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Ffw 2010 Presentation Transcript

  • 1. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg China vs. the United States: the Battle for Global Economic Supremacy Ryan W. Herzog Gonzaga University Fall Family Weekend October 22nd, 2010
  • 2. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Introduction Overview of China The Recent History Why? How? Removal of the Peg
  • 3. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Introduction • Why has China decided to pursue an exchange rate target?
  • 4. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Introduction • Why has China decided to pursue an exchange rate target? • How has China been able to maintain the pegged exchange rate without risking a crisis?
  • 5. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Introduction • Why has China decided to pursue an exchange rate target? • How has China been able to maintain the pegged exchange rate without risking a crisis? • Should we be pressuring China to let the renminbi appreciate?
  • 6. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Introduction • Why has China decided to pursue an exchange rate target? • How has China been able to maintain the pegged exchange rate without risking a crisis? • Should we be pressuring China to let the renminbi appreciate? • What has the United States gained/lost by China’s foreign policies?
  • 7. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Introduction • Why has China decided to pursue an exchange rate target? • How has China been able to maintain the pegged exchange rate without risking a crisis? • Should we be pressuring China to let the renminbi appreciate? • What has the United States gained/lost by China’s foreign policies?
  • 8. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Key Numbers for China • Real GDP grew at an annual rate of 9.6%.
  • 9. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Key Numbers for China • Real GDP grew at an annual rate of 9.6%. • Unemployment in China is at 9.6%.
  • 10. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Key Numbers for China • Real GDP grew at an annual rate of 9.6%. • Unemployment in China is at 9.6%. • Inflation is stable at 3.6%.
  • 11. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Key Numbers for China • Real GDP grew at an annual rate of 9.6%. • Unemployment in China is at 9.6%. • Inflation is stable at 3.6%. • China raised interest rates on deposits and lending to 2.5% and 5.56%, respectively.
  • 12. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Key Numbers for China • Real GDP grew at an annual rate of 9.6%. • Unemployment in China is at 9.6%. • Inflation is stable at 3.6%. • China raised interest rates on deposits and lending to 2.5% and 5.56%, respectively. • China has $2.6 trillion in reserves.
  • 13. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg GDP per person US and China (1980-2015)
  • 14. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Economic Growth in China (1953-2007)
  • 15. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg The Peg • China has pegged the renminbi at 8.27 yuan per dollar from 1997 through 2005.
  • 16. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg The Peg • China has pegged the renminbi at 8.27 yuan per dollar from 1997 through 2005. • From 2005 to July of 2008 China let the renminbi slowly appreciate to 6.82 yuan per dollar.
  • 17. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg The Peg • China has pegged the renminbi at 8.27 yuan per dollar from 1997 through 2005. • From 2005 to July of 2008 China let the renminbi slowly appreciate to 6.82 yuan per dollar. • On June 19th China announced a shift in the exchange rate regime to a managed float. Currently the renminbi is trading at 6.73 yuan per dollar.
  • 18. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Exchange Rate (1981-2010)
  • 19. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Asian Crisis • In 1997 many East Asian economies were hard hit by a financial crisis (including Thailand, Indonesia, South Korea, Malaysia, Philippines, and Hong Kong).
  • 20. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Asian Crisis • In 1997 many East Asian economies were hard hit by a financial crisis (including Thailand, Indonesia, South Korea, Malaysia, Philippines, and Hong Kong). • The financial crisis was caused by quick deregulation in the financial system which removed capital control. Large sums of “hot money” flowed into these countries leaving them suspectable to a currency crisis.
  • 21. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Asian Crisis • In 1997 many East Asian economies were hard hit by a financial crisis (including Thailand, Indonesia, South Korea, Malaysia, Philippines, and Hong Kong). • The financial crisis was caused by quick deregulation in the financial system which removed capital control. Large sums of “hot money” flowed into these countries leaving them suspectable to a currency crisis.
  • 22. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Export Led Growth • Asian economies from 1960 through 1990 used exports to fuel growth.
