Tuesday, November 17, 2009

Reason's China Want a Weak Yuan

I was just talking with my bother about why China wants to NOT apprceciate their Chinese Yuan currency in relation to the US dollar. One the main reason US companies do business in China is the cheap labor that can be had. If the Chinese Yuan was to appreciate against the dollar then the whole reasons go to China in the first place would disappear. If the Yuan appreciates too much then corporations would move back and possibly do business in the US. The reality is businesses do not want to be located in the US is because of the high working standards and regulatory costs. The Yuan currently trades at about 7 to 1 to the US dollar. As this currency relationship narrows businesses may move back to the US, Canada, or other parts of the world. It's inevitable that the average US citizen's standard of living will fall as China's rises.

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