The Chinese Currency Troubles

The Chinese need to revalue their currency.

I feel that the main reason the Chinese need to revalue their currency, is the renminbi is valued very low compared to other countries’ currencies. Economists figure that the renminbi is anywhere from 25% to 40% undervalued compared to currencies from around the world. In July 2008, the renminbi appreciated 21 percent, after which the U.S. dollar still only adds up to about 6.83 renminbi. It kind of reminds me of a little kid who is very proud of having his ten pennies instead of one dollar, because in his mind, ten is greater than one, therefore the ten pennies are worth more than the one dollar. This allows China to be a great exporter.

China will continue to have the upper-hand in global trading unless its currency is revalued to be worth more. Because of how little the renminbi is worth compared to other countries’ currencies, they can export much more than they import. Also, the U.S. owes the majority of the $2.4 trillion debt to china that various countries have added to over the years. President Obama showed America’s disgust with the Chinese’s currency prices and goods when he said, “to make sure our goods are not artificially deflated in price; puts us at a huge competitive disadvantage.” This statement shows that American’s care about quality and is a blow to Chinese goods and their quality.