Image by gacorley via Flickr
Suppose China lets the Yuan climb 20%, pushed by US of A, will it create more jobs in America? At an unemployment rate of more than 9.5% there may be an insignificant impact. From 2005 to 2008 the Yuan appreciated 20% but had little impact on US employment. Since 1994 the Yuan has appreciated by 55%. Production did not shift out of China either. If at all production moves out of China it will go to other Asian countries. Surely not to Europe or USA. America does not make what China or India make. And may not do so in the future. A stronger Yuan will boost China’s purchasing power. It will buy more American and European goods. Chinese will depend less on exports and buy more locally.
US Steel and Agriculture sectors are most vocal pushing for higher valuation of the Yuan. Surely they stand to gain the most. End September the US HR Carbon sheet was $587 compared with the Chinese price of US$562 for export to America and Europe.
The best way for USA and Europe is to find innovative ways to boost indigenous productivity.
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