China's exchange rate shenanigans have cost America jobs

Posted by mmcmullan on 03/18/2014

The Wall Street Journal ran a story recently on the recent decline in the value of the yuan, China’s currency. Being a Wall Street Journal article, it treats with chief concern the amount of money that currency speculators – both large corporations and the spare, incredibly wealthy individual who have bet on the yuan’s slow-as-molasses-but-steady appreciation – stand to lose by sudden drops in the yuan’s value:

While the recent declines likely aren't big enough to trigger a stampede out of the yuan, the added volatility in the exchange rate may give some investors pause.

The wider trading band also means there is more scope now for the yuan to depreciate on a day-to-day basis, which makes the yuan less of a guaranteed source of returns for many investors.

Yes, it’s a real bummer for those speculators. But anyway, way deep down in the story, delivered as almost an aside, is some truth that we found particularly interesting:

For some companies, losses on yuan bets will be offset by the benefits of a weaker currency, including lower operating costs and increased demand for their exports.

"A weaker yuan helps China’s exporters?"  Then the yuan’s sudden drop couldn’t possibly have anything to do with the rare trade deficit that China ran last month, could it?

Whether it does or not, all of these recent developments confirm that, by simple definition, China manipulates its currency, which remains undervalued. It manipulates its currency to build large trade surpluses with its largest trading partner. And those trade deficits have cost its larger trading partner millions of jobs.

That very large trading partner, meanwhile, could create millions of jobs by passing legislation that would allow currency manipulation to be treated in trade cases like the subsidy that it is.

Related recent Blogs

@KeepitMadeinUSA on Twitter

  • ICYMI: Senate passed its version of Highway Trust Fund bill; shortened length of extension to Dec. instead of May 2015. Heads back to House. 7 hours 3 min ago
  • The Senate is now debating legislation to reauthorize the Highway Trust Fund (well, until May 2015). Watch on @cspan: 10 hours 55 min ago
  • RT @SteveRattner: Amazing shift in US jobs -- gone from making things to taking care of sick people 11 hours 51 min ago
  • We must be close to election season. Candidates are talking a big game about unfair trade on the campaign trail: 14 hours 16 min ago
  • Looks like @amazon is getting into the 3D printing business. 15 hours 38 min ago
  • RT @WisconsinOven: MT @KeepitMadeinUSA @ScottPaulAAM shares ideas in @HuffingtonPost on how to restore American manufacturing leadership:ht… 16 hours 23 min ago
  • BTW, ALL the machines at that Indianapolis Adidas plant helped produce LeBron jerseys. Plus more in Iowa & Cleveland. 16 hours 23 min ago
  • !!! RT @darrenrovell The LeBron jersey assembly line at Adidas facility in Indianapolis 16 hours 26 min ago
  • Wisconsin companies are going on a national tour to promote American manufacturing: 17 hours 14 min ago
  • This --> @USAToday examines the myth of the STEM workers shortage. 1 day 12 hours ago