From the Readers

Trade sanction will only bring US cold comfort

(chinadaily.com.cn)
Updated: 2010-10-02 10:17

Comment on"China slams US bill on yuan"(China Daily, Sept 13)

If China revalues its currency by 20 to 30 % as the USA is requesting, it will lose practically all its export markets; If it does not revalue its currency and the US imposes import duties on Chinese products, the most that China will lose will be the US market only. If the US market represents 30% of the total Chinese export market, then China would lose at most 30% of its export market. 

In practice though, Chinese exports to the US will not decrease to zero no matter how high the duties are imposed on its products. It might decrease by 50% but then the left countries will be able to dodge the tariffs and will export a large amount of Chinese products to US.

All in all China will not lose much by not revaluing its currency despite the US threat to impose sanctions but it will lose everything by revaluing its currency as demanded by the US.

For the USA, it will not gain much by imposing high tariffs on Chinese products because it will import the same products in the same amount but at a higher price from other countries such as Vietnam, Indonesia, etc. So the well-needed jobs will not be created in the US and the US consumers will buy the same products at a higher prices. The most that the US will gain is the satisfaction to have imposed sanctions on China. A very cold comfort indeed.

 

Jean Michel, on China Daily Website

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