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Originally posted by Sidd Finch
Of course it's the Chinese government doing so.
Do you think anyone other than the Chinese government could make the decision to keep their currency pegged to the dollar, or to let it float?
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Of course not. That doesn't mean they are doing so in an effort to suppress the currency vs. other currencies. If I order pizza from Sam's, and Sam's switches from bicycle to SUV delivery, my continuing to order from Sam's doesn't necessarily mean I'm attempting to destroy the environment; it may just be a side effect of a decision based on Sam's being cheaper than Dominoes or the only place that doesn't get the box top stuck to the cheese, maybe its too much effort to look for the instruction book to reprogram my speed-dial. My lack of dedication to green causes will certainly factor into my decision, but it's not the only factor and may not be the most important one.
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And do you think the policy would be any different if it wasn't having the effect of bolstering Chinese exports to the US by making them cheaper?
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Well, their policy wasn't any different when that was exactly the case and the dollar was strong (or even over-valued against other currencies), so I'd have to say "no."
The peg doesn't necessarily make the exports cheaper in the US, it mainly makes them cheaper compared to other countries exports in the US (for instance, India's).
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See my Q to Hank -- if their currency floated, but they subsidized exports and taxed imports, would you consider that a good thing? Even if the net effect were the same?
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Not necessarily good or bad. In general, I think floating currencies are a good thing and subsidies and duties are bad. But I don't understand what you think this counterfactual flushes out. Whether China floats, repegs, or whatevers their currency, either together with or independent of their other trade policies, does not change my general belief that reducing US subsidies and import duties, including with respect to trade with China, is beneficial to the US economy.
