Currency Manipulation
The United States of America has been conducting trade with China ever since it has had a port. One of the first ships to sail under the American flag was the Empress of China, which left the New York harbor on February 22, 1784, to become the first U.S. ship in Chinese waters when it landed in Guangzhou, China. That first voyage opened a door to both the United States and China, a door that would lead to centuries of trade, and would make both nations the largest economies in the modern world. Later, the U.S. saw China for what it was: a huge mass filled with natural resources ripe for the taking. The U.S. government knew that European nations would also have this realization. To combat the theory of chopping China up into colonies, such as
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the Europeans did in Africa, the U.S. proposed the Open Door Policy. This allowed all nations to have equal trading rights with the government in Beijing and helped to make China the world's largest trade partner. However, becoming the largest world trade partner has come at a large cost. By the time China had joined the World Trade Organization in 2001, it had a well established record of exploiting its workers, human rights violations, and a low standard of living, as well as underhanded and unfair trade practices. This has given the People’s Republic of China an opportunity to significantly influence the wealth of the world. In addition, ever since the Clinton administration opened China up to free trade in 2000, The United States trade relationship with China has crippled the U.S. economy.
One of the reasons that the U.S. needs to seriously reevaluate their economic relations with China, is that the actions Beijing take deeply affect the economies of the world. In the first quarter of 2016, the world plunged into its worst recession since 2008. This is largely credited to the rapid growth of the Chinese economy in recent years. The Chinese have grown so rich so fast that they have not stopped to consider the consequences of their unstable growth. China has also started to oversupply its real estate market, creating ghost cities, or entire urban landscapes where nobody lives. As demand is falling short of this surplus supply, the Chinese housing market has slowed down significantly and showed signs of collapse. Finally, the Chinese stock market recognized the real estate bubble and fell 7% in one day, dragging the entire world into a recession.
Beijing’s crooked tricks are only the tip of the iceberg for why trade with the P.R.C. is bad for U.S. business. For example, China uses its large supply of natural materials to blackmail U.S.’, as well as other nations’, corporations into doing business within its borders. China accounts for over 90% of the world's naturally occurring rare earth metals, such as gadolinium, lanthanum, and samarium. These metals are used in everything from dump truck motors to iPhones. Many of the world’s companies need these metals to create their many products, and China refuses to supply the companies with what they need unless they run their factories and sell their goods within Chinese borders. The E.U., U.S., Japan, as well as other nations are scouring the rule books of the W.T.O. in order to find a Chinese trade violation so that they can stop this unjust blackmail, but they have yet to discover incriminating evidence.
The crooked methods and policies of the Chinese financial system are one of the main reasons it was not included in the Trans-Pacific Partnership, or T.P.P., a group consisting of twelve nations bordering the Pacific Ocean including Japan, Canada, Mexico, Australia, and the U.S. This group of nations conducts fair, frequent trade with each other on a regular basis. This agreement enforces the protection of Intellectual Property (IP) - properties that belong to individuals or companies and include patents, logos, and many more creations of the mind. The fact that China does not participate in the T.P.P. allows it to abuse the many creations of hard working Americans. In fact, there is a division of China’s People’s Liberation Army that goes to work every day to hack into the networks of U.S. companies to steal the technology that they posses. The N.S.A. chief says, “[Chinese cyber crimes constitute] the greatest transfer of wealth in history.” The F.B.I has also proven that the hacking of American corporation’s technologies and IP’s is being run by the Chinese government. In total, American businesses lose 2 billion dollars each year to Chinese IP pirates.
The American relationship with China has affected both nations in many other ways, with the U.S. taking deep losses in several areas of its capitalist economy. Of the 2.8 million U.S. jobs lost to cheaply paid Chinese workers, 1.9 of the jobs have been from the manufacturing sector. The Chinese standard of living is so low and unregulated that Chinese factory managers can afford to pay their employees close to nothing and still get work done. This makes American business owners buy Chinese products or elect to open factories in China so that they can pay so little for the cost of labor. Another way that the government in Beijing eliminates fair U.S. competition is by granting large subsidies, or government granted money to Chinese factories and farmers. The government gifted money eliminates fair U.S. competition in China, putting millions of American out of work, and driving down the wages of those who can manage to hold onto a job.
