# What do we care if China "manipulates" it's money? **URL:** \ **Category:** Great Debates\ **Created:** [December 21, 2006, 8:52pm UTC](https://boards.straightdope.com/t/what-do-we-care-if-china-manipulates-its-money/385124 "2006-12-21T20:52:57Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![rjung](https://avatars.discourse-cdn.com/v4/letter/r/45deac/32.png) [@rjung](https://boards.straightdope.com/u/rjung)\ **Post date:** [December 22, 2006, 9:15pm UTC](https://boards.straightdope.com/t/what-do-we-care-if-china-manipulates-its-money/385124/21 "2006-12-22T21:15:26Z")
[QUOTE=ralph124c] It also has driven US manufacturers OUT of business-we don’t have any more domestic manufacture of shoes, TV sets, radios, watches, or clothing left (except for high-end/luxury lines). [/quote] Sounds to me like the blame should not be with China, but for the short-sighted businesses who export their operations out of the US in pursuit of a quick buck. ---
**Author:** ![mazinger\_z](https://avatars.discourse-cdn.com/v4/letter/m/5f9b8f/32.png) [@mazinger\_z](https://boards.straightdope.com/u/mazinger_z)\ **Post date:** [December 22, 2006, 10:04pm UTC](https://boards.straightdope.com/t/what-do-we-care-if-china-manipulates-its-money/385124/22 "2006-12-22T22:04:15Z")
[QUOTE=Giles] Right – but there will be alternatives in India, Indonesia and Mexico. It actually does make sense for wealthy countries, with an highly educated work force, to concentrate on the upper end of manufacturing and service industries. [/QUOTE] Exactly. A higher educated workforce will make it easier to transition to and from different jobs. A workforce that isn’t burdened by capital intensive machinery is more diverse than say a guy with a pressed mold injector, or a machinist with a boring tool. ---
**Author:** ![FRDE](https://avatars.discourse-cdn.com/v4/letter/f/e68b1a/32.png) [@FRDE](https://boards.straightdope.com/u/FRDE)\ **Post date:** [December 23, 2006, 2:47pm UTC](https://boards.straightdope.com/t/what-do-we-care-if-china-manipulates-its-money/385124/23 "2006-12-23T14:47:46Z")
[QUOTE=mazinger\_z] Exactly. A higher educated workforce will make it easier to transition to and from different jobs. A workforce that isn’t burdened by capital intensive machinery is more diverse than say a guy with a pressed mold injector, or a machinist with a boring tool. [/QUOTE] I see the exact opposite. A highly educated worker is pretty useless on his own. Try this equation :- [Raw Materials] + [Labour] + [Machinery] =\> [Consumer Goods] + [Machinery] At present the Chinese are trading a lot of consumer goods for raw materials and **Machinery** In time they will become self sufficient in machinery, so they will only be interested in obtaining raw materials. Unlike the Japanese, they have no need to ‘export’ their surplus, they have a vast domestic population. By establishing sources of raw materials now, they can build up the bi-lateral trade links - eventually I suspect that they’ll lose interest in multi-lateral trade links. ---
**Author:** ![blinkingblinking](https://avatars.discourse-cdn.com/v4/letter/b/ea5d25/32.png) [@blinkingblinking](https://boards.straightdope.com/u/blinkingblinking)\ **Post date:** [December 23, 2006, 7:09pm UTC](https://boards.straightdope.com/t/what-do-we-care-if-china-manipulates-its-money/385124/24 "2006-12-23T19:09:38Z")
I am a no expert on China or economics. But a guy I know who is says that China is a financial power in the world becuase it goes its own way and does not listen to any advice that the IMF or World bank try to give. Apparently following what the IMF says has worsened the economies of Brazil, Argentina, Malawi, Ethiopia, Kenya and Niger. ---
**Author:** ![blinkingblinking](https://avatars.discourse-cdn.com/v4/letter/b/ea5d25/32.png) [@blinkingblinking](https://boards.straightdope.com/u/blinkingblinking)\ **Post date:** [December 23, 2006, 7:10pm UTC](https://boards.straightdope.com/t/what-do-we-care-if-china-manipulates-its-money/385124/25 "2006-12-23T19:10:39Z")
I am no expert… ---
**Author:** ![Der\_Trihs](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/der_trihs/32/233_2.png) [@Der\_Trihs](https://boards.straightdope.com/u/Der_Trihs)\ **Post date:** [December 23, 2006, 11:01pm UTC](https://boards.straightdope.com/t/what-do-we-care-if-china-manipulates-its-money/385124/26 "2006-12-23T23:01:17Z")
[QUOTE=Giles] I don’t doubt that there is some overt compulsion in China, but that’s not necessary at all. If you have a choice between: (1) working for 10,000 yuan in a factory; (2) working for 5,000 yuan on a farm; (3) being unemployed and taking home 0 yuan; most people take option 1. [/QUOTE] Especially if the government decides that more factory workers are needed, and has soldiers burn down the farm, so options 2 and three become the same. I’ve heard of that happening in some countries; not sure if China does it, but I wouldn’t be surprised. ---
