question of "how much more are you willing to pay for Chinese products" is more properly addressed to the global COMPANIES, not to the individual consumers. And the answer is: whatever the global playing field, these companies will buy from whichever country makes sense. None of these companies will EVER relocate a significant amount of its labor-intensive manufacturing to the USA... unless, of course, American workers are willing and able to compete on wages with the Chinas, Vietnams, and Indonesias of the world.

    But what our politicians seem to be aiming at isn't even, in the first place, to move jobs back to the USA. It's to get China to buy more US exports. Fair enough... but there are only certain American products the Chinese want to buy. OBVIOUSLY Chinese people aren't going to buy a lot of made-in-USA electronics or cars or clothing items; they DO buy American brands, but for reasons already acknowledged in the previous paragraph, these aren't "made-in-USA". A stronger renminbi will likely, though, lead to even more Chinese purchases of American real estate, and may increase the ability of our top universities to get full-fee-paying Chinese students instead of the subsidized American students. No doubt China would buy some of America's top weapons systems, if they were for sale...

    April 10, 2010 at 8:25 pm |
  67. Craig

    All of this "I refuse to pay more" attitude is exactly what the Chinese want – people's spending habits become dependent on low prices that only China can provide through its effective subsidy on exports. Americans need to grow up and decide whether they are willing to sacrifice a few things in order to compete on the world stage. There is no such thing as a free lunch – if we want to remain a superpower, we need to re-evaluate whether we are keeping pace with the rest of the world, and from what I've seen the answer is no. People seem to think that Americans are entitled to their living standard by birth, when in reality we've enjoyed an unrealistic standard for years, and there has to be some re-evaluation. If you support keeping the yuan low just so that you can buy more stuff you don't need, you might as well learn how to say "would you like fries with that" in Chinese. (It's 'nin xiang yao shu tiao ma?' btw)

    April 11, 2010 at 3:18 am |
  68. Chinaren

    @Elenore:

    "China workers are cowards and won't demand better living wages and benefits and environment."

    You should learn something about a country before making stupid remarks like this.

    A good TV program to watch would be the Discovery Channels 'The Peope's Republic of Capitalism'. A well balanced four part documentary about China, and how it's investing massively.

    My blog on China (where I've lived for eight years) is http://www.ChinarensBlog.com ;)

    I doubt revaluing the Yuan would do much for the US, it's way past that point.

    If you don't like Chinese goods, then stop buying them! Assuming you can find any that aren't made in China. Not many these days. The US, and the rest of the world, have allowed this to happen. Time to lie in the bed we made.

    April 11, 2010 at 12:50 pm |
  69. Diane Young

    My brand new Apple Mac 15 inch computer is made in China. My Panasonic 52 inch TV is made in China. My I Phone, I Pod, cell phone,etc etc. None of these products are cheap or junk. If they are going be made in the USA you will pay double or triple the price you are now paying. How many people can afford to pay that much more for the same products?

    April 12, 2010 at 11:56 am |
  70. J-C

    Don't talk so much, just do not buy anymore Chines junk

    April 12, 2010 at 9:47 pm |
  71. safi

    I think if china brings quality in the products they produce people would pay for it. As far as currecny is concerned it will not bring any changes in the price rather it will lead the country to stability.

    April 13, 2010 at 6:55 am |
  72. dd

    My wife just went to Whole Food to buy meat and came back without any beef and told me that for some strange reasons the usually lower-priced beef cuts we buy are a lot more expensive now. Waiting for a week will be better she figured. I seriously doubt that. With all the call for weaker dollar from politicians and business leaders in the United States, all commodity prices are going up, especially with the expectation that China will let the Yuan rise. We are in for a period of inflation of everything - not just for things made in China. Think about it: if a Pennsylvania farmer can sell beef to China for a higher price in dollar terms (but the same in Yuan, if it rises in value against dollar), why would he/she sells to us locals for less? I guess that Chinese are going to eat more American beef after all and eating less here might be even good for us - I only wish it is not because we don't have enough money.

