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USA votes for China trade sanctions



The sanctions haven't started, and the bill isn't fully approved yet, but it looks like China's currency is going to get forced to rise in value. That will likely make Chinese coins pop in US dollar (USD) value. If you're going to buy coins, better do it quick before that happens.

Don't lose sight that there is an election coming in November and members of the House of Representatives want to look like they're tough on China. It is unlikely that this measure will make it to the Senate. Besides China marches to the beat of their own drummer and acts when and does what is in their best interests.

Just because the Congress passes a bill doesn't mean the yuan has to rise in value.  It means the U.S. will apply sanctions if they don't raise the yuan rate.  Don't be surprised if the Chinese say "Scr*w You".  They have many options, like dumping Treasuries to put pressure back on the U.S.  This could get ugly.

I have read that the profit margin of most Chinese exporters is below 5%. If the Yuan appreciates by that much a significant part of China's export industry will shut down. The unhappiness on both sides of the Pacific is real yet neither country wants to publicly recognize how limited the other is to change. There will be a lot of jawing but I doubt that the exchange rate will adjust significantly more than it already has — which will do nothing to relieve tensions.

I know this is a complex issue, but personally, I think it is daft for a country to export its manufacturing jobs and then afterward act shocked that its unemployment rate has gone up. That is both bad policy and bad politics.

Best wishes,
Peter Anthony

It looks like all of you were right. China's the one in the strong position, not the USA, and neither side has much room to move anyway, so it's not likely anything too serious will happen. The USA screwed up bigtime, and China isn't going to let itself get blamed for it. Here's a few snippets from a recent news article:

U.S. backs off in currency dispute with China

China left little doubt about the rancor that would ensue if it is branded as a currency manipulator -- a largely symbolic move by the United States that would mandate more consultations with Beijing but no immediate penalties.

"The Chinese yuan should not be a scapegoat for the United States' domestic economic problems," Commerce Ministry spokesman Yao Jian said on Friday.

There had been speculation Obama might be tempted to label China as a currency manipulator for the first time in 16 years to look tough before the elections in which his Democrats risk big losses over discontent with his handling of the economy.

But there are concerns about angering China, whose support is needed on issues such as rebalancing the global economy, climate change and the nuclear programs of Iran and North Korea.

In an article published on Friday, Chinese central bank governor Zhou Xiaochuan pledged a continuation of yuan reform but only on Beijing's gradual terms.

"The yuan exchange rate will be basically stable at a reasonable and balanced level," he wrote in China Finance, a magazine published by the central bank.


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