Debunking the myths surroundng a Yuan revaluation
At the Peterson Institute's Real Time Economic Issues Watch, William Cline has authored an excellent, in-depth piece on why a revaluation of China's Yuan would indeed aid job growth in the U.S
Most significantly, Cline says that such a revaluation would lead to "an improvement in the trade balance" for the U.S. Specifically, it would aid U.S. manufacturers and Cline believes that such an improvement would "occur on the export side rather than in a reduction in the dollar value of imports."
Cline also surrounding China's currency:
1. "The first is that the United States no longer manufactures anything imported from China." Cline says this is "inaccurate even in some industries typically perceived as the domain of China and other developing countries." He points to sectors where "Domestic production dwarfs imports from China: semiconductors ($60 billion versus $2 billion), textiles ($58 billion versus $2 billion), automobile tires ($17 billion versus $2.0 billion), furniture ($49 billion versus $13 billion), fertilizer and pesticides ($40 billion versus $0.8 billion), basic chemicals ($98 billion versus $4 billion), iron and steel products ($124 billion versus $4 billion), and many other sectors."
2. The second myth is that China’s exchange rate does not affect its trade with the United States because in the period when it strengthened, from 2005 to early 2008, the imbalance with the United States widened instead of narrowing...this interpretation fails to recognize the lagged effect of the exchange rate in driving trade."
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