    April 13, 2010 at 7:19 am |
  73. smartcookie

    The US should pressure China to let the Yuan float to market rates. Our current course of action endangers the sliver of the American manufactering base left to us and frankly, should be seen as a national security concern. The Chinese are not our friends. We are rapidly becoming a debtor nation to a communist regime that would be delighted to excercise control over the US economy. How would you like that?

    April 13, 2010 at 5:52 pm |
  74. mitch

    America must get back on its feet before it is too late othewise next
    generation will be sold out to china.USA allowed china to benefit
    no tax policy t o drive it away from comunismbut got adict to cheap goods and export debt .It will be beter for 30 milion unemployed americans to get a even paid less 4$/hour job than staring at tv
    and feeling useless.China must obey al free market rules including
    free floated yuan.They benefited most of world free trading and now
    they are a mature country so free market will ajust the wealth to china and usa.

    April 14, 2010 at 3:34 am |
  75. Ronald Raygun

    A simple question: if the Chinese can set the value of their currency v. the USD, why can't the US Gov't set the value of the USD v. the RMB?

    That is, why does the Chinese Gov't get to set the exchange rate between the currencies for the exchange of goods?

    April 14, 2010 at 5:45 am |
  76. dd

    There is no such thing as market determined exchange rates. The current situation is that the Chinese central bank increases its money supply in sync with the Federal Reserve. That is their business, let the Chinese tell their government and their central bank how much money they need in supply and how much inflation they can tolerate, why do we care to speak for them? But we do care and have the right to tell the US government and the Federal Reserve not to print too much money and not to create too much inflation. 3% is OK, 30% is way too much. I have been working and saving for 25 years, unlike some Americans who don't work or some who don't save or politicians and business leaders who might earn and have saved some Yuan or Yen, all I have saved are American dollars and I am only paid in American dollars. How dare they tell me that my saving is going to be 30% less overnight and to take 30% pay cut in the future? This is the worst communism - I hate that! It is hard to believe that they are spinning it as a good thing to have 30% inflation. They must think the rest of Americans are fools.

    April 14, 2010 at 6:11 am |
  77. jas

    The Americans are to blame for their own money worries. since the second world war, American goverment, CEO's and wealthy people (share holder's) have embark on a policy of getting rich at the expense of the common person. they have long since transfer their manufactering to china and other countries which is the foundation of any good economy.
    The CEO"s are the true criminals in this trail and they should be hung for this problem instead of china
    Time to own up and face the facts, like i was taught from my father.
    SHAME ON YOU AMERICAN CEO's and SHAREHOLDERS

    April 14, 2010 at 6:39 am |
  78. Hershel

    Any product with a "Made in China" I do best to avoid, if not buy at all, I have been saying this for years. Look how treat thier own people, Do you think they care us????? At least in America you some sense of rights and protections.

    April 15, 2010 at 10:44 am |
  79. Would not buy

    All industries are subsidized in one way or another. Higher prices will slow sales and will help the US.

    April 15, 2010 at 11:10 am |
  80. dibs

    products made in malaysia, indonesia, vietnam, philippines, etc are slightly better in quality compared to china and india...but china has the advantage since their products are cheaper due to YUAN...if china YUAN will appreciate, it's good news for other countries i mentioned above...

    btw, at least in semicon and electronics manufacturing, it's no longer true that china has the cheapest labor cost, but they (china) has an unfair advantage since their YUAN is cheap.

    also, try to open your made in china iphone - you would IC components made outside of china...europe/us had developed this ecosystem which favors china and now it becomes so hard for other countries (in asia) to compete with china because of this 'ecosystem'...and currently, china is starting to flex its 'economic muscle' and the world is at its mercy...this is insane...dictating china to appreciate its YUAN is a first step to bring back sanity in this world...other asian countries will become more competitive - us/europe will now have other choices...but don't expect that the price will go down though...

    April 16, 2010 at 4:10 pm |
  81. Elliot

    I buy nothing from China and will not until they stop all of their crimes against humanity and the planet. Included in the long list of malfeasance is the genocide of the Tibetan people and elimination of their culture; child labor and slave labor; kangaroo trials for free speech and summary executions; more environmentally destructive projects than the rest of the world combined; the vast market for body parts of endangered and protected species; providing Iran and N Korea with the infrastructure needed to produce nuclear weapons and delivery systems. Anyone buying products from China, regardless of which company's name is on them, is complicit in these crimes. I cannot understand how any concerned citizen can think saving a few pennies can justify being an important contributor to these actions in China.

