why do you think china uses a currency peg? I guess they must have talked with Jack Kemp, the currency peg makes them an enterprise zone. what is the effect of the enterprise zone concept in the US, creating artificially low cost "havens" (in the case of our domestic economy, through the tax code) for businesses. what is their purpose? well, to attract capital investment of course, so that businesses will relocate into that zone. that's why China does it.
china maintains the peg because they want to suck up all US industrial investment into their country. they realize that semiconductor plants, biotech, auto production, are alot more important long term then more shopping malls and Applebees.
Yeah, sure. That's their logic. But we've been doing this capitalism thing for a lot longer than they have, and we know a whole lot more about it than they do. They are basically subsidizing the American consumer with their currency peg. That's fine with me. Let them subsidize us more.
Of course, I will will be the first to admit that if things get out of hand, and they can't keep it up any longer, then there will be consequences. The dollar will go down, and we won't be able to buy those TVs at cut rates anymore. When that happens, some people might say "we told you so." But that just shows what I've been saying all along: So long as the currency peg is in place, it's like they are giving us free money. How would we benefit if they end the peg sooner?
True, but you present no case that supports your position except cheap currency. That cannot last forever. Being the world leader in innovation and industry takes a lot more than just low cost labor and undervalued currency.
It takes a culture of industry and capitalism and freedom to sustain all that. We have that, China doesn't, and China won't have that, not for a long long time, if at all.
Instead of being so paranoic about China (remake of the Japan Inc paranoia of the 80's) we need to focus on our own problems like the education and competitiveness of our schools and our youth.