**Author:** ![SmackFu](https://avatars.discourse-cdn.com/v4/letter/s/53a042/32.png) [@SmackFu](https://boards.straightdope.com/u/SmackFu)\ **Post date:** [December 23, 2006, 11:01pm UTC](https://boards.straightdope.com/t/what-do-we-care-if-china-manipulates-its-money/385124/27 "2006-12-23T23:01:27Z")
[QUOTE=ralph124c] It also has driven US manufacturers OUT of business-we don’t have any more domestic manufacture of shoes, TV sets, radios, watches, or clothing left (except for high-end/luxury lines). Nobody seems to care, but the day will come when Chinese made goods become very expensive-but there won’t BE any domestic alternatives! [/QUOTE] If there comes a time when it would be less expensive to produce things domestically, the domestic companies would suddenly appear. ---
**Author:** ![Der\_Trihs](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/der_trihs/32/233_2.png) [@Der\_Trihs](https://boards.straightdope.com/u/Der_Trihs)\ **Post date:** [December 23, 2006, 11:06pm UTC](https://boards.straightdope.com/t/what-do-we-care-if-china-manipulates-its-money/385124/28 "2006-12-23T23:06:01Z")
[QUOTE=SmackFu] If there comes a time when it would be less expensive to produce things domestically, the domestic companies would suddenly appear. [/QUOTE] No, they wouldn’t. It takes time to acquire the hardware to manufacture things, and to train people to use that hardware. Easily long enough for major economic problems to occur. You _can’t_ build a whole manufacturing industry “suddenly”, especially without government aid, which is how it would happen in America. ---
**Author:** ![Least\_Original\_User\_Name\_Ever](https://avatars.discourse-cdn.com/v4/letter/l/e480ec/32.png) [@Least\_Original\_User\_Name\_Ever](https://boards.straightdope.com/u/Least_Original_User_Name_Ever)\ **Post date:** [December 24, 2006, 7:16am UTC](https://boards.straightdope.com/t/what-do-we-care-if-china-manipulates-its-money/385124/29 "2006-12-24T07:16:30Z")
[QUOTE=mazinger\_z] This is the invisible hand at work again, and it’s a good thing. However, this isn’t sustainable. This only works if China can continue to stock up on US dollars and debt. Either the US becomes more responsible with regards to savings and spending, which would make our currency stronger and much more lucrative to the world, thus giving us more wealth; or, we continue to spend fruitlessly and inefficiently and we cause a downward spiral in the global economy, of which whoever is holding our dollars and are debt will also be left holding the bag. It’s a win-win situation. [/QUOTE] If it’s not sustainable, is it really “the invisible hand”? I’m not trying to be snarky or anything, but I thought that th einvisible hand just “was” and it wasn’t a matter of it being sustainable or not. ---
**Author:** ![FRDE](https://avatars.discourse-cdn.com/v4/letter/f/e68b1a/32.png) [@FRDE](https://boards.straightdope.com/u/FRDE)\ **Post date:** [December 24, 2006, 2:39pm UTC](https://boards.straightdope.com/t/what-do-we-care-if-china-manipulates-its-money/385124/30 "2006-12-24T14:39:57Z")
[QUOTE=Der Trihs] No, they wouldn’t. It takes time to acquire the hardware to manufacture things, and to train people to use that hardware. Easily long enough for major economic problems to occur. You _can’t_ build a whole manufacturing industry “suddenly”, especially without government aid, which is how it would happen in America. [/QUOTE] Yes, you can close a factory in a day Break it up within a month Disperse the workers within a year - but it takes a long time to build and assemble a production unit. What strikes me as interesting is that as far as I am aware, Chinese production is not that sensitive to consumption elsewhere. We could live for a couple of years without importing anything from China. ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [December 24, 2006, 3:53pm UTC](https://boards.straightdope.com/t/what-do-we-care-if-china-manipulates-its-money/385124/31 "2006-12-24T15:53:11Z")
[QUOTE=FRDE] Yes, you can close a factory in a day Break it up within a month Disperse the workers within a year - but it takes a long time to build and assemble a production unit. What strikes me as interesting is that as far as I am aware, Chinese production is not that sensitive to consumption elsewhere. We could live for a couple of years without importing anything from China. [/QUOTE] Well, I kind of doubt this-try to buy plumbing supplies-like copper pipe, couplings, valves, etc.-they are (almost) all made in China! As I said, you can buy high-end stuff (made in the USA, Germany, or Italy), but the low-end stuff is ALL Chinese! ---
