Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

China put on notice over its currency(cornered by G7)
Financial Times ^ | 04/1705 | Andrew Balls and Scheherazade Daneshkhu

Posted on 04/18/2005 10:07:04 AM PDT by TigerLikesRooster

China put on notice over its currency
By Andrew Balls and Scheherazade Daneshkhu in Washington
Published: April 17 2005 19:11 | Last updated: April 17 2005 19:11

China RenminbiThe Group of Seven leading industrialised countries this weekend put China on notice that it must shift to a more flexible currency regime, with finance ministers demanding it take action immediately.

 
The G7's communique repeated its call for "more flexibility in exchange rates" where it was lacking, to help promote more balanced global growth, and added a demand that "vigorous action is needed to address global imbalances".

Officials said there was no discussion of singling out China because in the statement the language was already clearly aimed at Beijing - and because of the difficulty of getting Japan to agree a formal declaration.

But ministers from all the countries apart from Japan backed a US demand that China should act immediately.

John Snow, US treasury secretary said after the G7 meeting that China has had long enough to prepare its financial system, and more than two years of engagement with the US and the rest of the G7 on currency reform.

"With this groundwork in place, China is ready now to adopt a more flexible exchange rate," he said.

One senior official from a G7 country said: "It's not a question of threatening China but of recognising that this is getting urgent."

Greater currency flexibility is seen by the G7 as necessary to encourage other Asian developing countries to let their currencies rise against the dollar and promote domestic-led growth.

The US call was backed up by the finance ministers from Germany, France and Canada, speaking in the sidelines of the weekend meetings.

Mr Snow said the G7 had "put a clock" on the required actions by countries to help reduce global imbalances, including reducing the US budget deficit and promoting faster growth in Japan and Europe. That progress would be reviewed in an audit at the annual meetings of the International Monetary Fund and World Bank in September, he said. The US expects action from China within that timeframe.

China's top officials were not present in Washington this weekend, but have attended special sessions at the last two G7 meetings, and are expected to attend later in the year.

Sadakazu Tanigaki, Japan's finance minister, said China should be left to decide when to change its currency regime.

Reasons for Japan's reluctance to press China include a show of regional loyalty, and concerns about anti-Japanese sentiment and protests in China, officials from other countries said.

Japan's current account surplus is also four times larger than China's in dollar terms.

The hardening of US rhetoric came before the meeting, reflecting pressure on the Bush administration from Congress and small business groups.

There is concern that the US Treasury's gentle diplomacy may have made Beijing feel there was no urgency.

http://news.ft.com/cms/s/6923adf8-af6a-11d9-bb33-00000e2511c8.html


TOPICS: Business/Economy; Extended News; Foreign Affairs; News/Current Events
KEYWORDS: antijapanese; china; currency; economy; exchangerate; financeminister; g7; peg; protest; trade
China is surrounded economically for now.
1 posted on 04/18/2005 10:07:10 AM PDT by TigerLikesRooster
[ Post Reply | Private Reply | View Replies]

To: TigerLikesRooster; maui_hawaii; tallhappy; Dr. Marten; Jeff Head; Khurkris; hedgetrimmer; ...

Ping!


2 posted on 04/18/2005 10:07:40 AM PDT by TigerLikesRooster
[ Post Reply | Private Reply | To 1 | View Replies]

To: TigerLikesRooster

Why do the democracies let communist dictatorships get away with all kinds of obvious misbehavior? They didn't even name China for various pusilanimous reasons. Oy.


3 posted on 04/18/2005 10:10:38 AM PDT by Williams
[ Post Reply | Private Reply | To 1 | View Replies]

To: TigerLikesRooster

They need to raise the value of their currency...Ours is lowering, but not enough...Must be an equitable line there somewhere...


4 posted on 04/18/2005 10:12:12 AM PDT by Iscool
[ Post Reply | Private Reply | To 1 | View Replies]

To: TigerLikesRooster

Japan's reasons are actually a bit more complex than the article's dismissive "[R]easons for Japan's reluctance to press China include a show of regional loyalty, and concerns about anti-Japanese sentiment and protests in China, officials from other countries said"; Japan has to navigate very complex currency issues since they themselves do significant currency manipulation, and floating the yuan against the yen or dollar doesn't make that necessarily simpler.