  • 23. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Export Led Growth • Asian economies from 1960 through 1990 used exports to fuel growth. • The Asian Tigers (South Korea, Hong Kong, Singapore, Taiwan) and Japan used their abundance of cheap labor to specialize in low-skilled manufacturing exports.
  • 24. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Export Led Growth • Asian economies from 1960 through 1990 used exports to fuel growth. • The Asian Tigers (South Korea, Hong Kong, Singapore, Taiwan) and Japan used their abundance of cheap labor to specialize in low-skilled manufacturing exports. • Combined with improved educational systems allowed these economies to quickly improve labor productivity and subsequent economic growth.
  • 25. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Export Led Growth • Asian economies from 1960 through 1990 used exports to fuel growth. • The Asian Tigers (South Korea, Hong Kong, Singapore, Taiwan) and Japan used their abundance of cheap labor to specialize in low-skilled manufacturing exports. • Combined with improved educational systems allowed these economies to quickly improve labor productivity and subsequent economic growth. • China had a large surplus of low skilled labor and infrastructure in place to promote low tech manufacturing products.
  • 26. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg The Peg • The recent financial distress in neighboring countries and the negativity of trade barriers left China with really one option to promote exports.
  • 27. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg The Peg • The recent financial distress in neighboring countries and the negativity of trade barriers left China with really one option to promote exports. • A pegged exchange rate allowed China to control the price of their exports without worrying about the retaliation that normally follows trade barriers.
  • 28. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Currency Control through Monetary Policy • We can view foreign exchange through simple demand and supply diagrams.
  • 29. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Currency Control through Monetary Policy • We can view foreign exchange through simple demand and supply diagrams. • As the U.S. demanded China’s goods, the demand for the yuan increased.
  • 30. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Currency Control through Monetary Policy • We can view foreign exchange through simple demand and supply diagrams. • As the U.S. demanded China’s goods, the demand for the yuan increased. • Under a floating exchange rate, an increase in the demand for a currency would cause the currency to appreciate.
  • 31. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Currency Control through Monetary Policy • We can view foreign exchange through simple demand and supply diagrams. • As the U.S. demanded China’s goods, the demand for the yuan increased. • Under a floating exchange rate, an increase in the demand for a currency would cause the currency to appreciate. • To offset the appreciation, China would then buy U.S. dollars.
  • 32. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Currency Control through Monetary Policy • We can view foreign exchange through simple demand and supply diagrams. • As the U.S. demanded China’s goods, the demand for the yuan increased. • Under a floating exchange rate, an increase in the demand for a currency would cause the currency to appreciate. • To offset the appreciation, China would then buy U.S. dollars. • Essentially, China was buying U.S. debt (government bonds and mortgage backed securities) while the U.S. purchased trillions of China’s exports.
  • 33. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Trade with China (1999-2009)
  • 34. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Income Payments and Receipts (1999-2009)
  • 35. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Monetary Policy • Countries are faced with a choice when using monetary policy. Countries can:
  • 36. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Monetary Policy • Countries are faced with a choice when using monetary policy. Countries can: • Set interest rates
  • 37. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Monetary Policy • Countries are faced with a choice when using monetary policy. Countries can: • Set interest rates • Have free capital mobility
  • 38. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Monetary Policy • Countries are faced with a choice when using monetary policy. Countries can: • Set interest rates • Have free capital mobility • Fix exchange rates
  • 39. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Monetary Policy • Countries are faced with a choice when using monetary policy. Countries can: • Set interest rates • Have free capital mobility • Fix exchange rates • Countries cannot have all three.
  • 40. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Monetary Policy • Countries are faced with a choice when using monetary policy. Countries can: • Set interest rates • Have free capital mobility • Fix exchange rates • Countries cannot have all three. • By choosing to peg the yuan to the dollar, China is giving up the ability to set interest rates.
  • 41. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Monetary Policy • Countries are faced with a choice when using monetary policy. Countries can: • Set interest rates • Have free capital mobility • Fix exchange rates • Countries cannot have all three. • By choosing to peg the yuan to the dollar, China is giving up the ability to set interest rates. • If the United States lowers interest rates then foreign investors will shift away from dollar assets. An decrease in the demand for dollars causes a depreciation (an appreciation of the yuan). China must also lower rates to prevent the appreciation.
