Economy

G-7 Pressures China On Trade, Is This An Unfair Trade Advantage?

December 4, 2005 ⋅  E-Mail Article ⋅  Print Article ⋅ Post a comment

I feel it’s about time the G-7 mentioned the obvious to a country that has been competing with a very unfair advantage in the world marketplace. Yesterday the G7 conference groups spoke out against China’s reluctance to effectively, and fairly, revaluate their Yuan.

The G-7 is a group of seven: USA, Canada, Italy, Japan, United Kingdom, Germany & France. G-8 is the G-7 + Russia. The seven-nation organization was established in 1973, the G7 members attend an annual summit each year to coordinate its members’ economic policies and monitor trade issues throughout the world.

Europe, and Washington, have both been putting pressure on Beijing to allow the Yuan to strengthen against the dollar in order to ease pressure on European, and U.S., exporters. China has an unfair advantage because of the strength of the dollar. The strong dollar makes U.S. exports more expensive to purchasers around the world. A weaker Chinese Yuan helps China’s domestic businesses make its goods cheaper in global markets.

Many consider this an unfair and illegal trade practice in the modern global economy. Many feel that China has purposely held the Yuan down to give its economy an unfair advantage and thus make it more attractive than it normally would be. This practice is considered to be worse than protectionism, which China also practices in its domestic economy. Lawmakers and manufacturers in the United States, and Europe, say the Yuan is greatly undervalued, giving Chinese exporters an unfair advantage by holding down the value of China produced goods abroad.

So how does China get away with these practices? There are two reasons, the first is that they have great lobbyist working over your elected officials in congress, these lobbyist work hard to make sure their country has good PR here in America. Secondly, most Americans crave he low priced goods, even if they are actually risking their own jobs by constantly buying ‘Made in China’ items, they don’t educate themselves enough to understand how their buying habits shape the outlook of Americas’ domestic economy.

In order to resolve the Yuan issue, a group of U.S. senators called for imposing a 27.5% tariff on all U.S. imports from China until China correctly reevaluates its currency. There is also a bill in the U.S. House of Representatives that would define the Yuan/Dollar issue as currency manipulation; this would make the Chinese manipulation of the Yuan an illegal trade subsidy. This would entitle the U.S., and other countries, to retaliate with legal tariffs, or it could force the Chinese to pay huge penalties on their exports. Recently the White House did enforce tariffs on several types of Chinese produced clothing imports.

G-7 renews pressure on China exchange rate

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