Replies

>>'More importantly, it means that Chinese goods are artificially cheap.'

Not artificially, but really. Living in China is cheap because the standard of living here is much lower than that in the US.

>>That meant fewer US goods are being sold in China and more Chinese goods are being sold in the US.

Not exactly. I see lots of goods with American brands sold in China. They used to be American goods, but now made in China and sold in China. Yes, cheaper than those sold in the US.

Here is the math:

Right now if a product in China costs 100 rmb straight off the factory floor...

In dollars that equates to about $12.

A US manufacturer could make the same product at $14.50 each.

Under those circumstances the Chinese version is 17% cheaper, not in China, but in the US.

If the rmb is revalued to a proper level...but for the sake of this discussion lets just say instead of 8.3 to 1, it will go to 7 to 1...(about a 15% correction)

(please note that the average claim is that the RMB is about 30% undervalued)

The Chinese version then costs about $14.30...that is only 1.5% cheaper...thus allowing the US companies to compete. Also you have to realize that you would still have to get the product from China to the US...

If the 30% undervalue number is correct (and its close) then the exchange rate then goes to about 5.8 to 1.

In those circumstances the 100rmb product then becomes $17.25 in US dollars... In those circumstances the US product (@ $14.50) then becomes 16% cheaper...

US manufacturing companies are losing literally far in excess of a hundred billion in sales to Chinese based manufacturing every year.

This is the root cause of the lost 2 million jobs in the US.

It also threatens our economy.

The US exports over $50 billion per month in manufactured goods, but they are being undercut by China's monetary manipulations.