Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
China vs. the United States: the Battle for
Global Economic Supremacy
Ryan W. Herzog
Gonzaga University
Fall Family Weekend
October 22nd, 2010

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Introduction
Overview of China
The Recent History
Why?
How?
Removal of the Peg

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Introduction
• Why has China decided to pursue an exchange rate target?

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Introduction
• Why has China decided to pursue an exchange rate target?
• How has China been able to maintain the pegged exchange
rate without risking a crisis?

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Introduction
• Why has China decided to pursue an exchange rate target?
• How has China been able to maintain the pegged exchange
rate without risking a crisis?
• Should we be pressuring China to let the renminbi appreciate?

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Introduction
• Why has China decided to pursue an exchange rate target?
• How has China been able to maintain the pegged exchange
rate without risking a crisis?
• Should we be pressuring China to let the renminbi appreciate?
• What has the United States gained/lost by China’s foreign
policies?

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Introduction
• Why has China decided to pursue an exchange rate target?
• How has China been able to maintain the pegged exchange
rate without risking a crisis?
• Should we be pressuring China to let the renminbi appreciate?
• What has the United States gained/lost by China’s foreign
policies?

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Key Numbers for China
• Real GDP grew at an annual rate of 9.6%.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Key Numbers for China
• Real GDP grew at an annual rate of 9.6%.
• Unemployment in China is at 9.6%.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Key Numbers for China
• Real GDP grew at an annual rate of 9.6%.
• Unemployment in China is at 9.6%.
• Inflation is stable at 3.6%.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Key Numbers for China
• Real GDP grew at an annual rate of 9.6%.
• Unemployment in China is at 9.6%.
• Inflation is stable at 3.6%.
• China raised interest rates on deposits and lending to 2.5%
and 5.56%, respectively.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Key Numbers for China
• Real GDP grew at an annual rate of 9.6%.
• Unemployment in China is at 9.6%.
• Inflation is stable at 3.6%.
• China raised interest rates on deposits and lending to 2.5%
and 5.56%, respectively.
• China has $2.6 trillion in reserves.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
GDP per person US and China (1980-2015)

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Economic Growth in China (1953-2007)

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
The Peg
• China has pegged the renminbi at 8.27 yuan per dollar from
1997 through 2005.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
The Peg
• China has pegged the renminbi at 8.27 yuan per dollar from
1997 through 2005.
• From 2005 to July of 2008 China let the renminbi slowly
appreciate to 6.82 yuan per dollar.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
The Peg
• China has pegged the renminbi at 8.27 yuan per dollar from
1997 through 2005.
• From 2005 to July of 2008 China let the renminbi slowly
appreciate to 6.82 yuan per dollar.
• On June 19th China announced a shift in the exchange rate
regime to a managed float. Currently the renminbi is trading
at 6.73 yuan per dollar.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Exchange Rate (1981-2010)

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Asian Crisis
• In 1997 many East Asian economies were hard hit by a
financial crisis (including Thailand, Indonesia, South Korea,
Malaysia, Philippines, and Hong Kong).

