Nov 13 2010
US Trading off exports
Export led growth has always been a key factor in increasing a country’s economic growth and overall GDP – but now after the deterioration of the United State’s economy, President Obama has taken a stance and has told countries exporting to the US (specifically China and Japan) to stop ‘relying on exports to the United States for growth’.
China responded with a neutral and politically sound ‘maybe’.
The strain between the US and China has been worsened further by the Yuan’s tied rate with the US dollar, or a ‘dirty float’. This is caused by China’s buying and selling of the US dollar to manipulate it’s value on the currency market.
But the point that President Obama emphasized was that the US “did not want to lose the opportunity to create new jobs back home”, and in order to do that, international exports have to decrease in order to give way for domestic production and jobs – an arguably difficult aspect to change when for many years the US economy has grown use to increased consumption of overseas goods.