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Home Publications Blogs Beat the Press China Threatens to Raise the Value of the Yuan

China Threatens to Raise the Value of the Yuan

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Thursday, 14 July 2011 04:39

Yes, the United States has officially been asking (demanding?, begging?) China to raise the value of its currency against the dollar. Yet, the media continually threaten the country with the story that China may sour on the U.S. and stop buying U.S. debt if we don't get our budget deficit down.

However, if China stopped buying U.S. debt it would lead to a rise of the yuan against the dollar. This is exactly what the Obama administration has ostensibly been asking them to do.

In other words, China has no leverage in this picture. Their implicit threat is to do exactly what we supposedly want them to do. So why is the media trying to scare us?

Comments (3)Add Comment
Identification
written by PeakVT, July 14, 2011 10:14
So why is the media trying to scare us?

Because consciously or unconsciously NYT reporters identify with the financial industry, which has an interest in keeping the dollar "strong". If NYC depended on manufacturing the NYT would probably have a different outlook.
Chinese Enjoy Working for Low Wages
written by Paul, July 14, 2011 10:40
The NYT understands that the Chinese people have always had a low standard of living based on low wages. If the yuan increased in value, that Chinese lifestyle would no longer be sustainable.
...
written by Skjellifetti, July 14, 2011 7:29
There is no media scare story here. The NYT is reporting statements made by the Chinese, no more, no less. The media can win sometimes. When they interperate facts they get yelled at for poor interpretation. When the story is lall facts, they get yelled at for not interpreting.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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