American interests require a peaceful, prosperous, open, responsible and cooperative China since the times of Roosevelt. Because of the shared interests and primarily domestic concerns of both nations in the near term, it is essential for both states to see the importance of cooperation with each other. However, democratic and friendly China seems not possible for the US in the foreseeable future and most Americans are not sure that a strong China is in their national interest or not.
China is being accused of keeping its currency undervalued in order to boost exports. US legislators and trade groups say the yuan is kept up to 40% below what its value should be against dollar. US President Barack Obama urged China to adopt a ‘more market-oriented exchange rate’, a day after that a deputy governor of the Chinese Central Bank said that US should not politicise Chinese currency policy. When we look at this issue from Chinese perspective, US and EU force China to solve their own problem, which is not acceptable for them.However, EU does think adversely. According to them the global economy should be dealt with all together. Romano Prodi, former president of the European Commission said, China is in front of a choice whether to be a giant alone or to grow co-operatively. He also warns that all the countries that try to grow alone in a global world is bound to fail.
The yuan was tied to dollar until 2005 when it was allowed to rise in value by 20%. The peg was reinstated in 2008 when the global economic crisis at demand for Chinese products and factories began closing. China PM Wen pronounces himself as a staunch supporter of free trade warning against protectionism and currency devaluations to boost exports as harmful to economic recovery. He says keeping yuan stable was an important contribution to global recovery from the economic downturn. He claims that yuan, or renminbi, is not undervalued; not in that even as global trade plummeted last year, US and EU exports to China shrank at lower rate. With more than 800 billion of dollars its foreign exchange reserves invested in US Treasury Securities Wen says the value of the US dollar was a big concern and asked to take unspecified steps to reassure investors.
However, some experts argue that markets are overestimating the potential impact of an appreciation of Chinese renminbi aganist the US dollar on other currencies. Riaefcke from Commerzbank states that fears of reduction in China’s trade surplus with the US due to falling exports are not borne out by history.Between 2005-2009 when the trade-weighted renminbi appreciated notably, China’s surplus rose immediately. The direct effects of renminbi appreciation are not to be discernible. Only secondary effects which will be mainly of market psychological nature will have some limited effects on the G10 currencies.
If China did not start to appreciate the renminbi over a few weeks, economist Stephen Green urges that there would be a good chance for the US to label China as a currency manipulator. That could pave the way for the US to levy new duties on Chinese products. The respond coming from China will set the agenda for the global trade and exchange markets.
US is the strongest economy of the world now and China seems to be the one in the future.1890-1910 period was the time for US to boost as a super power. The time is ticking for China now, but the efforts of China to sustain its military capability and statistics about its developments make it dependant on US support, unfortunately. Any idea about a boycott on China from US will have hazardous impacts on China; because of this China is behaving in a way that the relation between them will not be damaged. Everybody and of course China also know that one swallow does not make a summer. The recorded economical developments does not mean everything, unless it is handled very carefully to maintain it.
Melike BAŞTÜRK