Trade with China

Author: Nishant Sheth

In today’s world, economy crisis is a word that is heard time and time again. Markets are still recovering all over the world and a trade war is something that would not help that progress. On October 11^th the senate passed what is known as the Currency Exchange Rate Oversight Reform Act. The stated purpose of this was to “allow any fundamentally misaligned currency to be labeled a subsidy subject to countervailing duties”. The clear target here was China. We as a country are not very friendly with China and anti-Chinese sentiment is abundant in our government. This is not a function of a single party but something felt by both Republicans and democrats. Government wants to raise trade barriers with China and public support for free trade is declining for the past 10 years. This is because the middle-class has been declining and free trade is limiting more jobs that would be contributing to our middle class. China’s economy is booming but they have many trade barriers and a high level of government restriction. This makes it harder for other economies to export and improve their own economies. Some of the main concerns with the bill are that it is flawed and not a safe move for America. Undervalued currencies are not recognized as an illegal subsidy as per the regulations of the World Trade Organization. This bill is undoubtedly going to increase tensions with China and lend itself toward a trade war. Also, Americans would not be able to get the same cheap products they always have. Do you feel that this bill is a good way to go or should Obama veto it? What action would we take to improve our own economy?

Article: http://www.economist.com/node/21532288