  • 42. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Monetary Policy • Countries are faced with a choice when using monetary policy. Countries can: • Set interest rates • Have free capital mobility • Fix exchange rates • Countries cannot have all three. • By choosing to peg the yuan to the dollar, China is giving up the ability to set interest rates. • If the United States lowers interest rates then foreign investors will shift away from dollar assets. An decrease in the demand for dollars causes a depreciation (an appreciation of the yuan). China must also lower rates to prevent the appreciation. • China has also elected to keep a tight control on foreign capital flows (opposite other Asian economies) which prevents against a large sudden shift in capital.
  • 43. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Foreign Reserves • Countries choosing to peg their exchange rate, must be willing to buy and sell foreign currency on demand.
  • 44. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Foreign Reserves • Countries choosing to peg their exchange rate, must be willing to buy and sell foreign currency on demand. • The central bank needs to hold an ample surplus of foreign exchange. Many emerging markets (even some developed economies) failed to hold sufficient foreign exchange and faced bank runs.
  • 45. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Foreign Reserves • Countries choosing to peg their exchange rate, must be willing to buy and sell foreign currency on demand. • The central bank needs to hold an ample surplus of foreign exchange. Many emerging markets (even some developed economies) failed to hold sufficient foreign exchange and faced bank runs. • China has followed the Federal Reserve’s massive increase in the money supply, China created a stock pile of foreign reserves ($2.6 trillion).
  • 46. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Foreign Reserves • Countries choosing to peg their exchange rate, must be willing to buy and sell foreign currency on demand. • The central bank needs to hold an ample surplus of foreign exchange. Many emerging markets (even some developed economies) failed to hold sufficient foreign exchange and faced bank runs. • China has followed the Federal Reserve’s massive increase in the money supply, China created a stock pile of foreign reserves ($2.6 trillion). • It is common for domestic and foreign policy goals to become misaligned. China is in a high growth, high inflation environment which calls for higher interest rates.
  • 47. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg General Effects on US • Low interest rates as China became a large purchaser of U.S. debt.
  • 48. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg General Effects on US • Low interest rates as China became a large purchaser of U.S. debt. • Cheap goods from China.
  • 49. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg General Effects on US • Low interest rates as China became a large purchaser of U.S. debt. • Cheap goods from China. • A loss in competitiveness for US manufacturing.
  • 50. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Why are we Pressuring China? • Cheap Chinese goods are having an adverse effect on our job market.
  • 51. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Why are we Pressuring China? • Cheap Chinese goods are having an adverse effect on our job market. • Will an appreciation in the yuan improve unemployment?
  • 52. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Why are we Pressuring China? • Cheap Chinese goods are having an adverse effect on our job market. • Will an appreciation in the yuan improve unemployment? • To help restore global imbalances.
  • 53. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Current Account for US and China (1980-2010)
  • 54. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Concerns for China • Will the United States be able to repay their debt in full?
  • 55. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Concerns for China • Will the United States be able to repay their debt in full? • Higher inflation in the United States will reduce the value of all U.S. denominated debt.
  • 56. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Concerns for China • Will the United States be able to repay their debt in full? • Higher inflation in the United States will reduce the value of all U.S. denominated debt. • Many economists are calling for a 3-4% inflation target.
  • 57. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Concerns for China • Will the United States be able to repay their debt in full? • Higher inflation in the United States will reduce the value of all U.S. denominated debt. • Many economists are calling for a 3-4% inflation target. • A appreciation in the yuan will make China’s exports more expensive and cause a potential slowdown in growth.
  • 58. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Concerns for China • Will the United States be able to repay their debt in full? • Higher inflation in the United States will reduce the value of all U.S. denominated debt. • Many economists are calling for a 3-4% inflation target. • A appreciation in the yuan will make China’s exports more expensive and cause a potential slowdown in growth. • A devaluation of the dollar will drastically reduce the value of China’s assets.
