Will Yuan’s Decline Reignite Trade Tensions With US? – Asia Business News – CNBC – CNBC. The Chinese government which has artificially kept the Chinese yuan undervalued and, therefore, increases their exporting value, has raised eyebrows by devaluing the yuan by another 1%, the first time in seven years.
The reason why the Chinese government has done this – the Chinese economy is slowing down, exports are down, due to slow global recovery from recession and because of its own on-coming housing bust. I have boldly predicted that the Chinese economy is going to go bust in the next few years, and therefore, the United States needs to get its own financial house in order to better survive this next global recession caused by China’s economic bust.
The U.S. needs to be a leader once again in manufacturing and exports, the only tried and true predictors of economic strength. That means we need a strong commitment by the federal government, and to forget the Laissez-faire attitude that has put us in this economic hole over the past 30 years. It also means commitment from the U.S. population to patronize American products that stimulate our own economy (meaning buying products that are made in the U.S.A.)
So, what will be the politicians reaction to the news that the Chinese yuan is being artificially devalued again? I suspect their will be faux outrage. What we need is a commitment to strengthen the U.S. economy and manufacturing and not just giving tax breaks to the rich.