Ryan’s Bill Targets Value of China’s Currency, Creates Jobs, Spur Investment
October 3rd, 2010 • Uncategorized
Many people think that China’s currency is undervalued. U.S. is saying that China should re-value its currency because at the current currency rate, China is able to produce and sell its exports to U.S. at a very low price. This harms the domestic producers of U.S., China is able to do that because they have relative lower prices of goods compared to the U.S. due to cheap labour and other production costs. In addition, China manipulated its currency rate to ensure its exports are competitive in foreign markets. As a result unemployment occurs in the U.S. because companies are forced to close down. “We have seen over the course of the last several years and longer a lot of artificially cheap products coming in and putting our citizens out of work,” said U.S. Rep. Tim Ryan”
If the currency of China is revalued, it will create jobs in the U.S. as well as attract more people to invest in its markets (This would reduce the U.S. deficit). On the other hand China will be worse off as its exports will become relative less attractive to the consumers as prices have gone up.
The revaluation of China’s currency helps to reduce U.S.’s deficit. However we should know this is not the only way. The U.S. government can put tariffs on imports from China or provide subsidy to local producers.
http://business-journal.com/ryans-bill-targets-value-of-chinas-currency-creates-jobs-spur-investmen-p17589-1.htm