Samuelson: China to Overtake U.S. Economy | Newsweek Voices - Robert J. Samuelson

The Real China Threat

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Posted By: Generic Person @ 08/25/2008 4:37:25 PM

When a nation has a low currency, its exports are in high demand. Everyone wants to buy from them because they can make it the cheapest and they do so it will sell.

After the nation generates high revenue thanks to high demand, the value of their currency increases because of it. They can no longer produce at low prices and the demand for their exports is decreased. They lose revenue, but at the same time their buying power is increased thanks to the higher value of their currency.

The nation is able to focus more on importing, buying with the new power of their currency. Eventually mostly spending will result in a shift of money to other nations with lower valued currency because the nation with the higher currency is doing all of the buying.

http://en.wikipedia.org/wiki/Depreciation

For a long time governments attempted to prevent this part of world trade with tariffs because they saw their nation's economy getting weaker (which is partly true) or because they just didn't like their neighbors. Then, after the war, America and other allied nations realized that free trade was beneficial in the long run, so they worked to remove the tariffs and create the systems of trade we have today.

Then China comes along and realizes it can have its cake and eat it too. All it has to do, is artificially control its currency. When the value would naturally increase because of high sales, it can put a stop to the rise and continue the high exports. The consequence is that the value of other nations' money decreases and when it comes time for china to do the buying, it's literally competing with it self.

"Symptoms of instability have already surfaced, and if they grow worse, everyone???including the Chinese???may suffer."

In capitalism there are winners, and losers, there is no right or wrong, all's fair. Mr. Samuelson is not saying that China is some evil nation that wants to take all of our money, hes saying that their current course of action is SELF DESTRUCTIVE (stated in the article) and that it happens to screw everyone else in the process.

"Both the United States and China are self-interested"

Yes Mr. Samuelson states examples of how America aided in creating global trade which ended up helping everyone who took part in it, but he's certainly not trying to fool anyone about America's true goals, making money.

By the way, nice call on America's huge deficit screwing us and everyone else, Mr. Samuelson wrote an article about it just a few months back, it was a good read.

Posted By: darrelcc @ 08/25/2008 12:58:36 AM

How dare you put down the greatest country on earth like that. It scares me to see you use the word "ours" as I would . Name a dissaster in this world that the US wasn't the first to mobilize itself and come to the rescue. C. MacLean, I trunever consider you a true American if you truly believe all that garbage you wrote. American's have the best of everything thanks to this great country we live in. Freedom, security, liberty, the ability to apply ourselves and be succesfulll. Why don't you pack your bags and drag your anti-american ass off this continent. Perhaps residents of the middle east or some obscure comminist ruled island will accept an unpatriotic worthless piece of *** like you.

Member Comments

Posted By: LaSwede @ 10/02/2008 5:41:42 PM

Dear darrelcc ,
Do you believe in Santa also? USA is a arrogant big joke and only blind people like you don´t see how fake it is
Posted By: Generic Person @ 08/25/2008 4:37:25 PM

When a nation has a low currency, its exports are in high demand. Everyone wants to buy from them because they can make it the cheapest and they do so it will sell.

After the nation generates high revenue thanks to high demand, the value of their currency increases because of it. They can no longer produce at low prices and the demand for their exports is decreased. They lose revenue, but at the same time their buying power is increased thanks to the higher value of their currency.

The nation is able to focus more on importing, buying with the new power of their currency. Eventually mostly spending will result in a shift of money to other nations with lower valued currency because the nation with the higher currency is doing all of the buying.

http://en.wikipedia.org/wiki/Depreciation

For a long time governments attempted to prevent this part of world trade with tariffs because they saw their nation's economy getting weaker (which is partly true) or because they just didn't like their neighbors. Then, after the war, America and other allied nations realized that free trade was beneficial in the long run, so they worked to remove the tariffs and create the systems of trade we have today.

Then China comes along and realizes it can have its cake and eat it too. All it has to do, is artificially control its currency. When the value would naturally increase because of high sales, it can put a stop to the rise and continue the high exports. The consequence is that the value of other nations' money decreases and when it comes time for china to do the buying, it's literally competing with it self.

"Symptoms of instability have already surfaced, and if they grow worse, everyone???including the Chinese???may suffer."

In capitalism there are winners, and losers, there is no right or wrong, all's fair. Mr. Samuelson is not saying that China is some evil nation that wants to take all of our money, hes saying that their current course of action is SELF DESTRUCTIVE (stated in the article) and that it happens to screw everyone else in the process.

"Both the United States and China are self-interested"

Yes Mr. Samuelson states examples of how America aided in creating global trade which ended up helping everyone who took part in it, but he's certainly not trying to fool anyone about America's true goals, making money.

By the way, nice call on America's huge deficit screwing us and everyone else, Mr. Samuelson wrote an article about it just a few months back, it was a good read.
Posted By: darrelcc @ 08/25/2008 12:58:36 AM

How dare you put down the greatest country on earth like that. It scares me to see you use the word "ours" as I would . Name a dissaster in this world that the US wasn't the first to mobilize itself and come to the rescue. C. MacLean, I trunever consider you a true American if you truly believe all that garbage you wrote. American's have the best of everything thanks to this great country we live in. Freedom, security, liberty, the ability to apply ourselves and be succesfulll. Why don't you pack your bags and drag your anti-american ass off this continent. Perhaps residents of the middle east or some obscure comminist ruled island will accept an unpatriotic worthless piece of *** like you.