Hu’s YUAN (YAWN?)

President Hu of China attempted to defend the undervalued Yuan as an aid to international trade and cost-cutting.  Undervalued Chinese components keep external markets’  exported finished products prices down,  Hu said.  (cf http://www.ft.com Financial Times) However President Hu under-estimated the world’s best anti-duping lawyers, here in the USA.  By reason, if not firm precedent, a nation’s purposively undervalued currency, can reduce prices to foreign markets in a manner which constitutes “dumping”. 

The relief other than a pricing reality which includes the yuan’s demand ? … a countervailing duty which would adjust the price upward.  A goods prices are affected by demand; that demand must include the demand for the currency to buy them as well.

China’s economy needs foreign importing to ease its economy from hyper-export skewing; and the unemployment of China’s export sector can be relieved through the import sector; and through expanded cross internal economies.

Appreciation of the yuan increases China’s buying power; and when the fuel oil or gas are priced in static dollars – China gets an energy price cut; and a foreign purchasing power which fights scarcity induced  price inflation by imported supply.  That which China needs to purchase abroad becomes cheaper with a rising yuan.

China may also finance its own bonds with internal investor security and appeal enhanced by a higher Yuan.

America and the rest of the world need employment – not  only China’s component manufacturers.  Trade retaliation would hurt China’s export sector much more than a rising yuan.  That yuan rise also enhances productivity factors and legal good cost inversions to save import customers from price rises.  With a stornger Yuan, China can also finance more customers.

For the ears of the occasional Chinese Fujianese gang vocal sounds of  her Foreign Ministry – a stronger Yuan strengthens China’s peaceful influence.  Japan and Germany went through it.

 

France’s President Jacques Chirac once said, the strength of a nation’s economy is the best measure (ie price setter) of her currency.