Why does US call for RMB appreciation?

Why does US call for RMB appreciation?
Jun 24, 2007 00:53
ZOEY Points: Join Date: Nov 29, 2004 Status: offline	The exchange rate of RMB has increased a lot and it is said that it breaks 1: 7.62 (US dollar to RMB). However, it seems that US is not satisfied with this result. Constant pressure are still pushed by US on China to appreciate its currency RMB. Here is the question: Why does US call for RMB appreciation? Anyone who has any ideas? According to Mundell, the father of the Euro's opinion, it can be interpretated as "a move to slow China's expansion". He said that China's current account balance is only a small factor in the U.S. deficit problem. Even though it represents only 10 percent of the U.S. deficit China is being picked on by the United States because "China is a resurgent power." (Source: Xinhua News). Do you agree with him or not?

Jun 24, 2007 00:53

ZOEY
Points:
Join Date: Nov 29, 2004
Status: offline

The exchange rate of RMB has increased a lot and it is said that it breaks 1: 7.62 (US dollar to RMB). However, it seems that US is not satisfied with this result. Constant pressure are still pushed by US on China to appreciate its currency RMB.

Here is the question: Why does US call for RMB appreciation? Anyone who has any ideas?

According to Mundell, the father of the Euro's opinion, it can be interpretated as "a move to slow China's expansion". He said that China's current account balance is only a small factor in the U.S. deficit problem.
Even though it represents only 10 percent of the U.S. deficit China is being picked on by the United States because "China is a resurgent power." (Source: Xinhua News).

Do you agree with him or not?

Jun 24, 2007 16:51

WCTMAN
Points:
Join Date: Dec 17, 2005
Status: Offline

The US doesn't think that the Chinese are playing fair since the rmb is not a free floating currency. That is, the value of the rmb is not determined by international currency markets, but by the Chinese govt. A low priced currency stimulates exports, since Chinese goods cost less to produce and sell abroad. A tshirt made here in China is one less tshirt made somewhere else in the world. At the same time, a low valued rmb makes imports to China more expensive, resulting in a large surplus in the balance of payments for the Chinese govt.

The US is not comfortable with this. Not only does money flow here, but jobs too. And, the Chinese and the US do not share the same political philosophy, with the US now worrying that too much of this "new" money flowing into China is being spent on the military.

Jun 24, 2007 20:07	#2
KATRINA Points: Join Date: Nov 29, 2004 Status: Offline	China's increasing economy makes US feel anxious. As a rising power, China's development arouses global concern. In order to maintan the status of being the only superpower, the US government tries his best to contain China. In countless occasions, US spreads the forged "China Threat" Theory .

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