Chinese manufacturing goes unregulated to decrease cost and increase speed. Seventy-five percent of the toys that are currently in the U.S. are made in China. A significant amount of those toys have been recalled due to safety issues such as lead-based paint or choking hazards. In recent news, an American flooring manufacturer called Lumber Liquidators have gone under fire for selling Chinese made laminate flooring that did not meet safety standards. The laminate material contained formaldehyde, a known cancer-causing material. However, Lumber Liquidators has insisted that its products are safe, but the customers who unknowingly bought these unregulated floors say otherwise. The rapid growth in the Chinese economy is harmful to the environment as well. The many factories within its borders make China the largest world producer of smog, or CO2 gasses, and pollution, which is undoubtedly speeding up the global warming process. There is little to no regulation of these emissions. These are only some examples of the impacts that lack of regulations have on a worker's life and the environment.
Finally, the Chinese have made it clear that in order to maintain a booming economic structure for generations to come, the education system must be evaluated. China graduates four times as many engineers as the U.S. does, making them be able to grow stronger faster with the aid and support of an intelligent workforce behind it. If America does not carefully consider the large drawbacks its economic relationship with China creates, then China will remain on track to becoming the wealthiest nation with the strongest economy much sooner than anyone thought.
The United States of America has done business with China ever since it has had ships; however, in the centuries of the every changing trade relations, the two nations have never been the closest of allies or had complete trust in one another.
In recent years, the level of distrust has skyrocketed due to currency manipulation, or the tool used by the P.R.C. to keep its currency value low in order to keep exports cheap. While most all trading nations participate in currency manipulation, China is one of the largest culprits. In order to have an undervalued currency, a nation must be buying more than they are selling. The Chinese, with their cheaply made products and underpaid workers, export colossal amounts of products all around the world for inexpensive prices. At this point it is clear to see that the Chinese are selling more than they are buying, or exporting an enormous amount of goods and importing less. This fact should mean that the Chinese currency is strong and the value of the Chinese yuan should be driven up. The Chinese government does not want the yuan’s value to go up because than China’s exports will be more expensive and less appealing for other nations to buy. So to keep the cost of the yuan down, China uses its incoming wealth to buy tremendous amounts of U.S. dollars. Therefore, the Chinese economy is technically selling more than it is buying, driving the value of the yuan down, keeping Chinese exports and wages low and driving up the value of the U.S. dollar. By buying U.S. dollars, the Chinese can maintain an extremely high GDP, or gross domestic product, which is the sum of all the money inside the country's borders at any given time. China can afford to maintain such a high GDP because their biggest import is money, keeping their treasuries full and their wages low. This trick costs America millions of jobs and makes China an economic superpower at the same
time.
The Sino-American trade relationship has plenty of room to grow and change in the future with the approaching 2016 presidential election. Many of these current, yet eccentric, contenders for Commander in Chief have very different outlooks on what to do with our neighbors to the far east. The Republican frontrunner, Donald J. Trump, proposes a no-nonsense policy regarding currency manipulation and cybertheft. Trump also recommends a 45% tariff on all Chinese exports, which may cripple the sale of Chinese goods in the U.S.A. while promoting American businesses at the same time. Regarding his taxation concepts, Trump says, “If China [doesn’t] come to the table, they’re going to have a tax when they put their products into this country. And they’re going to behave.” The views of Republican candidate Ted Cruz are very similar to those of Donald Trump; however, Cruz expresses strong opposition to the T.P.P, saying it undermines America’s trade strengths and hurts business interests. The Democratic Party’s views contain similarities and differences to those of the Republicans. Hillary Clinton, the Democratic frontrunner, has taken back her approval of the T.P.P., but agrees with most other trade deals. Clinton stands by what she said almost four years ago: “Today, China represents one of the most challenging and consequential bilateral relationships the United States has ever had to manage.” Bernie Sander’s takes different a different stance. He opposes all free trade agreements and favors heavy restrictions. Whoever is elected to be the next president of the United states will likely drastically change the relationship of the two biggest economies in the world. Both Beijing and Washington have successfully built powerful economies. This being said, Beijing, in particular, has done more than a few unethical things to get to where they are today - including currency manipulation, cyber crimes, and intellectual property theft. The United States has been falling behind because of the fair trade policies it pursues. With the pending election around the corner, the next leader of the free world has a real opportunity to finally take the proper course of action and force China to play on an even playing field.
