U.S. to evaluate Chinese currency

October 14, 2010 — by Kim Tsai

At first glance, undervalued Chinese currency might seem like a serious advantage for America’s economy. However, it is part of the reason the economy has not gotten better.

Looking at the state of the economy, U.S. officials have realized that the undervalued Chinese currency, yuan, is keeping the U.S. economy from bouncing back.

Undervalued yuan make it seem as if Americans will be able to get products more cheaply, but overall, the damages to America’s economic state are staggering. The cheaper products from China mean that American companies can’t compete in markets. China may not be drawing in maximum profits, but they are not the ones losing jobs.

Because American companies lose out to the under-priced products, U.S. workers lose their jobs. If Chinese currency was legitimately re-evaluated, America would be able to generate more jobs and stand more strongly in competitive markets.

According to an article in the “Economy in Crisis,” China is quite obviously in the wrong and statistics say that they may even undervalue their currency as much as 40 percent.

The undervalued yuan is a serious problem that is just starting to resurface now. The House of Representatives passed a bill 348 to 79, according to BBC News, to “pave the way for trade sanctions on China.”

The next step toward its institution as a law is through the Senate and President Obama, which will take some time. BBC News says that it is unlikely to happen until after mid-November, when mid-term elections for the Senate are occurring.

China has, reportedly, taken few measures on evaluating its currency. China has promised the U.S. that the exchange rates would be changing but have not what measures would be taken.

Although the relationship between the U.S. and China is rocky, the U.S. government should make stronger efforts to make its point known, such as with stronger suggestions or some kind of deal. If things continue as they are, the economy will weaken the U.S. and leave it defenseless in the future.

Undervalued yuan is an issue that should be dealt with immediately. With all the ideas on ways to help the U.S. economy, this is one of the most logical ways to do it.

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