China Currency Manipulation Continues

China is once again stepping in to manipulate the value of their currency.

As reported by Reuters, “The central bank set a stronger-than-expected daily trading midpoint for the yuan, state banks sold dollars and borrowing rates for the offshore component of the yuan rose, all hinting at state intervention to stem losses in the currency.”

What does China’s currency manipulation mean to you?

China artificially pegs their currency to the US Dollar, and then takes actions like those mentioned above to maintain that peg.

The problem is, China keeps the Yuan (China’s Currency – also referred to as Renminbi) artificially undervalued.

The current rate set by China is 6.9526 Yuan per US Dollar.

Combined with their horrible treatment of workers, this is what allows China to flood our market with cheap goods.

China’s currency manipulation has decimated manufacturing around the western world – including in Canada and the United States.

While the action taken most recently by China was to stabilize – rather than lower – the value of their currency, it is still part of their overall approach of undercutting the manufacturing potential of other nations.

If China’s currency was valued freely in the market, it would certainly rise – meaning the Yuan would be closer to the dollar. That would make China’s products more expensive, reducing their advantage in manufacturing and helping the manufacturing sector of other countries.

China’s currency manipulation has to be confronted and addressed. Leaders around the world – including here in Canada – must do what is best for their people. That means either pressuring China to end their currency manipulation or – if that doesn’t work – impose tariffs on Chinese goods to send a clear message that currency manipulation will not be tolerated.

Spencer Fernando

Photo – Twitter