Red China Manipulates Currency for Trade Advantage

AFPC China Reform Monitor ^ | August 6, 2003 | Al Santoli, ed.

[bruinbirdman]

A bipartisan group of U.S. Senators have co-signed a letter asking U.S. Treasury Secretary John Snow to investigate whether Red China is manipulating its currency to gain a trade advantage in the U.S. market, writes William Hawkins in the Washington Times. This followed a warning on the same issue by Federal Reserve Chairman Alan Greenspan. Based on the first half of this year, the 2003 U.S. trade deficit with Communist China will reach $120 billion, the largest and most lop-sided deficit in history.

In June, Red Chinese exports rose 33 percent from a year earlier to $34.5 billion, while production increased 17 percent, according to Beijing. Communist China devalued its currency in 1994, giving it a decided advantage over its trade rivals on the Pacific Rim. Ernest H. Preeg of the Manufacturers Alliance and the Hudson Institute has estimated that the Red Chinese Yuan is as much as 40 percent below market value. Beijing has intervened on a massive scale to keep the Yuan from being valued by the market. Its trade surplus gives it the dollar reserves it needs for financial intervention.

The unfair trade advantages that Red China holds over its neighbors poses dangers to regional stability that are not just commercial, Hawkins warns. Beijing's strategy to undermine American industry, while building up its own manufacturing base, works to shift the balance of power in Asia.

August 5:

According to a Pentagon report cited by Bill Gertz in the Washington Times, two Communist Chinese students studying in the United States supplied Red China's military with American defense technology that allowed Beijing to produce a special metal used in sensors and weapons. "This is a classic example of how the Red Chinese collect dual-use military technology," an FBI official said. The current espionage case - now subject of an ongoing investigation - allowed Communist China's military to develop a version of the substance Terfenol-D, which cost the U.S. Navy millions of dollars to create and has applications for advanced air planes and spacecraft. U.S. officials said Terfenol-D could be used by the Red Chinese in a multiple warhead missile. One of the Communist Chinese students attended Iowa State University where he worked closely with the Department of Energy's Ames Laboratory located on the school's campus. The other student attended Pennsylvania State University.

The Australian Broadcasting Company reports that Red China has jailed Zhao Changqing, an advocate of democratic reform, to a five-year sentence for "attempting to subvert state power." Zhao was arrested for drafting an open letter urging democratic reforms and the release of prisoners of conscience.

[evolved_rage]

Free Trade ping

[CanadianFella]

Paranoid hogwash. reminds me of the "coming-war-with-Japan" types from the 80's.

[At _War_With_Liberals]

China really seems to be a thorn in our side. I hope that they do not become a more serious problem in the next 20 years. I worry about a China, Russia, EU to some extent, Arab, Indian, Korean alliance against the US.

[bruinbirdman]

In a world economy, currency will find its value in the market. Some may speculate, some may profit from slave labor, many will lose. In the long run, currency evens out. The secret in the U.S.A. is "don't tax me to speculate". Commie slaves in Red China don't have that luxury. Until commie slaves have their revolution, I walk on commie sandals.

yitbos

[11B3]

BUY AMERICAN. BOYCOTT CHINA.

Unless you like supporting our number 1 enemy. (Then you must be a liberal.)

[CanadianFella]

BUY AMERICAN. BOYCOTT CHINA.
Unless you like supporting our number 1 enemy. (Then you must be a liberal.)

we are at war with Eurasia. we've always been at war with Eurasia.

[Jeff Head]

Yea, then there was all of that same type of paranoid hogwash in the mid to late 1930's, huh?

Problem is, WTSHTF...and it will if we keep feeding the perverted market economy being pushed now with the Red Chinese...it will be the same nation that is looked to, to pull the fat out of the fire.

And...after we wake up (again) and cinch up our britches...we'll do it again too. But most likely at horrendously great cost.

[NYFriend]

Your almost right. China doesn't have a floating currency (exchange value based on market). The Chinese government controls both the exchange and value of currency, and it is generally illegal to trade in foreign currency in China. There are a few exceptions. Hong Kong and the Special Administrative Zones have different rules, and you do not always need to deal in Chinese currency. There are also often separate prices for trade and internal commerce, as well as separate prices for state owned enterprises and private or market businesses. Very strange country. The Work Bank and WTO have been after China to make market reforms, some of which have been made.

This business about asking Dept. of Treasury to investigate is strange because it is well known that China's practice allows it to inflate the value of its currency.