5 posted on 04/18/2005 10:12:23 AM PDT by snowsislander
[ Post Reply | Private Reply | To 1 | View Replies]

To: TigerLikesRooster
The G7's communique repeated its call for "more flexibility in exchange rates" where it was lacking, to help promote more balanced global growth, and added a demand that "vigorous action is needed to address global imbalances"

How about a call for the U.S. to reduce gasoline usage by half for the same reasons?

6 posted on 04/18/2005 10:14:38 AM PDT by liberallarry
[ Post Reply | Private Reply | To 1 | View Replies]

To: TigerLikesRooster

On balance, the U.S. has always had a political problem insisting on balanced, bi-lateral trade. We have always taken it in the shorts -- by our own choice, or more properly, by Washington's choice.


7 posted on 04/18/2005 10:14:45 AM PDT by EagleUSA (Q)
[ Post Reply | Private Reply | To 1 | View Replies]

To: liberallarry
How about a call for the U.S. to reduce gasoline usage by half for the same reasons?

And what steps have you taken to halve your gasoline consumption since you're so obviously concerned?

8 posted on 04/18/2005 10:24:25 AM PDT by green iguana
[ Post Reply | Private Reply | To 6 | View Replies]

To: liberallarry; All

How do you suggest that we lower our gas usage??


9 posted on 04/18/2005 10:27:50 AM PDT by KevinDavis (Let the meek inherit the Earth, the rest of us will explore the stars!)
[ Post Reply | Private Reply | To 6 | View Replies]

To: liberallarry

Gasoline is running on a free market. The yuan is on an artificial peg which makes the whole system unbalanced. Completely different situations.


10 posted on 04/18/2005 10:29:13 AM PDT by bahblahbah
[ Post Reply | Private Reply | To 6 | View Replies]

To: green iguana
And what steps have you taken to halve your gasoline consumption since you're so obviously concerned?

I now drive a car which gets twice the gas mileage of my old one. I live in an extremely well-built house which requires very little energy to heat or cool...and I made sure I chose wisely when purchasing a heater. I've cut my driving to an absolute minimum.

And what have you done? Probably nothing.

More to the point, my post was intended to point out the lack of seriousness of the G-7 communique. China was being asked to adopt policies which would benefit G-7 (and us in particular), not itself.

11 posted on 04/18/2005 10:30:17 AM PDT by liberallarry
[ Post Reply | Private Reply | To 8 | View Replies]

To: KevinDavis

See #11.


12 posted on 04/18/2005 10:31:11 AM PDT by liberallarry
[ Post Reply | Private Reply | To 9 | View Replies]

To: liberallarry; All

Naw, I'm still on planning on to buy a suv.


13 posted on 04/18/2005 10:33:23 AM PDT by KevinDavis (Let the meek inherit the Earth, the rest of us will explore the stars!)
[ Post Reply | Private Reply | To 12 | View Replies]

To: bahblahbah
Gasoline is running on a free market

Not true.

The yuan is on an artificial peg which makes the whole system unbalanced.

Not true.

Neither market is completely free or controlled...and I'm not splitting hairs here.

14 posted on 04/18/2005 10:33:36 AM PDT by liberallarry
[ Post Reply | Private Reply | To 10 | View Replies]

To: TigerLikesRooster

was it cutler, in for brinker, this weekend that said anytime the g-7 forces an asian country to float their currency, it's always followed by a downturn for that country?


15 posted on 04/18/2005 10:35:28 AM PDT by ken21 (if you didn't see it on tv, then it didn't happen. /s)
[ Post Reply | Private Reply | To 1 | View Replies]

To: TigerLikesRooster

breaking the chinese currency peg is the key to the US not slipping into recession. right now, the amount of US business investment that is taking place in china is staggering - I see it everyday in the tech industry, its pouring into china. and its happening in manufacturing too. and we aren't just talking about toy making and cheap textiles.

china's 9% GDP growth is the reason why europe and japan have 0% growth, and the US can barely hold onto 3% GDP and is doing poorly on wage growth.