the Europeans did in Africa, the U.S. proposed the Open Door Policy. This allowed all nations to have equal trading rights with the government in Beijing and helped to make China the world's largest trade partner. However, becoming the largest world trade partner has come at a large cost. By the time China had joined the World Trade Organization in 2001, it had a well established record of exploiting its workers, human rights violations, and a low standard of living, as well as underhanded and unfair trade practices. This has given the People’s Republic of China an opportunity to significantly influence the wealth of the world. In addition, ever since the Clinton administration opened China up to free trade in 2000, The United States trade relationship with China has crippled the U.S. economy.
One of the reasons that the U.S. needs to seriously reevaluate their economic relations with China, is that the actions Beijing take deeply affect the economies of the world. In the first quarter of 2016, the world plunged into its worst recession since 2008. This is largely credited to the rapid growth of the Chinese economy in recent years. The Chinese have grown so rich so fast that they have not stopped to consider the consequences of their unstable growth. China has also started to oversupply its real estate market, creating ghost cities, or entire urban landscapes where nobody lives. As demand is falling short of this surplus supply, the Chinese housing market has slowed down significantly and showed signs of collapse. Finally, the Chinese stock market recognized the real estate bubble and fell 7% in one day, dragging the entire world into a recession.
Beijing’s crooked tricks are only the tip of the iceberg for why trade with the P.R.C. is bad for U.S. business. For example, China uses its large supply of natural materials to blackmail U.S.’, as well as other nations’, corporations into doing business within its borders. China accounts for over 90% of the world's naturally occurring rare earth metals, such as gadolinium, lanthanum, and samarium. These metals are used in everything from dump truck motors to iPhones. Many of the world’s companies need these metals to create their many products, and China refuses to supply the companies with what they need unless they run their factories and sell their goods within Chinese borders. The E.U., U.S., Japan, as well as other nations are scouring the rule books of the W.T.O. in order to find a Chinese trade violation so that they can stop this unjust blackmail, but they have yet to discover incriminating evidence.
The crooked methods and policies of the Chinese financial system are one of the main reasons it was not included in the Trans-Pacific Partnership, or T.P.P., a group consisting of twelve nations bordering the Pacific Ocean including Japan, Canada, Mexico, Australia, and the U.S. This group of nations conducts fair, frequent trade with each other on a regular basis. This agreement enforces the protection of Intellectual Property (IP) - properties that belong to individuals or companies and include patents, logos, and many more creations of the mind. The fact that China does not participate in the T.P.P. allows it to abuse the many creations of hard working Americans. In fact, there is a division of China’s People’s Liberation Army that goes to work every day to hack into the networks of U.S. companies to steal the technology that they posses. The N.S.A. chief says, “[Chinese cyber crimes constitute] the greatest transfer of wealth in history.” The F.B.I has also proven that the hacking of American corporation’s technologies and IP’s is being run by the Chinese government. In total, American businesses lose 2 billion dollars each year to Chinese IP pirates.
The American relationship with China has affected both nations in many other ways, with the U.S. taking deep losses in several areas of its capitalist economy. Of the 2.8 million U.S. jobs lost to cheaply paid Chinese workers, 1.9 of the jobs have been from the manufacturing sector. The Chinese standard of living is so low and unregulated that Chinese factory managers can afford to pay their employees close to nothing and still get work done. This makes American business owners buy Chinese products or elect to open factories in China so that they can pay so little for the cost of labor. Another way that the government in Beijing eliminates fair U.S. competition is by granting large subsidies, or government granted money to Chinese factories and farmers. The government gifted money eliminates fair U.S. competition in China, putting millions of American out of work, and driving down the wages of those who can manage to hold onto a job.
