Skip to comments.Red China: Chinese think tank warns US it will emerge as loser in trade war
Posted on 09/14/2010 1:44:53 PM PDT by bruinbirdman
A State Council think-tank in China has warned Washington that the US will come off worst in a trade war if it imposes sanctions against Beijing over the two nations' currency spat.
Ding Yifan, a policy guru at the Development Research Centre, said China could respond by selling holdings of US debt, estimated at over $1.5 trillion (£963bn). This would trigger a rise in US interest rates. His comments at a forum in Beijing follow a string of remarks by Chinese officials questioning US credit-worthiness and the reliability of the dollar.
China's authorities seem split over how to respond to moves on Capitol Hill for legislation to punish Beijing for holding down the yuan. The central bank has ruled out use of its "nuclear weapon", insisting that it would not exploit its $2.45 trillion of foreign reserves for political purposes. "The US Treasury market is a very important market for China," it said.
However, the mood is hardening on both sides of the Pacific. The dispute risks escalating if China's trade surplus with the US climbs further and more US jobs are lost. US Treasury Secretary Tim Geithner, who has taken a softly-softly line in the past, said on Friday that China had done "very little" to correct the undervaluation of the yuan since ending the dollar peg in June.
Mr Ding reflects thinking among some in the Poltiburo, who seem convinced that the US is in decline and that China's rise as an exporter of goods and capital give it the upper hand.
"They are utterly wrong," said Gabriel Stein from Lombard Street Research. "The lesson of the 1930s is that surplus countries with structurally weak domestic demand come off worst in a trade war."
He described the implicit threat to sell Treasuries as "empty
(Excerpt) Read more at telegraph.co.uk ...
1. Shipping jobs overseas, paying for unemployment benefits, and losing the revenues paid when the unemployed were tax payers, or
2. Paying $0.50 more for a US made pen instead of a foreign made pen.
China holds our debt. China has excess capital to buy from other trading partners.
China has a government that is much more unified than our own. The Chinese are all pulling in the same direction, more or less. The US has a political class that is in it for themselves. In fact, many in the US government have been bought by the Chinese. The Chinese have more to say about US political moves than the average American.
The Chinese standard of living is low, and the people are used to dealing with whatever the goverment hands them.
The US standard of living is relatively high, even though it’s on the decline. People in the US feel entitled. A trade war that crashed the economy would cause widespread panic.
It sort of seems to me that the Chinese, if they were willing to deal with the worldwide economic mess, could crush the US.
The think tank is shallow.
Saddly, most Americans don’t think that deeply, and Walmart does not have a lot of American made goods. I say, bring on the Trade War.
If you want to cut the tax rate on the US based pen maker to 0%, I'd be all for it. Giving the government more control over trade, not so much.
How much do they have, as a percentage of sales?
But it sure makes a good club to hold over our government's head to ensure that our government jumps everytime China yells, "frog".
What else is China going to do with all those dollars they earn from the massive current account deficit they have with us?
Me too, but I don't need a $0.50 price cut or any other kind of government intervention to know I'd be saving money over the long haul by buying the US made pen.
Mr. Ding is right as long as Obama is occupying the White House. Obama will do whatever is most damaging to the US.
0bama might sell our Pacific Fleet, including all of our Nimitz Class Aircraft Carriers to the Chinese. /No sarcasm.
1. Shipping jobs overseas, paying for unemployment benefits, and losing the revenues paid when the unemployed were tax payers, orWho has any faith the government will sort things out?
2. Paying $0.50 more for a US made pen instead of a foreign made pen, [and]
3. Shipping jobs overseas, paying more for unemployment benefits, and losing the revenues paid when the unemployed were tax payers because we made pens more expensive.
Absolutely. Higher prices, fewer jobs and a more influential government!!
It's the American way.
Lets see a few billion people pissed at their leader, how long before he’s dead meat.
I’m looking at a “Grown in U.S.A.” label on the tomatoes I purchased just today. But of course, they could have been assembled from foreign parts.
The Free Trader Globalists will side with the Communist Chinese on this one...sure bet.