**Author:** ![FRDE](https://avatars.discourse-cdn.com/v4/letter/f/e68b1a/32.png) [@FRDE](https://boards.straightdope.com/u/FRDE)\ **Post date:** [December 25, 2006, 8:22am UTC](https://boards.straightdope.com/t/what-do-we-care-if-china-manipulates-its-money/385124/32 "2006-12-25T08:22:43Z")
[QUOTE=ralph124c] Well, I kind of doubt this-try to buy plumbing supplies-like copper pipe, couplings, valves, etc.-they are (almost) all made in China! As I said, you can buy high-end stuff (made in the USA, Germany, or Italy), but the low-end stuff is ALL Chinese! [/QUOTE] Fair enough, but if that stuff gets hard to get hold of, will you suffer ? My point is that China is currently supplying us with cheap **in** essentials - should they supply essentials, then we would need to worry ---
**Author:** ![Agnostic\_Pagan](https://avatars.discourse-cdn.com/v4/letter/a/c4cdca/32.png) [@Agnostic\_Pagan](https://boards.straightdope.com/u/Agnostic_Pagan)\ **Post date:** [December 25, 2006, 9:18am UTC](https://boards.straightdope.com/t/what-do-we-care-if-china-manipulates-its-money/385124/33 "2006-12-25T09:18:36Z")
[QUOTE=FRDE] Fair enough, but if that stuff gets hard to get hold of, will you suffer ? My point is that China is currently supplying us with cheap **in** essentials - should they supply essentials, then we would need to worry [/QUOTE] Umm, what else would you use to build a house or any other building you want plumbing in? I would consider those fairly essential items. The Chinese market has already driven up the price of cement and concrete, which played havoc with the construction industry for a while. [Road construction](http://www.wsdot.wa.gov/biz/construction/constructioncosts.cfm) is feeling it too. All said, China is playing us the same way we’ve played others. Tit for tat and all that. And as much as business failed us by outsourcing, government failed us more by allowing it to happen and then not doing much to help retrain workers and create a higher educated workforce (who can then get jobs at Starbucks with the other grad students.) ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [December 25, 2006, 4:45pm UTC](https://boards.straightdope.com/t/what-do-we-care-if-china-manipulates-its-money/385124/34 "2006-12-25T16:45:18Z")
[QUOTE=Agnostic Pagan] And as much as business failed us by outsourcing, government failed us more by allowing it to happen and then not doing much to help retrain workers and create a higher educated workforce (who can then get jobs at Starbucks with the other grad students.) [/QUOTE] Well, we had our chance to elect [Tom Harkin](http://en.wikipedia.org/wiki/Tom_Harkin) president in 1992. (I campaigned for him.) “Retraining” was a core policy of his campaign. ---
**Author:** ![mazinger\_z](https://avatars.discourse-cdn.com/v4/letter/m/5f9b8f/32.png) [@mazinger\_z](https://boards.straightdope.com/u/mazinger_z)\ **Post date:** [December 27, 2006, 6:10pm UTC](https://boards.straightdope.com/t/what-do-we-care-if-china-manipulates-its-money/385124/35 "2006-12-27T18:10:27Z")
[QUOTE=Least Original User Name Ever] If it’s not sustainable, is it really “the invisible hand”? [/QUOTE] Yes, it is. The invisible hand is just market forces/pressures which cause a rational person to act in a certain way. ---
**Author:** ![mazinger\_z](https://avatars.discourse-cdn.com/v4/letter/m/5f9b8f/32.png) [@mazinger\_z](https://boards.straightdope.com/u/mazinger_z)\ **Post date:** [December 27, 2006, 6:17pm UTC](https://boards.straightdope.com/t/what-do-we-care-if-china-manipulates-its-money/385124/36 "2006-12-27T18:17:46Z")
[QUOTE=FRDE] I see the exact opposite. A highly educated worker is pretty useless on his own. Try this equation :- [Raw Materials] + [Labour] + [Machinery] =\> [Consumer Goods] + [Machinery] At present the Chinese are trading a lot of consumer goods for raw materials and **Machinery** In time they will become self sufficient in machinery, so they will only be interested in obtaining raw materials. Unlike the Japanese, they have no need to ‘export’ their surplus, they have a vast domestic population. By establishing sources of raw materials now, they can build up the bi-lateral trade links - eventually I suspect that they’ll lose interest in multi-lateral trade links. [/QUOTE] If all they are doing is producing manufactured goods, then I’ll gladly take the US as the higher educated work force. A higher educated work force can always sell services which don’t require capital intensive machinery that depreciates, takes up resources, and can become obsolete. A service economy is more flexible than a manufacturer economy. If I’m making chairs, I can then make engine parts? Not in my company. A service economy is to a manufaturer economy, as a manufacturer economy is to an agrarian economy. Can a machinist also tell a business owner what his operational expenses are, what his average return on investment is, how to profit maximize or innovate his products? The US didn’t get to its place economically by remaining a manufacturing economy. ---
