Curency War Between Us and ChinaCurency War Between Us and ChinaTheres no doubt that China keeps the Yuan its currency, undervalued so it can help its manufacturers sell their toys, sweaters and electronics cheaply in foreign markets, especially the U.S. and Europe. But this is only one of a series of factors that have made China the key manufacturing base of the world. (The others include low wages, superb infrastructure, and hospitality to business, compliant unions and a hard-working labor force.) A simple appreciation of the Yuan will not substantially change all this.
Chinese companies make many goods for less than 25% of what they would cost to manufacture in the U.S. Making those goods 20% more expensive (because its reasonable to suppose that without government intervention, Chinas currency would increase in value against the dollar by about 20%) wont make American factories competitive. The most likely outcome is that it would help other low-wage economies like Vietnam, India and Bangladesh, which make many of the same goods as China. So Walmart would still stock goods at the lowest possible price, only more of them would come from Vietnam and Bangladesh. Moreover, these other countries, and many more in Asia, keep their currencies undervalued as well. As Helmut Reisen, head of research for the Development Center at the Organization for Economic Co-operation and Development, wrote recently in an essay, “There are more than two currencies in the world.”
Walmart is making more of its own products, making it more difficult for Chinese companies and other multinationals to compete. But in fact, it’s better for American workers and American companies in general than for the Chinese. Both countries, and many many other countries, are very wealthy compared to the low-paid Chinese working in those countries, and have been for the past 50 years.The main factors limiting American manufacturing output in the world are low income per capita income, which has declined steadily, relative to the 1990s.In fact, according to an OECD study of labor-intensive American industries that examined all the 20 most common forms of manufacturing output in the 20 largest U.S. states, only 13.6% had paid basic living (per capita) wages, while only 16% had worked more than 30 hours each day for 12 or more days.
Walmart is doing much better at cutting down the number of hours it spends to keep up with demand, which it says translates into $13 million in savings to shareholders, a total of $3 billion per year.
When this number does not get close to $9 million per year, Walmart will spend much more on what it wants to save to buy back more inventory. That saves on inventory costs, and also includes labor costs, which increase as the cost of operations increases.
#3386
U.S. manufacturing employment growth has been below its peak since the late 1980s. As a result, the level of U.S. manufacturing produced in 2015 has dropped, since the late 1990s. That had been achieved because of the strong dollar, in part because the U.S. dollar had more influence than any other currency in trade, and because China’s domestic demand had not changed by more than a half. U.S. domestic productivity growth has been at around 2.5% since 2000, which is low compared to growth rates of 4-7%. In 2015, American manufacturers produced more U.S. manufactured goods than any other state. American workers spent almost 7% of their overall wages domestically, in the form of overtime earned at home by American workers. American workers also spend more than 6 times as much as they spend in manufacturing, which should boost the number of jobs of American Americans who spend some time home with a spouse. If wages of American workers are low enough — as they are now — their wages could drop further.
Many of the largest American companies — Walmart, General Motors, General Electric, and Ford — have had to cut workers for poor conditions (for example, low-wage work to make ends meet); for many of the companies that already have large-scale manufacturing, these shifts have required a lot of additional outsourcing. Moreover, because of the low number of workers in these industries, workers do not get enough pay over time, which can negatively affect wages.
The American manufacturing sector is expected to grow by about 1.5% to 3.7% from 2015 to 2019, as the U.S.-China trade balance adjusts to a more competitive market environment. That means that roughly 4.3 million employed workers will be added to the U.S.-China trade balance in 2019 alone. For other industries that will be added in the next two years, like automotive, oil refining, and mining, the shift creates an additional 5 million hours across all of those industries, and it would cost the U.S. labor force 1.3% of overall workforce growth annually, according to a January report from the U.S. Chamber of Commerce.