16 posted on 04/18/2005 10:37:35 AM PDT by oceanview
[ Post Reply | Private Reply | To 1 | View Replies]

To: TigerLikesRooster
One senior official from a G7 country said: "It's not a question of threatening China but of recognizing that this is getting urgent."

He/she must be EU. China has it made, and the reasons for giving that up will need to be substantial. So don't expect China to give in until some kind of economic suffocation is imposed by her trading partners.

17 posted on 04/18/2005 10:37:57 AM PDT by Realism (Some believe that the facts-of-life are open to debate.....)
[ Post Reply | Private Reply | To 1 | View Replies]

To: liberallarry

How's about we just raise the price of gas to the point where it a) cuts usage and b) encourages subsitution or development of alternative sources? That is how it is done under capitalism.


18 posted on 04/18/2005 10:40:15 AM PDT by RKV ( He who has the guns, makes the rules.)
[ Post Reply | Private Reply | To 6 | View Replies]

To: TigerLikesRooster

China will have to move to a more flexible exchange rate system. The market force alone will dictate it, when it costs them more to import raw materials than to export finished products.

Let's just hope they do it slowly and in a controlled manner. Otherwise, the rise in inflation here will really hurt.


19 posted on 04/18/2005 10:40:29 AM PDT by Fishing-guy
[ Post Reply | Private Reply | To 1 | View Replies]

To: ken21

that's fine with me. the alternative is that we allow the peg to remain, and the artificially low cost environment that it creates - suck up all the corporate investment from the US and western nations into it. Essentially, China is now an "enterprise zone" for US companies.


20 posted on 04/18/2005 10:40:38 AM PDT by oceanview
[ Post Reply | Private Reply | To 15 | View Replies]

To: liberallarry
And what have you done? Probably nothing.

Stick to speaking for yourself.

21 posted on 04/18/2005 10:43:38 AM PDT by green iguana
[ Post Reply | Private Reply | To 11 | View Replies]

To: RKV

If analysts are right about the developing shortfall in oil supply that's going to happen whether or not the Chinese let their currency float.


22 posted on 04/18/2005 10:43:48 AM PDT by liberallarry
[ Post Reply | Private Reply | To 18 | View Replies]

To: green iguana

Fair enough. So. What have you done?


23 posted on 04/18/2005 10:44:36 AM PDT by liberallarry
[ Post Reply | Private Reply | To 21 | View Replies]

To: liberallarry

The US isn't artificially inflating gas prices by governmental edict.

China is artificially keeping the value of it's money low.


24 posted on 04/18/2005 10:46:12 AM PDT by untrained skeptic
[ Post Reply | Private Reply | To 6 | View Replies]

To: untrained skeptic
It all revolves around the definition of artificially.

If the currency were allowed to float presumably the dollar would drop against the yuan until trade was balanced. Meaning China's cheap labor advantage would be neutralized and the difference of lifestyles and wealth between the two countries would be maintained.

We see that as fair and natural. They don't.

25 posted on 04/18/2005 10:52:08 AM PDT by liberallarry
[ Post Reply | Private Reply | To 24 | View Replies]

To: Williams
They didn't even name China for various pusilanimous reasons. Oy.

Well, once named, then it would probably end up as war. World leaders are trying to finesse it.

26 posted on 04/18/2005 10:53:23 AM PDT by glorgau
[ Post Reply | Private Reply | To 3 | View Replies]

To: liberallarry

"If analysts are right about the developing shortfall in oil supply that's going to happen whether or not the Chinese let their currency float."

While this is a true statement, it does nothing to support your suggestion that the US givernemnt should interfere in the free market through which oil is traded and cap our oil usage so that other countries can buy oil cheaper.

Reducing American demand won't likely have a huge effect long term effect on oil consumption, merely on who consumes the oil and how much they pay for it.

Oil companies are producing oil about as fast as they can, if the price drops they will produce a little less from less cost effective sources, but mainly lower demand will cause lower prices, which will boost the demand elsewhere.

The Chineese curency is a seperat issue. It's a case where the Chineese is artificailly protecting their export economy by keeping the value of their money low.

This allows them to keep their labor inexpensive. It also makes it expensive for anyone in their country to import anything, so they keep control of their domestic economy as well.

