A Brief Note On Penalty And Profit : A Story Of Manipulation

1047 Words5 Pages
Charles Lowd
Global Issues/POLS 2401
October 6, 2015
Penalty and Profit: A Story of Manipulation
The United States has a long standing love/hate relationship with China. One that is broad in content, with some points being beneficial and other being adversarial. The topics of trade, deficit, and fiscal dependency have been debated for years with no definitive resolution. The relationship became further strained when news spread of China (allegedly) using currency manipulation (also called “currency intervention”) to decrease the value of yuan (the Chinese currency). China used currency manipulation by buying large amounts of US dollars using yuan. Doing so increases the supply of yuan in the foreign exchange market which causes an increase
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For the U.S. and WTO to condemn China for trying to keep their economic structure afloat would be hypocritical and unjust.
China, a country large in size, population, economy, is a really important asset globally. America’s second-largest trading partner, China is the producer of most of America’s items including clothes, consumer electronics, and manufacturing goods. The codependency of America and China is a very fragile and with recent debate of penalization, a potentially, volatile situation. It is the world’s second-largest economy after the United States, currently “accounting for about 12 percent of the world economy and about a quarter of global growth in recent years” (Swanson). China’s ability to produce large quantities of goods and at very low costs is what makes the country’s importance to global trade, especially America. 1.2 Trillion dollars of our debt is to China, which helps to keep our interest rates low by “allowing firms to make investments that would be unattractive at a higher cost of borrowing” (Kaneene). With investments like that, there is an increase in the capital available, an increase in the
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