In the latest speech of Trump, he once more talked about the trading of China. Openly, he said China had totally controlled its exchange rates, which has caused lots of problems to America in trading and other areas. He showed his opinion that he doesn’t support TPP, for it will bring lots of bad effects to America but be helpful to those countries which control the exchange rates such as China. Therefore, he would take measures to solve the problems if he is successful to be the next president of America.
In other words, if Trump becomes the president, a war of economy between China and America might happen. As a businessman, he clearly knows how to make profits from business. He again and again stresses that he will put up prices in tariff for China. Both countries have argued about the exchange rates for many years, but as time goes by, we can see that both countries have profited from it though it goes with lots of arguments.
Is it as serious as Trump said? Is it the time for America to fight against China in trading? What will happen when Trump starts a war between China and America in trading? Do you have any ideas?
Trump is not a knowlegeable person despite his small fortune. He will not win. He is an ignorant person somewhat like Erdogan of Turkey. He uses racist feelings in the lower cultural levels of US society to seek power. Mostly, his followers are poor, uneducated people. This is surprising because his real intentions are to benefit the RICH.
The USD's value is determined by the world market, not by the government. The fact is, the weakening of the RMB helps China in at least two significant ways. (1) When U.S. companies do business with China, they pay their Chinese suppliers (vendors) in USD. When the Chinese supplier/vendor converts that into RMB, they get more RMB and make more profits. This also allows the Chinese companies to be more competitive in their pricing when selling goods to the U.S. In theory, it could help U.S. companies be more competitive when selling goods to customers. (2) The controlled devaluation of the RMB hurts it (the RMB) in being recognized as a trustworthy world currency. Thus, it strengthens the USD in world markets. China controls and sets the value of the RMB at what they want it to be in order to support the economy in China. In a true open market, the market should determine the value of the country's currency. All significant and recognized major currencies in the world allow the market to determine their value, not the government.
On the other hand, if I were making the decision to arbitrarily devalue the RMB in order to support the Chinese economy, then, I might consider doing the same as the Chinese government has done. It definitely helps China even though it is not what countries with major currencies do. China is facing the problem of trying to maintain economic growth at target levels. This is one way that they are addressing the problem.
Trump is not wrong here. The dollar is floating against all currencies and the value of the Chinese yuan is decided by the People's Bank of China, not the market.
Because she has a proven record of political errors, underhanded tactics (email accounts) and misjudgments that have cost lives: in Bengazi, among them.
I personally don't trust her because she wants the presidency too much.
Comment