Posted on 04/10/2025 10:55:39 AM PDT by SoConPubbie
President Donald Trump on Tuesday accused China of manipulating its currency to offset the impact of U.S. tariffs.
"You got to hand it to them. They're manipulating their currency today as an offset against the tariffs," Trump said at an event at the National Republican Congressional Committee.
(Excerpt) Read more at newsmax.com ...
Their currency change is within a 10% window.
The tariffs are 125%.
Perspective.
Our American uni party political class is 100% complicit in setting these artificially low exchange rates. .
rdcbn1 posted: China has been using a monetary policy of artificially undervaluing their currency to accomplish the monetary equivalent of trade dumping for decades. This is insidious because it is automatic and across the board de facto dumping for all products produced by China due to artificial and unfair exchange rates.
This should “help” them with other countries as the exchange rates against Euros or Aussie dollars will also shift.
Hopefully soon everyone will fully realise what worms the PRC are.
The currency manipulation will only harm them in the long run. They are fighting for today. Tomorrow or a month from now the US will aet a yuan valuation different from China. Like oil or corn, the Yuan will be by the wheelbarrow.
For decades! I am not savvy enough to totally understand the implications of that but it obviously gives China a continuing and unfair advantage!
Currency manipulation is achieved through a country altering the exchange rate which lowers the value of its currency.
The net result is that the products manufactured in that country become cheaper on the world market.
Lower prices means lower tariffs. It also means that the companies making goods earn less because their money is worth less on the world market.
Currency manipulation really only hurts the people in that country.
They may sell more goods, but they make less profit on each unit sold and their money doesn't buy as much as it did previously.
Lower prices means lower tariffs. It also means that the companies making goods earn less because their money is worth less on the world market***
I guess that is where my understanding breaks down. How does weakening your own currency help your country? Is that why they do far less imports than exports?
China buys our treasury bonds; China buys our real estate; China buys our politicians and our leaders. Doesn't that weaken their purchasing power? How can they build the world's largest navy on a continually devaluated national currency? ...etc.? 🤷
Weakening your own currency hurts your people because it also weakens their purchasing power. But, then China is well-known for not caring about their people.
From: Currency intervention
In the 1990s and 2000s, there was a marked increase in American imports of Chinese goods. China's central bank allegedly devalued yuan by buying large amounts of US dollars with yuan, thus increasing the supply of the yuan in the foreign exchange market, while increasing the demand for US dollars, thus increasing the price of USD. According to an article published in KurzyCZ by Vladimir Urbanek, by December 2012, China's foreign exchange reserve held roughly $3.3 trillion, making it the highest foreign exchange reserve in the world. Roughly 60% of this reserve was composed of US government bonds and debentures.
There has been much disagreement on how the United States should respond to Chinese devaluation of the yuan. This is partly due to disagreement over the actual effects of the undervalued yuan on capital markets, trade deficits, and the US domestic economy.
Paul Krugman argued in 2010, that China intentionally devalued its currency to boost its exports to the United States and as a result, widening its trade deficit with the US. Krugman suggested at that time, that the United States should impose tariffs on Chinese goods. Krugman stated:
The more depreciated China’s exchange rate — the higher the price of the dollar in yuan — the more dollars China earns from exports, and the fewer dollars it spends on imports. (Capital flows complicate the story a bit, but don’t change it in any fundamental way). By keeping its current artificially weak — a higher price of dollars in terms of yuan — China generates a dollar surplus; this means the Chinese government has to buy up the excess dollars.
— Paul Krugman 2010 The New York Times
Greg Mankiw, on the other hand, asserted in 2010 the U.S. protectionism via tariffs will hurt the U.S. economy far more than Chinese devaluation. Similarly, others have stated that the undervalued yuan has actually hurt China more in the long run insofar that the undervalued yuan does not subsidize the Chinese exporter, but subsidizes the American importer. Thus, importers within China have been substantially hurt due to the Chinese government's intention to continue to grow exports.
This is one element that I missed... sort of obvious when one thinks about it: law of supply and demand. And of course as the dollar increases in value their holdings increase in value. Those holdings are in U.S. treasury bonds which earn interest in increased value dollars. In small amounts it would make no difference but as their dollar holdings increase it becomes decisive.
I am a bit surprised at Paul Krugman. Since the first Trump Admin he has struck me as a bit of an air head.
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