Steve James wrote:I really wonder how much American goods that the Chinese buy as opposed to their American counterparts and Chinese (Mexican, Thailand, Malaysian) goods. I'm not an economist, but I think the "imbalance" is precisely that. I.e., we buy shitloads of Chinese merchandise at low prices, and the Chinese hardly buy shit from us. And, what they do buy, they put into products (like Huawei phones) that they sell back to us at lower prices.
US products are not competitive because of the tariffs that are placed on US products..
not just in China but in many other countries.
Yes, it seems like a good idea to even that imbalance out somehow. I understand that if we don't buy their goods it will affect the Chinese economy. But, it's the American consumer and Chinese worker who have benefited.
At the expense of jobs as companies relocated overseas to ease the tax burden and avoid labor laws ect.
This is changing as the tax incentive changes. .
If I were Chinese, however, I would simply look for other markets and opportunities elsewhere. Americans aren't the only customers or providers. Other countries are making agreements with China. Many of them are finding out those agreements work against them in the long run.
Not to mention, iinm, the US is in debt to China, not the other way around. Have we saved enough from the tariffs to pay off our debt?
This means if China does anything to devalue the US their debt also becomes worth less,
its not in their interest to do so...They buy US dollars to stabilize their own economy .
Why China Owns So Much U.S. Debt
China makes sure the yuan is always low relative to the U.S. dollar. Why?
Part of its economic strategy is to keep its export prices competitive.
It does this by holding the yuan at a fixed rate compared to a "currency basket" of which the majority is the dollar. When the dollar falls in value, the Chinese government uses dollars it has on hand to buy Treasuries. It receives these dollars from Chinese companies that receive them as payments for their exports. China's Treasury purchases increase demand for the dollar and thus its value.
It's more likely that China would slowly begin selling off its Treasury holdings. Even when it just warns that it plans to do so, dollar demand starts to drop. That hurts China's competitiveness.
As it raises its export prices, U.S. consumers would buy American products instead.
Which the tariffs will force to happen anyway, just not under their control.
China could only start this process if it further expands its exports to other Asian countries and increases domestic demand.
They have a good strategy that was based on whats being addressed now.
It will be interesting going forward to see how this plays out. Its not sustainable for the US.
As peacedog mentioned, they are starting to have problems with this strategy as manufacturing changes becoming more automated. .