Growing War: US & China over Currency

The aggression between China and the United States is heating up over the battle of Chinese currency value. The US is pushing for China to increase the value of the Yuan while China says a lower value is in their own interests. This conflict over the Chinese currency could tip the world into a financial and currency war.

Even the International Monetary Fund has expressed growing concerns over the currency value conflict between the SU and China. The IMF chief said that this was a “real threat” to the world financial system.

The US is accusing the Chinese government of undervaluing its currency in order to harm the US recovery. Their argument is that the undervalued Chinese currency is slowing the global recovery and hurting American jobs.

The slowing the global recovery to me seems complicated, and I’m not sure of how this will affect the world economy. However I do see how this could be hurting American jobs. As usual, no matter which news source you go to, no one is explaining how this affects American jobs.

The policies of neoliberalism were to deregulate everything. To end trade barriers that has protected domestic jobs from outsourcing. It appears to me that, essentially, the US is trying to stimulate manufacturing jobs domestically. Obviously those with enough investment capital will take manufacturing overseas and produce there because it is more profitable.

I think the US government wants investors to return manufacturing to the US in order to build up its own economy. Now Obama and the rest of the government (both Democrat and Republican) are unwilling to just create those trade barriers to force domestic investment. Want they want to have happen is that the middle ground investors be unable to get over seas to invest in manufacturing, while allowing the top economic elite to be able to do so. This kind of action will have to be followed up with some way of increasing exploitation of domestic workers to make it closer to Third World workers. Creating legislation to lower the minimum wage, and end safety restrictions would be a perfect example.

What China is intending to do

Recently China has announced its intent to establish a domestic consumer-driven economic model. Meaning they are planning to have an economy where Chinese citizens create commodities that are sold to Chinese consumers. A system that existed in the West post-World War Two. I believe the Chinese government is trying to build up their own economy by possibly having people be able to afford things manufactured in their own country. They would essentially be their own consumers and producers.

What I think has happened here is that China has learned the lesson of neoliberal economics. This system of deregulation has devastated the West and China wants none of it. I think the China government has realized how unsafe it is to make your economy dependent on another’s.

China is an export economy, meaning that its main source of industry is creating things to be sold in other countries. Now this means that the Chinese economy is extremely vulnerable to market fluctuations in these countries purchasing these commodities. If the US goes into recession and jobs are lost, homes foreclosed, that means the masses don’t have money to spend on purchasing commodities. This will mean people are not buying commodities from Chinese producers and then those Chinese producers go out of business. This is what happened during the global economic recession.

Its very likely that China is changing its economy to end a dependence on other nations as a source of revenue. This is a wise thing to do, ending foreign independence for commodity purchase. Essentially the Chinese are, in a way, going back to the way things were during the socialist era. Chinese people bought Chinese manufactured goods, sustaining jobs for Chinese people. True, that was socialist and this is capitalist, but the essential production self-consumption aspect remains the same.

The Chinese are doing the smart thing; end a dependence on foreign purchasing. It is this that the US government doesn’t like. It’s all well and good when China makes its population a cheap expendable pool of labour for the benefit of the US, but if it does anything in its own interest regardless of US opinion, then China is “instigating” a currency conflict.