Who pays the price? The Chineese people pay a price in that their standard of living is not allowed to improve. Countries like the US pay a price in higher trade deficits.


27 posted on 04/18/2005 10:57:43 AM PDT by untrained skeptic
[ Post Reply | Private Reply | To 22 | View Replies]

To: untrained skeptic
While this is a true statement, it does nothing to support your suggestion that the US givernemnt should interfere in the free market through which oil is traded and cap our oil usage so that other countries can buy oil cheaper.

I didn't actually make that suggestion. I was just pointing out the flaws in the G-7 communique which asks the Chinese government to act against its own perceived interests to promote "fairness" and "balance". Keep in mind also that not everyone feels the way you do about the market and market forces.

Reducing American demand won't likely have a huge effect long term effect on oil consumption, merely on who consumes the oil and how much they pay for it.

True...and that applies to the currency situation as well (although the parallel is far from exact).

The Chineese curency is a seperate issue.

Not really. It's mostly a question of who benefits and whose ox is gored, who has to sacrifice.

Who pays the price? The Chineese people pay a price in that their standard of living is not allowed to improve. Countries like the US pay a price in higher trade deficits.

This is just bad analysis. The Chinese are doing extremely well. That's why they're resisting change.

28 posted on 04/18/2005 11:08:58 AM PDT by liberallarry
[ Post Reply | Private Reply | To 27 | View Replies]

To: liberallarry

"It all revolves around the definition of artificially."

The Yen is being kept from floating because of of the CHineese government's intervention. Without that intervention, the currency would float.

The price of oil and the demand for oil in the United States is set by the free market. You are suggesting government intervention to cap oil usage.

In neither case is it dificult to see which approach is artificial.

In the case of the Yen, China's trading partners are insisting that China trade with them on fair and equitable terms.

Your suggestion that America cap our oil consumption has less clear goals.

It would devestate our economy, and give a huge boost to the economies of other countries. Why do you suggest we do this? It's definately not in the best interest of the United States.

Trade is in the best interest of China, and we are insisting that they trade fairly if they want us to continue trading with them without sanctions.

What benefit is the US going to gain by cutting our oil usage in half?

I can understand that we should cut our oil usage where possible to save costs and increase our efficiency, but I see no justification for the government to step in and regulate our oil consumption to half of what it is now.


29 posted on 04/18/2005 11:11:15 AM PDT by untrained skeptic
[ Post Reply | Private Reply | To 25 | View Replies]

To: TigerLikesRooster
With the Chinese, it is of no use putting a monetary value on their currency, it is whatever the wish it to be. Their currency should be banned unless they conform to international standards for monetary valuation.
30 posted on 04/18/2005 11:15:56 AM PDT by TheForceOfOne
[ Post Reply | Private Reply | To 1 | View Replies]

To: TigerLikesRooster

Yeah, they'll need to change it. If not float it, but at least peg it at a reasonable value.

One issue that China has to overcome is its fragile financial system, and the effect changing the RMB to a reasonable value would cause.

For example -- a Chinese investor buys US dollar for investment or US treasury at the current rate, 8.3 RMB per 1 USD. Let's ssay it goes to 6 RMB per USD (i.e. RMB rises to the fair value). It means the investor will lose 2 RMB per US). So if the government imposes it on say, June 1st, then investors will be thinking "if i need the money, i should get it converted back NOW", hence they'd sell before the deadline and this could cause a massive selling of USD and US treasuries in general.

My guess is that they'll change it but will change it gradually, say 7.8 in summer, 7.4 in the winter, etc.


31 posted on 04/18/2005 11:24:10 AM PDT by pganini
[ Post Reply | Private Reply | To 1 | View Replies]

To: glorgau
Well, once named, then it would probably end up as war.

A Chinese declaration of war would turn things around real quick. With China's economy mostly made up of foreign investment, exports and having no rich friends in the neighborhood it would be a short war. Even if somehow China could win the battle locally, it would be economically obliterated quickly.

32 posted on 04/18/2005 11:26:39 AM PDT by Realism (Some believe that the facts-of-life are open to debate.....)
[ Post Reply | Private Reply | To 26 | View Replies]

To: untrained skeptic
I've already responded to some of this in my previous post.