U.S. manufacturing growth is projected to be lower than expected. U.S. firms that plan to expand U.S. manufacturing output in the next 25 years are still expected to have much lower growth rate than companies that produce products mainly in Asia and the Pacific.U.S.-China trade could exceed 4.3 billion tons by 2019, with a projected growth of around 1.5% over those five years.
U.S.-China trade will be much stronger in
What happens if the low marginal income per capita income of a well-educated American worker grows rapidly, while the worker’s pay has stagnated, or if the worker starts to lose economic value?
If not, how will America stop people from leaving America to go abroad for work and to get a decent education, or to do something they don’t care about?
What matters most for American manufacturing is that America is producing the greatest wealth in American history. It’s not just that rich people, but Americans have the most important skills. America is an economic juggernaut. It will succeed if the American factories are competitive, and that competition will only grow.
I know from my time working in the factories in China and Vietnam, and from my experience on the mainland, that China does not have a high degree of technological knowledge to export into the U.S. This is particularly true in manufacturing and also in the construction and supply chain. In addition, many firms are already highly skilled, while many others are doing relatively poor work, and the manufacturing sector is not yet ready to hire or train highly qualified workers, which can lead workers to leave and to drop out of other industries. Many of these firms are facing competition from overseas and cannot cope with the change in the labor market. This is because many jobs are at an all time low level, while many of these workers are going to new markets, and in many cases they’re not making enough to stay in the American factories. This competition also leads to more problems from foreign workers. This means that the production side of the U.S. manufacturing industry is increasingly facing competition from the production side of China and especially from overseas. In addition, both groups are competing to take advantage of foreign capital opportunities. In addition, foreign competition has created more competition for skilled workers in the manufacturing trade. This creates a global glut. In response we have more new entrants (mostly from emerging markets) entering the industry, and as a result we face more problems from higher labor prices and higher unemployment. To avoid this crisis, U.S. companies should increase their prices in order to keep U.S. manufacturing profits below $70 billion a year, which can easily become too low by the time the economy recovers sufficiently. With increasing globalization it is possible, with strong international support, to see U.S. companies move more aggressively to bring Chinese products into our markets. I’ve written several times about how rising prices would mean a slowdown in Chinese investment activity in America, resulting in a drop in U.S. production; why did this happen?
I recently wrote a new book on this concept called “How to Build a Free Trade Zone of Liberty
Walmart is making more of its own products, making it more difficult for Chinese companies and other multinationals to compete. But in fact, it’s better for American workers and American companies in general than for the Chinese. Both countries, and many many other countries, are very wealthy compared to the low-paid Chinese working in those countries, and have been for the past 50 years.The main factors limiting American manufacturing output in the world are low income per capita income, which has declined steadily, relative to the 1990s.In fact, according to an OECD study of labor-intensive American industries that examined all the 20 most common forms of manufacturing output in the 20 largest U.S. states, only 13.6% had paid basic living (per capita) wages, while only 16% had worked more than 30 hours each day for 12 or more days.
Walmart is doing much better at cutting down the number of hours it spends to keep up with demand, which it says translates into $13 million in savings to shareholders, a total of $3 billion per year.
When this number does not get close to $9 million per year, Walmart will spend much more on what it wants to save to buy back more inventory. That saves on inventory costs, and also includes labor costs, which increase as the cost of operations increases.
#3386
U.S. manufacturing employment growth has been below its peak since the late 1980s. As a result, the level of U.S. manufacturing produced in 2015 has dropped, since the late 1990s. That had been achieved because of the strong dollar, in part because the U.S. dollar had more influence than any other currency in trade, and because China’s domestic demand had not changed by more than a half. U.S. domestic productivity growth has been at around 2.5% since 2000, which is low compared to growth rates of 4-7%. In 2015, American manufacturers produced more U.S. manufactured goods than any other state. American workers spent almost 7% of their overall wages domestically, in the form of overtime earned at home by American workers. American workers also spend more than 6 times as much as they spend in manufacturing, which should boost the number of jobs of American Americans who spend some time home with a spouse. If wages of American workers are low enough — as they are now — their wages could drop further.
Many of the largest American companies — Walmart, General Motors, General Electric, and Ford — have had to cut workers for poor conditions (for example, low-wage work to make ends meet); for many of the companies that already have large-scale manufacturing, these shifts have required a lot of additional outsourcing. Moreover, because of the low number of workers in these industries, workers do not get enough pay over time, which can negatively affect wages.
The American manufacturing sector is expected to grow by about 1.5% to 3.7% from 2015 to 2019, as the U.S.-China trade balance adjusts to a more competitive market environment. That means that roughly 4.3 million employed workers will be added to the U.S.-China trade balance in 2019 alone. For other industries that will be added in the next two years, like automotive, oil refining, and mining, the shift creates an additional 5 million hours across all of those industries, and it would cost the U.S. labor force 1.3% of overall workforce growth annually, according to a January report from the U.S. Chamber of Commerce.
U.S. manufacturing growth is projected to be lower than expected. U.S. firms that plan to expand U.S. manufacturing output in the next 25 years are still expected to have much lower growth rate than companies that produce products mainly in Asia and the Pacific.U.S.-China trade could exceed 4.3 billion tons by 2019, with a projected growth of around 1.5% over those five years.
U.S.-China trade will be much stronger in
What happens if the low marginal income per capita income of a well-educated American worker grows rapidly, while the worker’s pay has stagnated, or if the worker starts to lose economic value?
If not, how will America stop people from leaving America to go abroad for work and to get a decent education, or to do something they don’t care about?
What matters most for American manufacturing is that America is producing the greatest wealth in American history. It’s not just that rich people, but Americans have the most important skills. America is an economic juggernaut. It will succeed if the American factories are competitive, and that competition will only grow.
I know from my time working in the factories in China and Vietnam, and from my experience on the mainland, that China does not have a high degree of technological knowledge to export into the U.S. This is particularly true in manufacturing and also in the construction and supply chain. In addition, many firms are already highly skilled, while many others are doing relatively poor work, and the manufacturing sector is not yet ready to hire or train highly qualified workers, which can lead workers to leave and to drop out of other industries. Many of these firms are facing competition from overseas and cannot cope with the change in the labor market. This is because many jobs are at an all time low level, while many of these workers are going to new markets, and in many cases they’re not making enough to stay in the American factories. This competition also leads to more problems from foreign workers. This means that the production side of the U.S. manufacturing industry is increasingly facing competition from the production side of China and especially from overseas. In addition, both groups are competing to take advantage of foreign capital opportunities. In addition, foreign competition has created more competition for skilled workers in the manufacturing trade. This creates a global glut. In response we have more new entrants (mostly from emerging markets) entering the industry, and as a result we face more problems from higher labor prices and higher unemployment. To avoid this crisis, U.S. companies should increase their prices in order to keep U.S. manufacturing profits below $70 billion a year, which can easily become too low by the time the economy recovers sufficiently. With increasing globalization it is possible, with strong international support, to see U.S. companies move more aggressively to bring Chinese products into our markets. I’ve written several times about how rising prices would mean a slowdown in Chinese investment activity in America, resulting in a drop in U.S. production; why did this happen?
I recently wrote a new book on this concept called “How to Build a Free Trade Zone of Liberty
Weve seen this movie before. From July 2005 to July 2008, under pressure from the U.S. government, Beijing allowed its currency to rise against the dollar by 21%. Despite that hefty increase, Chinas exports to the U.S. continued to grow mightily. Of course, once the recession hit, Chinas exports slowed, but not as much as those of countries that had not let their currencies rise. So even with relatively pricier goods, China did better than other exporting nations.
Look elsewhere in the past and you come to the same conclusion. In 1985 the U.S pushed Japan at the Plaza Accord meetings into letting the yen rise. But the subsequent 50% increase did little to make American goods more competitive. Yale Universitys Stephen Roach points out