This is about jobs and the world’s economy.
China’s currency manipulation gives goods made in China a huge price advantage — some estimate as much as 40%! — over goods made in other countries. It is a part (only a part) of the reason so many of our companies move manufacturing and jobs there. This is not “free trade” it is a stacked deck.
The Obama administration was supposed to officially declare on April 15 whether China was manipulating its currency. Leading up to the decision a number of economists, business associations, trade groups and others were trying to apply pressure in various forms.
China had a surprise of its own to contribute to the lead-up. On April 12 they announced a trade deficit. In March I posted this, China’s Coming Surprise Announcement And My Bridge On EBay,
So here we are with the decision on the 15th and the surprise announcement coming on the 12th.
Oh, by the way, I wanted to let everyone know that I will be selling a bridge on eBay, and invite you to bid. It’s just coincidentally going to be auctioned just before the Chinese announcement.
Well, no one bought my bridge, and yes, things are getting back to … normal? China reports surprise $1.68 billion trade surplus in April,
Exports for the month were up 31% from a year earlier to $119.92 billion, while imports were up 50% at $118.24 billion. Economists, according to the Dow Jones Newswires survey, had expected a 29.1% rise in exports and a 52.3% rise in imports.
Unfortunately (for the rest of the world) these imports are raw materials and parts for, you guessed it, more exports. According to Business Week,
Liu Li-Gang, a Hong Kong-based economist at Australia and New Zealand Banking Group Ltd., said today that China’s trade surplus is likely to “return to a high level in coming months” because surging imports indicate Chinese manufacturers are sourcing materials to be made into exports.
The Obama administration has taken the Chinese currency issue to the G20. Currently the problems with Greece and the Euro are on the front burner, but with Europe’s announcement today of a $1 trillion “crisis fund” and our own 400 point stock market response (those Wall Streeters love them some government intervention after all) maybe this will move off the front page and we can get back to addressing the Chinese trade imbalance.