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Chinese currency not to blame for sluggish US economy

Take a stroll down a Wal-Mart isle and nearly every other item you pick up will bear the infamous label “MADE IN CHINA.” America’s business sector gorges on cheap, outsourced products to please the consumer-based economy— the ideology being “buy cheap” on more than one front.

Businesses are eager to increase profit margins by dancing between the lines of selling cheap and buying cheaper, which often requires a little assistance from now-booming Chinese manufacturers. This mentality is common, so what is there to complain about?

Plenty, according to the American government. China has just about brought the US government to its wits end with its purposefully undervalued currency, the Renminbi.

The purpose of this particular piece of legislation is to discourage American consumers from purchasing Chinese goods. The mentality behind this is to decrease imports from China and increase US exports in foreign markets.

The reality of the ramifications of this piece of legislation is that nearly nothing will change. Manufacturing goods in China is drastically cheaper than producing the same goods in America. Even if taxes were to double the cost of Chinese goods, companies would still flock to Chinese manufacturers for their needs.

Even if the Renminbi were to inflate, and possibly help narrow the gap between America’s imports and exports, it would be nothing more than a band-aid for America’s gaping economic wounds. It could even potentially worsen them.

Businesses rely too heavily on the many basics produced in China. The result would only be bloated price tags which would hurt the average American already suffering from the recession. Healing these wounds calls for a major change in infrastructure in the US.

China maintaining an undervalued Renminbi at the supposed cost of the US encourages Americans to cry victim of a beggar-thy-neighbor approach. Much of US policy concerning this matter is based on the premise that an artificially cheap Renminbi is a major contributing factor to the slowed economic recovery of the US.

However, simply raising the Renminbi will not dramatically decrease the margin between America’s exports and imports, and an 18th century British Parliament-type tariff will do so neither. In order for there to be a significant effort towards balancing America’s imports, there must be a change in the consumer-based nature of the economy.

Trisha Thacker is a biology freshman and may be reached at [email protected].

1 Comment

  • Interesting piece, especially this part, "Manufacturing goods in China is drastically cheaper than producing the same goods in America." Let's not forget one of the reasons why it is so cheap to produce everything in China. That's because they treat workers like animals and pay them as little as possible, just like UH food service workers and janitors.

    Walmart is the biggest front for Chinese sweatshops in the world.
    http://www.wakeupwalmart.com/

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