Asia in My Classroom

I know with the trade deficit ever increasing with China this issue has many of the Feds ticked off. They believe China is purposely keeping their currency deflated so that Americans can keep buying Chinese goods on the cheap thus keeping our trade deficit high and American made goods low. American companies in order to turn a profit must have their products made in China because labor costs are so low. As a result, we get pet food and toys that have lead contamination because production standards are not like they are here. Another reason why the Feds are upset about the Yuan's value being kept artificially low is that it increases China's wealth to invest in modern weaponry which in today's world could lead to another Cold War. Just my thoughts!

The US dollar is really getting a beating against top world currencies. And whether the Chinese Yuan is kept artificially low or not doesn't make the future brighter for the US dollar unless it bounces back to what it's worth, say two or three years ago. In fact, in my homeland Philippines, overseas Filipino contract workers want to get paid in Philippine currency (Peso) instead of US dollars to at least maintain a higher salary rate. Less than three years ago, the exchange rate between Philippine peso and US dollar almost hit P52:US$1. Now the exchange rate is P41:US$1. With the increasing prices of basic commodities and transportation in my homeland, overseas Filipino workers want to be paid in pesos to avoid getting hit by the continuing slide of the US dollar. I don't really know the situation in China with respect to the Chinese Yuan against the US dollar. All I know is that the balance of trade between US and China is quite lopsided in favor of the latter.

Chinese furniture manufacturing is starting to move away from cheap and into the mid-price range. This has driven the low-cost manufacturing into Vietnam where wages are still low.

I read the same thing about Vietnam. It's true but there are other issues that would keep manufacturing in China despite the relative increase in costs. The main thing is transportation to where they want to ship these products. The chinese have developed massive plans for the exportation of materials out of China from ports to containers. Although Vietnam is building these now and has a lot already, the Chinese are still ahead the the quick, efficient, and cheap transportation of materials for shipment.

It's true the Chinese has the power to seriously weaken the dollar but it is their best interest not to do such. It would devalue their own surplus which are held in US dollars and lose it's main trading partner.

If we were in a world where we're considering nuclear weapons, I would care less about the falling dollar at that point.