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Asian Crisis
• In 1997 many East Asian economies were hard hit by a
financial crisis (including Thailand, Indonesia, South Korea,
Malaysia, Philippines, and Hong Kong).
• The financial crisis was caused by quick deregulation in the
financial system which removed capital control. Large sums of
“hot money” flowed into these countries leaving them
suspectable to a currency crisis.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Asian Crisis
• In 1997 many East Asian economies were hard hit by a
financial crisis (including Thailand, Indonesia, South Korea,
Malaysia, Philippines, and Hong Kong).
• The financial crisis was caused by quick deregulation in the
financial system which removed capital control. Large sums of
“hot money” flowed into these countries leaving them
suspectable to a currency crisis.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Export Led Growth
• Asian economies from 1960 through 1990 used exports to fuel
growth.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Export Led Growth
• Asian economies from 1960 through 1990 used exports to fuel
growth.
• The Asian Tigers (South Korea, Hong Kong, Singapore,
Taiwan) and Japan used their abundance of cheap labor to
specialize in low-skilled manufacturing exports.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Export Led Growth
• Asian economies from 1960 through 1990 used exports to fuel
growth.
• The Asian Tigers (South Korea, Hong Kong, Singapore,
Taiwan) and Japan used their abundance of cheap labor to
specialize in low-skilled manufacturing exports.
• Combined with improved educational systems allowed these
economies to quickly improve labor productivity and
subsequent economic growth.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Export Led Growth
• Asian economies from 1960 through 1990 used exports to fuel
growth.
• The Asian Tigers (South Korea, Hong Kong, Singapore,
Taiwan) and Japan used their abundance of cheap labor to
specialize in low-skilled manufacturing exports.
• Combined with improved educational systems allowed these
economies to quickly improve labor productivity and
subsequent economic growth.
• China had a large surplus of low skilled labor and
infrastructure in place to promote low tech manufacturing
products.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
The Peg
• The recent financial distress in neighboring countries and the
negativity of trade barriers left China with really one option to
promote exports.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
The Peg
• The recent financial distress in neighboring countries and the
negativity of trade barriers left China with really one option to
promote exports.
• A pegged exchange rate allowed China to control the price of
their exports without worrying about the retaliation that
normally follows trade barriers.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Currency Control through Monetary Policy
• We can view foreign exchange through simple demand and
supply diagrams.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Currency Control through Monetary Policy
• We can view foreign exchange through simple demand and
supply diagrams.
• As the U.S. demanded China’s goods, the demand for the
yuan increased.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Currency Control through Monetary Policy
• We can view foreign exchange through simple demand and
supply diagrams.
• As the U.S. demanded China’s goods, the demand for the
yuan increased.
• Under a floating exchange rate, an increase in the demand for
a currency would cause the currency to appreciate.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Currency Control through Monetary Policy
• We can view foreign exchange through simple demand and
supply diagrams.
• As the U.S. demanded China’s goods, the demand for the
yuan increased.
• Under a floating exchange rate, an increase in the demand for
a currency would cause the currency to appreciate.
• To offset the appreciation, China would then buy U.S. dollars.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Currency Control through Monetary Policy
• We can view foreign exchange through simple demand and
supply diagrams.
• As the U.S. demanded China’s goods, the demand for the
yuan increased.
• Under a floating exchange rate, an increase in the demand for
a currency would cause the currency to appreciate.
• To offset the appreciation, China would then buy U.S. dollars.
• Essentially, China was buying U.S. debt (government bonds
and mortgage backed securities) while the U.S. purchased
trillions of China’s exports.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Trade with China (1999-2009)

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Income Payments and Receipts (1999-2009)

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Monetary Policy
• Countries are faced with a choice when using monetary policy.
Countries can:

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Monetary Policy
• Countries are faced with a choice when using monetary policy.
Countries can:
• Set interest rates

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Monetary Policy
• Countries are faced with a choice when using monetary policy.
Countries can:
• Set interest rates
• Have free capital mobility

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Monetary Policy
• Countries are faced with a choice when using monetary policy.
Countries can:
• Set interest rates
• Have free capital mobility
• Fix exchange rates