  • 59. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Concerns for China • Will the United States be able to repay their debt in full? • Higher inflation in the United States will reduce the value of all U.S. denominated debt. • Many economists are calling for a 3-4% inflation target. • A appreciation in the yuan will make China’s exports more expensive and cause a potential slowdown in growth. • A devaluation of the dollar will drastically reduce the value of China’s assets. • Is China at risk for overheating?
  • 60. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Concerns for China • Will the United States be able to repay their debt in full? • Higher inflation in the United States will reduce the value of all U.S. denominated debt. • Many economists are calling for a 3-4% inflation target. • A appreciation in the yuan will make China’s exports more expensive and cause a potential slowdown in growth. • A devaluation of the dollar will drastically reduce the value of China’s assets. • Is China at risk for overheating? • By maintaining the peg, China is adopting the expansionary monetary policy of the United States.
  • 61. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Concerns for China • Will the United States be able to repay their debt in full? • Higher inflation in the United States will reduce the value of all U.S. denominated debt. • Many economists are calling for a 3-4% inflation target. • A appreciation in the yuan will make China’s exports more expensive and cause a potential slowdown in growth. • A devaluation of the dollar will drastically reduce the value of China’s assets. • Is China at risk for overheating? • By maintaining the peg, China is adopting the expansionary monetary policy of the United States. • They are growing at a nearly 10% rate, and could soon experience high inflation.
  • 62. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Concerns for China • Will the United States be able to repay their debt in full? • Higher inflation in the United States will reduce the value of all U.S. denominated debt. • Many economists are calling for a 3-4% inflation target. • A appreciation in the yuan will make China’s exports more expensive and cause a potential slowdown in growth. • A devaluation of the dollar will drastically reduce the value of China’s assets. • Is China at risk for overheating? • By maintaining the peg, China is adopting the expansionary monetary policy of the United States. • They are growing at a nearly 10% rate, and could soon experience high inflation. • China just raised both their deposit and lending rates by 25 base points.
  • 63. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Concerns for U.S. • Will interest rates increase? Short-run or long-run?
  • 64. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Concerns for U.S. • Will interest rates increase? Short-run or long-run? • Will we be able to replace China as a large purchaser of U.S. debt?
  • 65. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Concerns for U.S. • Will interest rates increase? Short-run or long-run? • Will we be able to replace China as a large purchaser of U.S. debt? • If China dumps dollars how far will the dollar depreciate?
  • 66. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Concerns for U.S. • Will interest rates increase? Short-run or long-run? • Will we be able to replace China as a large purchaser of U.S. debt? • If China dumps dollars how far will the dollar depreciate? • Many U.S. firms use Chinese’s goods as inputs in the production process.
  • 67. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Concerns for U.S. • Will interest rates increase? Short-run or long-run? • Will we be able to replace China as a large purchaser of U.S. debt? • If China dumps dollars how far will the dollar depreciate? • Many U.S. firms use Chinese’s goods as inputs in the production process. • With the Federal Reserve pumping trillions to help stabilize the economy will this push inflation over the edge?
  • 68. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Concerns for U.S. • Will interest rates increase? Short-run or long-run? • Will we be able to replace China as a large purchaser of U.S. debt? • If China dumps dollars how far will the dollar depreciate? • Many U.S. firms use Chinese’s goods as inputs in the production process. • With the Federal Reserve pumping trillions to help stabilize the economy will this push inflation over the edge? • Will their be any improvement in jobs?
  • 69. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Holders of Federal Debt • The gross national debt is $13.2 trillion of which:
  • 70. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Holders of Federal Debt • The gross national debt is $13.2 trillion of which: • $8.6 trillion is held publicly.
  • 71. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Holders of Federal Debt • The gross national debt is $13.2 trillion of which: • $8.6 trillion is held publicly. • $4 trillion is held by foreign and international investors.
  • 72. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Holders of Federal Debt • The gross national debt is $13.2 trillion of which: • $8.6 trillion is held publicly. • $4 trillion is held by foreign and international investors. • $800 billion is held by Federal Reserve banks • $4.6 trillion is held by the government.
  • 73. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Supplier of Funds to the U.S. • The government debt is projected to increase to nearly $20 trillion by 2020.
