Don Boudreaux on China, Currency Manipulation, and Trade Deficits

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🗓️ 8 November 2010

⏱️ 65 minutes

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Summary

Don Boudreaux of George Mason University talks with EconTalk host Russ Roberts about Chinese exchange rate policy and the claim that China keeps the value of its currency artificially low in order to boost exports to the United States and reduce U.S. exports. Boudreaux argues that regardless of whether China is manipulating its currency, inexpensive Chinese imports are generally good for the United States. He also points out that manufacturing output in the United States has been thriving despite claims that the United States is being "hollowed out." The conversation also includes a discussion of whether Chinese holdings of U.S. Treasuries threaten the United States.

Transcript

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0:00.0	Welcome to Econ Talk, part of the Library of Economics and Liberty.
0:12.5	I'm your host Russ Roberts of George Mason University and Stanford University's Hoover
0:17.3	Institution.
0:18.7	Our website is econtalk.org, where you can subscribe, find other episodes, comment on this podcast,
0:25.8	and find links to other information related to today's conversation.
0:29.9	Our email address is mailadicontalk.org.
0:33.6	We'd love to hear from you.
0:35.5	Today is November 3rd, 2010, and my guest is Don Boudreau of George Mason University.
0:43.7	We blog together at Cafe Hayek.
0:46.2	Don, welcome back to Econ Talk.
0:48.0	Good to be here Russ.
0:49.4	Our topic for today is China, America's trade relationship with China and China's currency,
0:54.9	the Yuan.
0:55.9	A lot of people claim that China manipulates its currency to enrich itself and hurt us,
1:01.5	that they deliberately pursue a policy of undervaluing its currency.
1:07.0	What's the argument there?
1:08.1	What do people who are worried about that?
1:09.7	What are they worried about?
1:10.7	It's actually not very complicated.
1:12.7	For Americans to buy things from the Chinese, Americans first have to convert their dollars
1:18.8	into Chinese currency, the Yuan, or sometimes call the Renminbi.
1:24.2	And so if the price of the Chinese currency of the Yuan in terms of dollars is low, then
	...

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