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Monetary Policy
• Countries are faced with a choice when using monetary policy.
Countries can:
• Set interest rates
• Have free capital mobility
• Fix exchange rates
• Countries cannot have all three.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Monetary Policy
• Countries are faced with a choice when using monetary policy.
Countries can:
• Set interest rates
• Have free capital mobility
• Fix exchange rates
• Countries cannot have all three.
• By choosing to peg the yuan to the dollar, China is giving up
the ability to set interest rates.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Monetary Policy
• Countries are faced with a choice when using monetary policy.
Countries can:
• Set interest rates
• Have free capital mobility
• Fix exchange rates
• Countries cannot have all three.
• By choosing to peg the yuan to the dollar, China is giving up
the ability to set interest rates.
• If the United States lowers interest rates then foreign investors
will shift away from dollar assets. An decrease in the demand
for dollars causes a depreciation (an appreciation of the yuan).
China must also lower rates to prevent the appreciation.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Monetary Policy
• Countries are faced with a choice when using monetary policy.
Countries can:
• Set interest rates
• Have free capital mobility
• Fix exchange rates
• Countries cannot have all three.
• By choosing to peg the yuan to the dollar, China is giving up
the ability to set interest rates.
• If the United States lowers interest rates then foreign investors
will shift away from dollar assets. An decrease in the demand
for dollars causes a depreciation (an appreciation of the yuan).
China must also lower rates to prevent the appreciation.
• China has also elected to keep a tight control on foreign
capital flows (opposite other Asian economies) which prevents
against a large sudden shift in capital.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Foreign Reserves
• Countries choosing to peg their exchange rate, must be
willing to buy and sell foreign currency on demand.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Foreign Reserves
• Countries choosing to peg their exchange rate, must be
willing to buy and sell foreign currency on demand.
• The central bank needs to hold an ample surplus of foreign
exchange. Many emerging markets (even some developed
economies) failed to hold sufficient foreign exchange and
faced bank runs.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Foreign Reserves
• Countries choosing to peg their exchange rate, must be
willing to buy and sell foreign currency on demand.
• The central bank needs to hold an ample surplus of foreign
exchange. Many emerging markets (even some developed
economies) failed to hold sufficient foreign exchange and
faced bank runs.
• China has followed the Federal Reserve’s massive increase in
the money supply, China created a stock pile of foreign
reserves ($2.6 trillion).

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Foreign Reserves
• Countries choosing to peg their exchange rate, must be
willing to buy and sell foreign currency on demand.
• The central bank needs to hold an ample surplus of foreign
exchange. Many emerging markets (even some developed
economies) failed to hold sufficient foreign exchange and
faced bank runs.
• China has followed the Federal Reserve’s massive increase in
the money supply, China created a stock pile of foreign
reserves ($2.6 trillion).
• It is common for domestic and foreign policy goals to become
misaligned. China is in a high growth, high inflation
environment which calls for higher interest rates.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
General Effects on US
• Low interest rates as China became a large purchaser of U.S.
debt.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
General Effects on US
• Low interest rates as China became a large purchaser of U.S.
debt.
• Cheap goods from China.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
General Effects on US
• Low interest rates as China became a large purchaser of U.S.
debt.
• Cheap goods from China.
• A loss in competitiveness for US manufacturing.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Why are we Pressuring China?
• Cheap Chinese goods are having an adverse effect on our job
market.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Why are we Pressuring China?
• Cheap Chinese goods are having an adverse effect on our job
market.
• Will an appreciation in the yuan improve unemployment?

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Why are we Pressuring China?
• Cheap Chinese goods are having an adverse effect on our job
market.
• Will an appreciation in the yuan improve unemployment?
• To help restore global imbalances.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Current Account for US and China (1980-2010)

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Concerns for China
• Will the United States be able to repay their debt in full?

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Concerns for China
• Will the United States be able to repay their debt in full?
• Higher inflation in the United States will reduce the value of
all U.S. denominated debt.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Concerns for China
• Will the United States be able to repay their debt in full?
• Higher inflation in the United States will reduce the value of
all U.S. denominated debt.
• Many economists are calling for a 3-4% inflation target.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Concerns for China
• Will the United States be able to repay their debt in full?
• Higher inflation in the United States will reduce the value of
all U.S. denominated debt.
• Many economists are calling for a 3-4% inflation target.
• A appreciation in the yuan will make China’s exports more
expensive and cause a potential slowdown in growth.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Concerns for China
• Will the United States be able to repay their debt in full?
• Higher inflation in the United States will reduce the value of
all U.S. denominated debt.
• Many economists are calling for a 3-4% inflation target.
• A appreciation in the yuan will make China’s exports more
expensive and cause a potential slowdown in growth.
• A devaluation of the dollar will drastically reduce the value of
China’s assets.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Concerns for China
• Will the United States be able to repay their debt in full?
• Higher inflation in the United States will reduce the value of
all U.S. denominated debt.
• Many economists are calling for a 3-4% inflation target.
• A appreciation in the yuan will make China’s exports more
expensive and cause a potential slowdown in growth.
• A devaluation of the dollar will drastically reduce the value of
China’s assets.
• Is China at risk for overheating?