To suggest that either the oil or currency markets are, or have ever been, free in the normal sense is ridiculous. They are, and have always been, manipulated by governments and other large interests. But the markets are so large that even these interests have only limited ability to counter the forces of supply and demand.

The Chinese pay a price for the peg they're maintaining; they have to purchase huge quantities of overvalued dollars. So far they think it worthwhile and they seem to have found a way to dispose of those dollars that also works to their advantage.

You (and G-7) are telling the Chinese you have a better conception of what is fair and equitable and in their interests than they themselves do. Not surprisingly, they're not buying.

What is true in all this is that the present situation cannot continue. Either we or the Chinese or both of us must make concessions or see the whole system fail as it did in '29...and I'm afraid it's the American worker and the American middle class which are going to be sacrificed.

33 posted on 04/18/2005 11:33:00 AM PDT by liberallarry
[ Post Reply | Private Reply | To 29 | View Replies]

To: liberallarry
"It all revolves around the definition of artificially"

(I say this in jest - not as an insult) That's kind of like arguing about the definition of "is".

The G7 is pushing for a level playing field in which the market determines the exchange rate. It seems that the Chinese do not so much see this is unfair but as less advantageous than the present situation. Sure the Chinese can print all the Yuan they like but we can also enact all the tariff's we like in order to balance the situation. At the end of the day will will end up with a floating Yuan it's just a question of how many ox's get gored along the way.
34 posted on 04/18/2005 11:47:34 AM PDT by cdrw (Freedom and responsibility are inseparable)
[ Post Reply | Private Reply | To 25 | View Replies]

To: cdrw
it's just a question of how many ox's get gored along the way.

Exactly.

35 posted on 04/18/2005 12:03:56 PM PDT by liberallarry
[ Post Reply | Private Reply | To 34 | View Replies]

To: TigerLikesRooster

This kind of crap is what happens when you allow children to play adult games.

i.e. Most favored nation status for China. What a Joke, these pukes (the govt not the people) should be forced back into the stone age where they belong until the People in China get fed up and overthrow their government.

oops... where is my head... then the all important all knowing business lobby won't get to make all of that money by selling into that region.


36 posted on 04/18/2005 12:06:25 PM PDT by Leatherneck_MT (3-7-77 (No that's not a Date))
[ Post Reply | Private Reply | To 1 | View Replies]

To: TigerLikesRooster
So let's say your China and you have many billions in US treasuries and you are being directed to take a loss on them by the rest of the planet.
Anybody here think they will take the loss?? They will dump them like the cheap paper they are. Think that might bring about a crisis for the US?? It sure could. We need to sell one billion in debt every single day. Fill the market with firesale treasuries and selling your latest edition becomes problematic.
Calulate the percentage of your loss by the amount you inflate your currency value over the dollar. Buy at one to one, get paid back at less.

It is the exact reason the Japanese hold their currency very close to the 100 yen mark. If they inflated their currency value, as the worlds net largest creditor and the number one holder of US Treasuries, they loose their @$$!

I think this is more of a global transparency move that is a requirement to revalue the currency. To have auditable value you have to have an intact banking system. The Chinese are a leaking sieve of corruption.

They are being put on notice to clean up their act.

What they actually do remains to be seen.
37 posted on 04/18/2005 12:27:17 PM PDT by Pylot
[ Post Reply | Private Reply | To 1 | View Replies]

To: Pylot
So let's say your China and you have many billions in US treasuries and you are being directed to take a loss on them by the rest of the planet. Anybody here think they will take the loss?? They will dump them like the cheap paper they are. Think that might bring about a crisis for the US?? It sure could. We need to sell one billion in debt every single day. Fill the market with firesale treasuries and selling your latest edition becomes problematic. Nah... what would happen is that the treasuries due to the sale will cause INTEREST RATES to go up. The treasuries will still be sold, but the interest rates are gonna bite us hard. Housing market is already bloated and it'll probably crater if this happens. And if the US economy head into a severe recession, it'll come back to bite China as well. Tricky business....
38 posted on 04/18/2005 12:35:25 PM PDT by pganini
[ Post Reply | Private Reply | To 37 | View Replies]

To: liberallarry

"I was just pointing out the flaws in the G-7 communique which asks the Chinese government to act against its own perceived interests to promote "fairness" and "balance". Keep in mind also that not everyone feels the way you do about the market and market forces."