  • 74. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Supplier of Funds to the U.S. • The government debt is projected to increase to nearly $20 trillion by 2020. • China currently holds $900 billion in U.S. government debt.
  • 75. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Supplier of Funds to the U.S. • The government debt is projected to increase to nearly $20 trillion by 2020. • China currently holds $900 billion in U.S. government debt. • Federal Old Age and Survivors Trust Fund holds $2.4 trillion.
  • 76. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Supplier of Funds to the U.S. • The government debt is projected to increase to nearly $20 trillion by 2020. • China currently holds $900 billion in U.S. government debt. • Federal Old Age and Survivors Trust Fund holds $2.4 trillion. • As we deplete the retirement trust funds and government debt grows we are going to need large buyers of government debt.
  • 77. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg A Solution to Unemployment • There will likely be a small change in manufacturing jobs.
  • 78. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg A Solution to Unemployment • There will likely be a small change in manufacturing jobs. • Nearly 8 million manufacturing jobs have been lost since 2000.
  • 79. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg A Solution to Unemployment • There will likely be a small change in manufacturing jobs. • Nearly 8 million manufacturing jobs have been lost since 2000. • Above equilibrium wages will keep manufacturing suppressed.
  • 80. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg A Solution to Unemployment • There will likely be a small change in manufacturing jobs. • Nearly 8 million manufacturing jobs have been lost since 2000. • Above equilibrium wages will keep manufacturing suppressed. • There are no insurances the jobs will return to the United States.
  • 81. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg A Solution to Unemployment • There will likely be a small change in manufacturing jobs. • Nearly 8 million manufacturing jobs have been lost since 2000. • Above equilibrium wages will keep manufacturing suppressed. • There are no insurances the jobs will return to the United States. • Job losses could increase in industries that depend on Chinese imports.
  • 82. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg A Solution to Unemployment • There will likely be a small change in manufacturing jobs. • Nearly 8 million manufacturing jobs have been lost since 2000. • Above equilibrium wages will keep manufacturing suppressed. • There are no insurances the jobs will return to the United States. • Job losses could increase in industries that depend on Chinese imports. • Exporting industries in the US will be hurt (car manufacturing).
  • 83. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Conclusion • Should the United States be putting pressure on China to let the yuan appreciate?
  • 84. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Conclusion • Should the United States be putting pressure on China to let the yuan appreciate? • U.S. made car exports totaled 56,597 from January 2010-July 2010. An eightfold increase from the previous year (8,847). In 2000, U.S. made car exports to China totaled 215.
  • 85. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Conclusion • Should the United States be putting pressure on China to let the yuan appreciate? • U.S. made car exports totaled 56,597 from January 2010-July 2010. An eightfold increase from the previous year (8,847). In 2000, U.S. made car exports to China totaled 215. • China is our third largest export market.
  • 86. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Conclusion • Should the United States be putting pressure on China to let the yuan appreciate? • U.S. made car exports totaled 56,597 from January 2010-July 2010. An eightfold increase from the previous year (8,847). In 2000, U.S. made car exports to China totaled 215. • China is our third largest export market. • Are we risking a bigger trade war? Smoot-Hawley Tariff Act was a likely contributor to the Great Depression.
  • 87. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Conclusion • Should the United States be putting pressure on China to let the yuan appreciate? • U.S. made car exports totaled 56,597 from January 2010-July 2010. An eightfold increase from the previous year (8,847). In 2000, U.S. made car exports to China totaled 215. • China is our third largest export market. • Are we risking a bigger trade war? Smoot-Hawley Tariff Act was a likely contributor to the Great Depression. • Will market pressures be sufficient?
  • 88. Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg Conclusion • Should the United States be putting pressure on China to let the yuan appreciate? • U.S. made car exports totaled 56,597 from January 2010-July 2010. An eightfold increase from the previous year (8,847). In 2000, U.S. made car exports to China totaled 215. • China is our third largest export market. • Are we risking a bigger trade war? Smoot-Hawley Tariff Act was a likely contributor to the Great Depression. • Will market pressures be sufficient? • What about the Currency Reform for Fair Trade Act that was passed a few weeks ago.