    April 17, 2010 at 3:11 am |
  82. dd

    You might want to read the news in terms of jobs going back to America: "China has decreased output and increased export taxes on all its rare earth materials to a range of 15 to 25 percent" according to the CNN report "China mineral dominance concerns U.S."
    http://edition.cnn.com/2010/US/04/16/china.minerals/index.html
    Sounds like China is doing something opposite to subsidizing its industry/export and those minerals might be mined in California again (perhaps with some government subsidies). Is this a result of lobbying by politicians and business leaders in the United States? Very interesting.

    April 17, 2010 at 6:39 am |
  83. USA

    China and even India are purely relying on their volume of population.
    China might have the highest number when it come to exports. However, the $ value that china will earn by exports will be devided into over 1 billion chinees population as compared to that of america getting divided into 307 million americans. Cash earned per person in America is significantly higher than that of America.

    Besides, China and India has jobs only because their employees work for much lesser salaries. The movement they ask for as much money as the developed world would pay their employees, they dont have a job. Hence standard of living in China and India will only be second best to the developed world. They can never cross that barrier as long as their economies rely on outsourced jobs.

    April 18, 2010 at 9:38 am |
  84. seylan

    The Chinese cheap product concept which was awful even to hear about a few yrs back is no more so, since the Quality of these products have improved (though there's still scope for lots of improvement).
    As a consumer looking for value for money, what matters to me is the price and quality. Not where the product came from.

    April 19, 2010 at 8:42 am |
  85. dhanveer

    Why are the comments here so dumb and stupid..really guys??? And then you feel offended when other nations call Americans DUMB. This is a good move for Americans and the rest of the world. The only reason the Chinese are moving ahead is because of its artificial currency rate.If this is fixed,YOU AMERICANS get the jobs that you have been complaining that the immigrants take from you. also other deserving nations around the world also do well,and higher quality products, valued at a reasonable rate is consumed around the world.
    Stop being so dumb. THIS IS A GOOD THING in the long run as it will aslo decrease the deficit that America owns

    April 22, 2010 at 9:42 am |
  86. ben

    It is very simple to raise the value of the RMB. Just legislate a requirement for all U.S. importer to settle their trade with China in RMB. There will be so much demand for RMB and it will appreciate.

    April 22, 2010 at 1:20 pm |
  87. misterH

    Buying Chinese made goods is nothing but funding our future enemy slowly. Stop it now else we will ourselves be to blame. Look at what we have allowed to happen to China in terms of its growth especially in military and other miscle flexing terms. Stop it everyone before it is too late.

    April 22, 2010 at 2:27 pm |
  88. samuel welsh

    cheap crap no work.
    china wins-stop crap made from china

    June 21, 2010 at 6:44 pm |
  89. Mark

    Watch, once the Yuan rises, the prices will cause so much inflation that they'll force China to revalue the currency again, but this time, it will be to bring it down. :)

    October 25, 2010 at 3:29 am |
  90. Mark

    Chinese crap is made by US companies who opened factories in China.

    October 25, 2010 at 3:31 am |
  91. Mark

    If people in the US are willing to work for $1 usd per hour, then maybe the factories will move back here.

    October 25, 2010 at 3:32 am |
  92. Emm Jee

    People need to understand the difference between price and cost. Chinese goods have a low price; but the cost is not dissimilar to goods anywhere else. Someone performing an hour of work is someone performing an hour of work wherever it happens. Chinese goods have an unrecorded social cost as workers have no bargaining power, and unrecorded environmental cost as the Chinese destroy the environment at will and an unrecorded political cost as China is still an autocracy.

    If I had the option, I would not buy any Chinese goods, or goods with Chinese components.

    November 26, 2010 at 12:45 pm |
  93. business.blogs.cnn.com

    China currency debate would you spend more.. Retweeted it :)

    April 19, 2011 at 2:33 pm |

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