Continued trade without sanctions is in the best interest of China. If they continue to limit free trade by not letting their currency float, we should place sanctions to make the playing field more even.

"Keep in mind also that not everyone feels the way you do about the market and market forces."

Believe what you want, but be prepared to back it up with facts.

You can argue that countries have the right to interfere in the free market, and I won't disagree with you, they definately have that right. However, trade is between two or more parties, and there's no reason we need to let the Chineese dictate the terms of that trade to us.

If they want to protect their markets, we are welcome to do the same. Actually they are encouraging us to do so. THere's no flaw in the G-7 communique. It's a warning to the Chineese that our patience with their actions is running thin. We have given them time to prepare to allow their currency to float so that they can ease into that transition, but they need to trasition if they want to avoid repercussions.

How is that unfair?

"True...and that applies to the currency situation as well (although the parallel is far from exact)."

Huh? People buy most Chineese products based on price. If the value of the Yen increases, the cost of making those products goes up, and products from other countries become more competitive, including domestic products.

Products also become more competitive in Chineese markets because the Chineese Yen goes farther when purchasing foreign goods than it currently does. How are the two similar other than they aren't fixed entities.

"Not really. It's mostly a question of who benefits and whose ox is gored, who has to sacrifice."

So you're comparing us purposfully hurting our economy by our own decision to the us requiring the CHineese to allow the Yen to float if they want to avoid trade sanctions...

The Chineese are being encouraged to let the Yen float because it's a requirement to enjoy the free trade with foreign countries that has been so beneficial to them.

They are being encouraged to reduce trade barriers to have more "fair" trade in the sense that there are less artificial barriers being placed on that trade. If they don't agree to do so, we can place our own trade barriers in the form of sanctions.

What exactly would be the benefit we would be gaining for cutting our oil consumption in half?

China still has their soverienty, and they have a choice to make of if it's better to maintain their currency restrictions and suffer sanctions, or if they are willing to remove them to benefit from the trade without sanctions.

Why would we want to make the decision to cut our oil consumption?

Please don't be offended if I misinterpret you, but please correct me. You seem to be of the opinion that oil is a global resource that no one has a greater right to than anyone else. I can agree with that to a great extent.

I feel that those who can most afford it deserve the ability to buy oil that countries export. The reason that I feel this way is that China, specifically China's government, has made choices that have significantly hindered their economy. They have chosen strong government control over freedom. They've chosen stability over economic growth.

Countries in Europe have done similar things, though their citizens have more input on the process than the chineese. The Europeans have chosen short work weeks, plentiful benefits, and long vacations. To gain this they sacrificed productivity, high employment rates, and individual freedoms.

In the United States, we've made due with longer work weeks, less government entitlements, and less safty nets when hard times hit us. The rewards we've gotten for doing so it greater productivity, greater wealth, and greater freedom.

Why should our government cap our oil consumption to help other countries that haven't made the tradeoffs that we have made? China has a huge population and vast resources. They have a history of innovation and education. Why were they so poor for so long? Why are they just now becoming an industralized Country?

Their government chose to limit their freedom to maintain control. They decided to prevent economic volitility at the expese of economic growth. They decided to reduce freedom and it's possitive effect on invention in order to maintain order in the manner they desired.

You can argue that different societies value different things. Just don't insist that we in the United States should share the price for the decisions they make. We pay our own price for the decisions we've made, they should accept the results of their decisions, or change to improve their situation.

China has recognized this, and has increasingly embraced free trade, though definately not fully embraced it.

Socialism and Communism have a cost. They place a heavy burden on the economy that embraces those philosophies. Each country and it's people must decide if the price is worth the benefit.


39 posted on 04/18/2005 12:38:50 PM PDT by untrained skeptic
[ Post Reply | Private Reply | To 28 | View Replies]

To: liberallarry

"You (and G-7) are telling the Chinese you have a better conception of what is fair and equitable and in their interests than they themselves do. Not surprisingly, they're not buying."

If China could have it's way it's in their best interest to not let the Yen float. However, it's not in our best interest, and it's harming our economy. It's also harming the economy of other countries of the G-7.