Chinese manufacturing goes unregulated to decrease cost and increase speed. Seventy-five percent of the toys that are currently in the U.S. are made in China. A significant amount of those toys have been recalled due to safety issues such as lead-based paint or choking hazards. In recent news, an American flooring manufacturer called Lumber Liquidators have gone under fire for selling Chinese made laminate flooring that did not meet safety standards. The laminate material contained formaldehyde, a known cancer-causing material. However, Lumber Liquidators has insisted that its products are safe, but the customers who unknowingly bought these unregulated floors say otherwise. The rapid growth in the Chinese economy is harmful to the environment as well. The many factories within its borders make China the largest world producer of smog, or CO2 gasses, and pollution, which is undoubtedly speeding up the global warming process. There is little to no regulation of these emissions. These are only some examples of the impacts that lack of regulations have on a worker's life and the environment.
Finally, the Chinese have made it clear that in order to maintain a booming economic structure for generations to come, the education system must be evaluated. China graduates four times as many engineers as the U.S. does, making them be able to grow stronger faster with the aid and support of an intelligent workforce behind it. If America does not carefully consider the large drawbacks its economic relationship with China creates, then China will remain on track to becoming the wealthiest nation with the strongest economy much sooner than anyone thought.
The United States of America has done business with China ever since it has had ships; however, in the centuries of the every changing trade relations, the two nations have never been the closest of allies or had complete trust in one another.
In recent years, the level of distrust has skyrocketed due to currency manipulation, or the tool used by the P.R.C. to keep its currency value low in order to keep exports cheap. While most all trading nations participate in currency manipulation, China is one of the largest culprits. In order to have an undervalued currency, a nation must be buying more than they are selling. The Chinese, with their cheaply made products and underpaid workers, export colossal amounts of products all around the world for inexpensive prices. At this point it is clear to see that the Chinese are selling more than they are buying, or exporting an enormous amount of goods and importing less. This fact should mean that the Chinese currency is strong and the value of the Chinese yuan should be driven up. The Chinese government does not want the yuan’s value to go up because than China’s exports will be more expensive and less appealing for other nations to buy. So to keep the cost of the yuan down, China uses its incoming wealth to buy tremendous amounts of U.S. dollars. Therefore, the Chinese economy is technically selling more than it is buying, driving the value of the yuan down, keeping Chinese exports and wages low and driving up the value of the U.S. dollar. By buying U.S. dollars, the Chinese can maintain an extremely high GDP, or gross domestic product, which is the sum of all the money inside the country's borders at any given time. China can afford to maintain such a high GDP because their biggest import is money, keeping their treasuries full and their wages low. This trick costs America millions of jobs and makes China an economic superpower at the same
time.
The Sino-American trade relationship has plenty of room to grow and change in the future with the approaching 2016 presidential election. Many of these current, yet eccentric, contenders for Commander in Chief have very different outlooks on what to do with our neighbors to the far east. The Republican frontrunner, Donald J. Trump, proposes a no-nonsense policy regarding currency manipulation and cybertheft. Trump also recommends a 45% tariff on all Chinese exports, which may cripple the sale of Chinese goods in the U.S.A. while promoting American businesses at the same time. Regarding his taxation concepts, Trump says, “If China [doesn’t] come to the table, they’re going to have a tax when they put their products into this country. And they’re going to behave.” The views of Republican candidate Ted Cruz are very similar to those of Donald Trump; however, Cruz expresses strong opposition to the T.P.P, saying it undermines America’s trade strengths and hurts business interests. The Democratic Party’s views contain similarities and differences to those of the Republicans. Hillary Clinton, the Democratic frontrunner, has taken back her approval of the T.P.P., but agrees with most other trade deals. Clinton stands by what she said almost four years ago: “Today, China represents one of the most challenging and consequential bilateral relationships the United States has ever had to manage.” Bernie Sander’s takes different a different stance. He opposes all free trade agreements and favors heavy restrictions. Whoever is elected to be the next president of the United states will likely drastically change the relationship of the two biggest economies in the world. Both Beijing and Washington have successfully built powerful economies. This being said, Beijing, in particular, has done more than a few unethical things to get to where they are today - including currency manipulation, cyber crimes, and intellectual property theft. The United States has been falling behind because of the fair trade policies it pursues. With the pending election around the corner, the next leader of the free world has a real opportunity to finally take the proper course of action and force China to play on an even playing field.