**Author:** ![Throatwarbler\_Mangrove](https://avatars.discourse-cdn.com/v4/letter/t/8c91f0/32.png) [@Throatwarbler\_Mangrove](https://boards.straightdope.com/u/Throatwarbler_Mangrove)\ **Post date:** [December 27, 2006, 7:43pm UTC](https://boards.straightdope.com/t/what-do-we-care-if-china-manipulates-its-money/385124/37 "2006-12-27T19:43:24Z")
The underlying assumption here is that the US manufacturing sector has undergone a significant contraction in output since China started expaniding hers. I’ve never seen any hard figures to indicate that this is so, and in the book _China Inc._, it is claimed that exactly the opposite has happened: Every year in recent memory has seen US manufacturing output INCREASE. I don’t have the book handy right now to give a proper cite, but it seems pretty believable. The US is, after all, the innovation and technology center of the world. The hard figures that I HAVE seen from the protectionists all go on and on about one thing: EMPLOYMENT in the manufacturing sector has dropped. Not output or total deliveries, just employment. ---
**Author:** ![Throatwarbler\_Mangrove](https://avatars.discourse-cdn.com/v4/letter/t/8c91f0/32.png) [@Throatwarbler\_Mangrove](https://boards.straightdope.com/u/Throatwarbler_Mangrove)\ **Post date:** [December 27, 2006, 7:45pm UTC](https://boards.straightdope.com/t/what-do-we-care-if-china-manipulates-its-money/385124/38 "2006-12-27T19:45:49Z")
…which begs the question: Has anyone seen any figures to indicate otherwise? ---
**Author:** ![pantom](https://avatars.discourse-cdn.com/v4/letter/p/34f0e0/32.png) [@pantom](https://boards.straightdope.com/u/pantom)\ **Post date:** [December 28, 2006, 3:02am UTC](https://boards.straightdope.com/t/what-do-we-care-if-china-manipulates-its-money/385124/39 "2006-12-28T03:02:16Z")
> [@](#): > > **mazinger\_z** > Yes, it is. The invisible hand is just market forces/pressures which cause a rational person to act in a certain way. Huh? The Chinese government is not a rational actor in the market. This statement is a platitude with no relevance. If the Chinese government was, in fact, a rational actor, it would not have piled up a trillion dollars worth of reserves. The point of doing so is not so much to bankrupt the USA, which might work for an ephemeral moment, but which as a policy goal is utterly irrational, the point instead is to dominate its area, east Asia. If you have any doubt about that, take a look at the current situation in Thailand: > [@](#): > > from [Thailand’s Military Imprecision (in the Financial Times; subscription required to read the whole thing)](http://www.ft.com/cms/s/2ca24132-91db-11db-a945-0000779e2340.html) > > The economies share more than appreciating currencies. They also share a heavy reliance on exports and mercantilist mindset that makes currency strength a competitive handicap – **especially when measured against China.** As a result, Asian central banks have a penchant for intervening in the foreign exchange markets to curb financial strength. In a normal world, given an even tangentially rational Chinese government, the Chinese currency would have appreciated far more than it has, the Chinese people would, as a result, not have found a trillion dollars of their wealth tied up in American debt securities and been far richer, and Thailand’s only worry would be how “hot” the money pouring into its stocks and bonds was, not whether the consequent rise in the baht would make their currency uncompetitive. ---
**Author:** ![FRDE](https://avatars.discourse-cdn.com/v4/letter/f/e68b1a/32.png) [@FRDE](https://boards.straightdope.com/u/FRDE)\ **Post date:** [December 28, 2006, 12:49pm UTC](https://boards.straightdope.com/t/what-do-we-care-if-china-manipulates-its-money/385124/40 "2006-12-28T12:49:17Z")
[QUOTE=mazinger\_z] If all they are doing is producing manufactured goods, then I’ll gladly take the US as the higher educated work force. A higher educated work force can always sell services which don’t require capital intensive machinery that depreciates, takes up resources, and can become obsolete. A service economy is more flexible than a manufacturer economy. If I’m making chairs, I can then make engine parts? Not in my company. A service economy is to a manufaturer economy, as a manufacturer economy is to an agrarian economy. Can a machinist also tell a business owner what his operational expenses are, what his average return on investment is, how to profit maximize or innovate his products? The US didn’t get to its place economically by remaining a manufacturing economy. [/QUOTE] A long time ago I was talking to an American guy from Ford. He said: ‘People talk about the future is going to be in the service economy, what are people going to do ? Shine each others shoes ?’ I could see his point. [Previous page](https://boards.straightdope.com/t/what-do-we-care-if-china-manipulates-its-money/385124.md?page=1)