We are insisting that they change their policy if they want to trade with us. We are suggesting that theri trading with us in a manner that we feel is more fair is more benificial than them trading under the sanctions we will impose if they don't change their policy.

That's the nature of trade negotiations.

"To suggest that either the oil or currency markets are, or have ever been, free in the normal sense is ridiculous. They are, and have always been, manipulated by governments and other large interests."

The government manipulation in the US is tiny compared to the volume of Oil sales and compared to the similar manipulation of other governemnts.

Our biggest manipulation is taxes, and our taxes on oil and gasoline are but a fraction of what they are in Europe, or even Belize, which I recently visited.

As for other interests manipulating prices. What the left accuses as being market minipulation is almost always a free market at work.

If it's more profitable to reduce production and charge a higher price for a product, in general that's a regular market force at work. It's only when there is a monopoly or collusion and a significant barrier to entry into the market before there becomes a problem.

Opec can be used as an example of collusion to inflate prices, but to a large extent the various nations of Opec are in competition with each other and the real cooperation is pretty minimal.

"The Chinese pay a price for the peg they're maintaining; they have to purchase huge quantities of overvalued dollars. So far they think it worthwhile and they seem to have found a way to dispose of those dollars that also works to their advantage."

Sure, they pay that price by not passing on the benefits their economy has generated to their workers. They keep the workers poor and controlled. They keep the majority of the profits for the governemnt and us it to maintain control and build up their military.

They also provide minimal social services.

At the same time, our industry cannot compete with the Chineese, because the free market demands more for it's workers.


40 posted on 04/18/2005 12:56:30 PM PDT by untrained skeptic
[ Post Reply | Private Reply | To 33 | View Replies]

To: untrained skeptic
What I'm arguing is that fairness and balance are not the issue here; this is a game of hardball or poker in which each side is seeking to maximize advantage. I've no problem with our side attempting to do so. It's the sanctimony with which G-7 presents its case that bothers me. If their communique is viewed as just another weapon, propaganda, rhetoric - then fine. If I'm supposed to view it as moral I gag.

If you wish I'll reply to your arguments point by point.

41 posted on 04/18/2005 1:17:57 PM PDT by liberallarry
[ Post Reply | Private Reply | To 40 | View Replies]

To: TigerLikesRooster

And the boss of the slave galley said we have good news and bad news. First the good news, you get double rations for lunch. Now the bad news, after lunch the Captain wants to go water skiing.

China increases the value of the Yuan, it sure is gonna be hard on the slaves!


42 posted on 04/18/2005 1:19:16 PM PDT by Pylot
[ Post Reply | Private Reply | To 1 | View Replies]

To: TigerLikesRooster

'Bout time.


43 posted on 04/18/2005 1:53:40 PM PDT by CPT Clay (Drill ANWR, Personal Accounts NOW.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: liberallarry

"If you wish I'll reply to your arguments point by point."

I think you clarified your point quite well.

"What I'm arguing is that fairness and balance are not the issue here; this is a game of hardball or poker in which each side is seeking to maximize advantage."

Yes and no. Playing hardball usually results in trade wars sooner or later. It's in our best interests to be cooperative and to encourage through negotiation rather than attempt to dictate and butt heads.

Are teh rest of the countries being sanctimonious on this issue? I don't think it's reasonable to assign such attitudes based on what are likely third hand reports of the situation at best.

When it comes down to the facts, this is merely a trade negotiation.


44 posted on 04/18/2005 2:06:18 PM PDT by untrained skeptic
[ Post Reply | Private Reply | To 41 | View Replies]

To: untrained skeptic
When it comes down to the facts, this is merely a trade negotiation.

Not merely. There are life and death issues here, the welfare of nations, the fate of peoples.

I've no doubt that the negotiators for the Chinese and ourselves are very realistic. Very, very realistic. The danger lies in the gambles each side is required to make. A mutually destructive trade war could easily develop.

I'm reminded of the negotiations between Caspar Gutman and Sam Spade in the "Maltese Falcon". :)

45 posted on 04/18/2005 2:16:20 PM PDT by liberallarry
[ Post Reply | Private Reply | To 44 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson