China and US Trade - Currency Challenges, Slow Downs, And Enormous Trade Flow Imbalances
By Lance Winslow
We have a real troubling situation with China. You see, they have 1.3 billion people, and they would like to employ over half of them. Meanwhile, they have enough capacity and capability if they continue to grow at 10% year-over-year to supply five planets the size of Earth with similar populations with all the products they could ever need. Their production is so overwhelming, and their ability to produce so extraordinary that they are crowding out all the other industrialized nations for manufacturing.
There are other problems; they are also polluting their environment, exploiting their people, and economically enslaving the masses while they use currency manipulation tricks to unbalance the trade flows. This is causing significant stress, and although we call China one of our greatest trading partners, it is taking a toll on American manufacturing because we have rules and regulations, over litigiousness, and unions which demand high labor costs and extremely lucrative Cadillac style benefits - they don't have any of that really. We can't even get their courts to honor our patents.
Yes, we could do more in the United States to stay efficient using a little more common sense, but make no mistake China is taking every possible advantage to serve her will, and therefore taking advantage of us. If we let them, that's our fault, and who can blame any country for doing what's in their best interests?
There was an interest piece in the Wall Street Journal on July 26, 2012 titled; "China Shifts Yuan's Course, Risking a Clash With US," by Bob Davis and Lingling Wei which indicated the latest in this on-going saga of currency manipulation, but I'd say things are about to get even worse. I've always said China is painting itself into an economic corner by using currency manipulation tactics.
Their last round of stimulus ended up a terrible situation due to corrupt business deals and crony capitalism, which is common in countries engaging in so-called "state run capitalism" which ends up meaning that friends of friends get the juice and the citizens get stuck with the bill, and hard labor via economic enslavement. To add insult to injury, China now wishes to print money, and try quantitative easing rather than allow their currency to float and rise.
If they do this, and debase their currency on purpose, that's the same as their current and previous currency manipulation tricks. They are using political rhetoric to continue to put the screws to America, and other regions of the world such as Europe. It's taking its toll, and it's if we don't fix these trade flow issues our GDP will be at zero or 1% for quite a while, especially considering economic crisis in Europe right now.
Indeed, this is a multifaceted problem in China which has no intention of changing her ways because she likes the position she's in, and she would like to run this game plan for another decade. That just can't happen, and I feel that China has painted itself into an economic corner, and not only will China have to pay for it, but the rest of the world has already paid, and we will pay again as that global economic slowdown continues. Indeed I hope you will please consider all this and think on it.
Lance Winslow has launched a new provocative series of eBooks on Economic Challenges. Lance Winslow is a retired Founder of a Nationwide Franchise Chain, and now runs the Online Think Tank; http://www.worldthinktank.net
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