And?

What\’s the problem here?

China’s surplus with the US has grown by just 18pc. The high-level EU team — the first currency mission of its kind — will include Jean-Claude Trichet, the president of the European Central Bank. The implicit threat is that China could face protectionist measures if it persists with a mercantilist policy of holding down the currency to gain export share.

Mercantilism harms those stupid enough to practice it. We, the consumers (for of course the economy should be run for the benefit of us, the consumers) here in Europe benefit from the Chinese error. So why are our rulers flying off to try and make us poorer?

Another way of putting it. A high euro to yuan exchange rate means that we get more Chinese goods for each unit of European goods that we export. That is, we have to expend less effort to make the exports with which we buy our imports. This makes us richer.

Why would we want to stop that happening?

2 comments on “And?

  1. so the massive china imports to the US has made the US richer ,yet we are in fiancial trouble…
    maybe we should double our china imports to fix the problem??

    Tim adds: Yes, of course imports from China have made the people who bought them richer. That’s why they bought them, remember, because they increased their utility?

  2. the situtation is new(or recent) without a balance…our chits for their goods make the US richer in assets …and yet somehow poorer ….
    assets dont pay the rent..jobs do

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