Monday, October 3, 2011
In the BBC article "US Senate Backs Debate on Currency Law Amid Yuan Row" the economic struggle with China escalates. The Senate voted to entertain debate about enacting legislation to encourage China to let it's currency increase in value. I found the article interesting because it forced me to do some research into how economics works and how it effects international and national politics.
Due to the undervaluation of the Chinese currency, Yuan, China is more attractive to large corporations than other nations. Basically, since corporations can get cheap production and greater profit, China receives more business and can get money from exports. Also, with an undervalued currency, citizens of China are more likely to by products produced in their own country, keeping wealth from leaving.
These factor give China an edge on trading but have also perturbed the US government and reduced production and jobs in the US as they increase in China. The currently proposed bill would provide Congress with the ability to place tariffs on goods imported from countries determined to be undervaluing their currency. This would make production in the US more financially competitive and level the playing field.
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