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Concerns for China
• Will the United States be able to repay their debt in full?
• Higher inflation in the United States will reduce the value of
all U.S. denominated debt.
• Many economists are calling for a 3-4% inflation target.
• A appreciation in the yuan will make China’s exports more
expensive and cause a potential slowdown in growth.
• A devaluation of the dollar will drastically reduce the value of
China’s assets.
• Is China at risk for overheating?
• By maintaining the peg, China is adopting the expansionary
monetary policy of the United States.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Concerns for China
• Will the United States be able to repay their debt in full?
• Higher inflation in the United States will reduce the value of
all U.S. denominated debt.
• Many economists are calling for a 3-4% inflation target.
• A appreciation in the yuan will make China’s exports more
expensive and cause a potential slowdown in growth.
• A devaluation of the dollar will drastically reduce the value of
China’s assets.
• Is China at risk for overheating?
• By maintaining the peg, China is adopting the expansionary
monetary policy of the United States.
• They are growing at a nearly 10% rate, and could soon
experience high inflation.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Concerns for China
• Will the United States be able to repay their debt in full?
• Higher inflation in the United States will reduce the value of
all U.S. denominated debt.
• Many economists are calling for a 3-4% inflation target.
• A appreciation in the yuan will make China’s exports more
expensive and cause a potential slowdown in growth.
• A devaluation of the dollar will drastically reduce the value of
China’s assets.
• Is China at risk for overheating?
• By maintaining the peg, China is adopting the expansionary
monetary policy of the United States.
• They are growing at a nearly 10% rate, and could soon
experience high inflation.
• China just raised both their deposit and lending rates by 25
base points.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Concerns for U.S.
• Will interest rates increase? Short-run or long-run?

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Concerns for U.S.
• Will interest rates increase? Short-run or long-run?
• Will we be able to replace China as a large purchaser of U.S.
debt?

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Concerns for U.S.
• Will interest rates increase? Short-run or long-run?
• Will we be able to replace China as a large purchaser of U.S.
debt?
• If China dumps dollars how far will the dollar depreciate?

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Concerns for U.S.
• Will interest rates increase? Short-run or long-run?
• Will we be able to replace China as a large purchaser of U.S.
debt?
• If China dumps dollars how far will the dollar depreciate?
• Many U.S. firms use Chinese’s goods as inputs in the
production process.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Concerns for U.S.
• Will interest rates increase? Short-run or long-run?
• Will we be able to replace China as a large purchaser of U.S.
debt?
• If China dumps dollars how far will the dollar depreciate?
• Many U.S. firms use Chinese’s goods as inputs in the
production process.
• With the Federal Reserve pumping trillions to help stabilize
the economy will this push inflation over the edge?

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Concerns for U.S.
• Will interest rates increase? Short-run or long-run?
• Will we be able to replace China as a large purchaser of U.S.
debt?
• If China dumps dollars how far will the dollar depreciate?
• Many U.S. firms use Chinese’s goods as inputs in the
production process.
• With the Federal Reserve pumping trillions to help stabilize
the economy will this push inflation over the edge?
• Will their be any improvement in jobs?

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Holders of Federal Debt
• The gross national debt is $13.2 trillion of which:

