Geithner's Banking on Chinese Inflation to Boost U.S. Competitiveness

Posted by jeckert on 02/16/2011

The Wall Street Journal reports that Treasury Secretary Tim Geithner informed the Senate Finance Committee that inflation in China would aid U.S. competitiveness.

According to the Journal, Geithner said:

The yuan is only “moving at about 0.5%-a month now against the dollar, but because their inflation rates are much higher than ours, if you look at the actual competitive balance now, its appreciating substantially more rapidly than that. And that’s very good, because it means that companies now as they choose where they build their next plant, where they lock in long-term contracts, they have to plan for the reality that the competitive playing field is going to be shifting in our direction. We’ve got to make sure that happens.”

So, we're depending on Chinese inflation to boost American manufacturing? C'mon, we can do better than that.  Chinese inflation may help us be more competitive, but it's no substitute for a manufacturing strategy...or stopping China's cheating when it comes to currency manipulation and dumping. 

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