Posted on 09/25/2010 8:28:32 AM PDT by Lorianne
Speaker Nancy Pelosi said Wednesday it is time to pass a bill naming China a currency manipulator, which would appease exporters.
She said the legislature would create "a more level playing field in world trade."
"For years, the Bush administration, the Obama administration and members of Congress have tried to persuade the Chinese government to allow its currency to respond to market forces. No significant progress has been made," the powerful California Democrat said in a statement posted on her Web site.
(Excerpt) Read more at upi.com ...
ping
The First Question: What’s In It For Nancy?
You’ve hit the nail on the head.
Every now and then, even a blind pig finds an acorn. But, the time for this move was BEFORE we moved all our manufacturing capability to China and they bought controlling stock in our government.
Hey Nancy, you know what would please exporters and businesses even more?
REPEAL OBAMACARE.
EXTEND THE BUSH TAX CUTS.
ROLL BACK THE ISF AND OTHER CUSTOMS NONSENSE YOU IMPLEMENTED.
In other words, get off the back of business, and they can go back to the business of making money. China raising the value of its currency wont’ do anything if the businesses here are too bogged down in regulations and taxed to death...
My response is: let the Dems pass this before the election. It can be used as a stick on the Chinese with the new Congress afterwards.
Wouldn’t this increase our debts to China?
Increase the amount of debt we owe to China?
After November, the powerful democrat will be useless. Bet she quits. I can see her running around saying, “They took my hammer away”. She is truly a POS.
If China raises its prices, then it will cost us more to import from them. Bummer.
Which will make it easier for US comapnies to manufacture things here again.
China’s currency manipulation is what moved all of our manufacturing there to start with!
I wouldn't count on that. The business climate in the US would have to change.
Doesn’t matter, though. The problem isn’t the low Yuan, it’s our own attacks on our own businesses. Massive increases in taxation and regulation do more damage against the US economy than a low Yuan.
The Yuan has always been kept low; throughout the 90s and early 2000s, much more than it is now (it was pegged at 10:1 then 8:1, now it’s 6.7:1). Yet we prospered, because the Congress and the President were nominally - if not outright - pro-business.
As an example, consider just the cost of importing. I’m arranging an import of some Chinese-built products for a client. He lives in Salt Lake City, and the three pallets will come from Ningbo, China. The cost from the Chinese factory to the port of Ningbo, the port fees in China, the export fees, and the price of shipping (all the way to the port of Los Angeles) is $188.
The cost for the truck delivery from the Port of LA to my client is $228. That’s delivery from the fence of the Port to his dock.
The cost for the Port of LA - fees, duties (only 4.9% of value, about $120), inspections, customs bonds, ISF bond - to the fence of the Port of LA is $950.
It costs TWICE the price of ALL costs of transport and export just to do the paperwork our Government has added (the most onerous is the new ISF bond, a $350 bond to “prove” you are who you say you are, due on each shipment). $400 to get it from the factory in Ningbo, to a ship, and physically from the port, on a truck, to Salt Lake City.
And it costs $950 to do the US side of the paperwork required for that 300 yard transit from the ship to the truck.
For a shipment of 3 pallets, 650 total pounds, and $2040 in value. He’s bearing a 50% “tax” on importing, not including the cost of transportation.
No, the value of the Yuan is irrelevant; what is killing businesses is not the artificially low Yuan value, but the ever-increasing taxation and regulation on American businesses that is killing us.
It can't be said that the decline of US manufacturing is solely due to internal regulations and taxes. It's all of the above.
The US was a major exporter (still is). But, the yuan valuation hurts our cost competitiveness at the global level, not just domestic sales. The average worker in China make the equivalent of $0.50/hr versus $70/hr for union labor. If the yuan was valued appropriately, that gap wouldn't close, but it would be about 6 times closer.
Plus, China has no respect for intellectual property rights. They get a lot of "free" assistance.
So, it's all of the above.
It's 99% of our own doing; the price of the Yuan may be 1%.
The US was a major exporter (still is). But, the yuan valuation hurts our cost competitiveness at the global level, not just domestic sales. The average worker in China make the equivalent of $0.50/hr versus $70/hr for union labor. If the yuan was valued appropriately, that gap wouldn't close, but it would be about 6 times closer.
Minimum wage in China (and for the most part it's followed - the fines are extremely high) is 850 RMB per month. That's about $0.70 per hour, at an RMB exchange rate of 6.7 to the USD.
Now cut the RMB down to parity with the USD - 1 RMB to 1 USD. That labor cost goes from $0.70 to $4.70 per hour. It's still nearly 1/20th that of the US. It's not enough to make a dent, even if you jump the RMB exchange rate not 10 or 20 percent like people are talking, but to PARITY.
The reality is, for most products made in China (and I work over there, in consumer electronics manufacturing), the cost of labor is infinitesimal. Labor of a pair of shoes MAY be 8 minutes. Labor on a laptop is MAYBE 40 minutes. On a 6.5" woofer it's about 4 minutes.
Those shoes would have the cost go up $0.75 - less than a dollar for a $50 pair of shoes. That laptop would have less than $4 cost difference. And a woofer would have $0.37 change in cost, meaning the price for a pair of speakers goes up $0.75.
The cost of labor is really nothing in the cost of most products.
The difference is China doesn't have $4/hour State L&I insurance per worker, or $3/hr unemployment. Or required health insurance. Or mandatory ADA-compliant doorknobs. Or Sarbanes Oxley reporting. Mandatory yellow striping on the floor around dangerous areas. Required harnesses for stepping in to a scissors lift. And on and on. Things that drive that $70/hour burdened cost for the forklift driver who is contractually required to be paid $26/hour as his salary.
Plus, China has no respect for intellectual property rights. They get a lot of "free" assistance.
I've actually successfully defended my own patents in China. You need to have a Chinese patent, but then it's actually pretty simple to defend!
Likewise in the US; if you have a patent in China or Germany, it's perfectly legal to use it here in the US, without repercussion - there isn't reciprocity between most nations in terms of patent rights. If it's not a granted USPTO patent, then you're free to use it as you will.
Want intellectual protection in China? Get it patented in China - my experience is that a typical product patent is about $3000 to do, including full translation from English to Mandarin (about 1/10th the cost of doing it in the US).
My experience - as a guy who's set up and ran factories (loudspeaker production) in the US, Belgium, Chile, and now China - is that the labor costs and parts costs are about the same everywhere, in terms of what an individual part really costs you. It's the burdens added in the US on top of the raw costs that kill you, and make us barely competitive with the EU, and nowhere NEAR competitive with Asian/South American production.
Think about it - McDonald's can make a profit selling you a double cheeseburger for $1. That's the cost of materials, delivery, the store, electricity, advertising, and even the labor to make the patties, slaughter the cattle, make and package the buns, make the cheese, assemble your burger, and put it on a tray.
Raw labor costs in most mass-production products is functionally zero; it's the burdens on that labor costs (and those are 100% the domain of and driven by the Government) that make the difference.
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