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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: goldworldnet who wrote (261031)	4/8/2008 7:30:05 PM
From: neolib	Read Replies (1) \| Respond to of 281500

Well China, like most of Asia, is clearly in the economic camp that thinks a positive balance of trade is good. Many economists in the USA claim it is not. AFAIK, the arguments that a negative balance of trade is not a problem largely rest on claims that it will balance out (in free market conditions) which IMHO is equivalent to saying that negative balances are not good. If negative balances are good, then one should not appeal to claims that they will reverse at some point and balance out as justification for not considering them negatives.

To: goldworldnet who wrote (261031)	4/8/2008 7:33:03 PM
From: TimF	Respond to of 281500

It helps them keep their exports high, but it also causes it to be more difficult for Chinese people to buy imported goods. In a sense its a way to try to push wages down. Now the economic growth in China has been strong enough that wages have grown a lot anyway, but their purchasing power is lower because of the weak Yuan policy. China accumulates dollars and t-bills like the mercantilist European powers used to accumulate gold. At least China isn't just sitting on piles of t-bills, there is a lot of investment going on in the country, but consumption is artificially suppressed.