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Holders of Federal Debt
• The gross national debt is $13.2 trillion of which:
• $8.6 trillion is held publicly.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Holders of Federal Debt
• The gross national debt is $13.2 trillion of which:
• $8.6 trillion is held publicly.
• $4 trillion is held by foreign and international investors.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Holders of Federal Debt
• The gross national debt is $13.2 trillion of which:
• $8.6 trillion is held publicly.
• $4 trillion is held by foreign and international investors.
• $800 billion is held by Federal Reserve banks
• $4.6 trillion is held by the government.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Supplier of Funds to the U.S.
• The government debt is projected to increase to nearly $20
trillion by 2020.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Supplier of Funds to the U.S.
• The government debt is projected to increase to nearly $20
trillion by 2020.
• China currently holds $900 billion in U.S. government debt.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Supplier of Funds to the U.S.
• The government debt is projected to increase to nearly $20
trillion by 2020.
• China currently holds $900 billion in U.S. government debt.
• Federal Old Age and Survivors Trust Fund holds $2.4 trillion.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Supplier of Funds to the U.S.
• The government debt is projected to increase to nearly $20
trillion by 2020.
• China currently holds $900 billion in U.S. government debt.
• Federal Old Age and Survivors Trust Fund holds $2.4 trillion.
• As we deplete the retirement trust funds and government debt
grows we are going to need large buyers of government debt.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
A Solution to Unemployment
• There will likely be a small change in manufacturing jobs.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
A Solution to Unemployment
• There will likely be a small change in manufacturing jobs.
• Nearly 8 million manufacturing jobs have been lost since
2000.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
A Solution to Unemployment
• There will likely be a small change in manufacturing jobs.
• Nearly 8 million manufacturing jobs have been lost since
2000.
• Above equilibrium wages will keep manufacturing suppressed.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
A Solution to Unemployment
• There will likely be a small change in manufacturing jobs.
• Nearly 8 million manufacturing jobs have been lost since
2000.
• Above equilibrium wages will keep manufacturing suppressed.
• There are no insurances the jobs will return to the United
States.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
A Solution to Unemployment
• There will likely be a small change in manufacturing jobs.
• Nearly 8 million manufacturing jobs have been lost since
2000.
• Above equilibrium wages will keep manufacturing suppressed.
• There are no insurances the jobs will return to the United
States.
• Job losses could increase in industries that depend on Chinese
imports.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
A Solution to Unemployment
• There will likely be a small change in manufacturing jobs.
• Nearly 8 million manufacturing jobs have been lost since
2000.
• Above equilibrium wages will keep manufacturing suppressed.
• There are no insurances the jobs will return to the United
States.
• Job losses could increase in industries that depend on Chinese
imports.
• Exporting industries in the US will be hurt (car
manufacturing).

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Conclusion
• Should the United States be putting pressure on China to let
the yuan appreciate?

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Conclusion
• Should the United States be putting pressure on China to let
the yuan appreciate?
• U.S. made car exports totaled 56,597 from January 2010-July
2010. An eightfold increase from the previous year (8,847). In
2000, U.S. made car exports to China totaled 215.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Conclusion
• Should the United States be putting pressure on China to let
the yuan appreciate?
• U.S. made car exports totaled 56,597 from January 2010-July
2010. An eightfold increase from the previous year (8,847). In
2000, U.S. made car exports to China totaled 215.
• China is our third largest export market.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Conclusion
• Should the United States be putting pressure on China to let
the yuan appreciate?
• U.S. made car exports totaled 56,597 from January 2010-July
2010. An eightfold increase from the previous year (8,847). In
2000, U.S. made car exports to China totaled 215.
• China is our third largest export market.
• Are we risking a bigger trade war? Smoot-Hawley Tariff Act
was a likely contributor to the Great Depression.

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Conclusion
• Should the United States be putting pressure on China to let
the yuan appreciate?
• U.S. made car exports totaled 56,597 from January 2010-July
2010. An eightfold increase from the previous year (8,847). In
2000, U.S. made car exports to China totaled 215.
• China is our third largest export market.
• Are we risking a bigger trade war? Smoot-Hawley Tariff Act
was a likely contributor to the Great Depression.
• Will market pressures be sufficient?

Outline Introduction Overview of China The Recent History Why? How? Removal of the Peg
Conclusion
• Should the United States be putting pressure on China to let
the yuan appreciate?
• U.S. made car exports totaled 56,597 from January 2010-July
2010. An eightfold increase from the previous year (8,847). In
2000, U.S. made car exports to China totaled 215.
• China is our third largest export market.
• Are we risking a bigger trade war? Smoot-Hawley Tariff Act
was a likely contributor to the Great Depression.
• Will market pressures be sufficient?
• What about the Currency Reform for Fair Trade Act that was
passed a few weeks ago.