RRJ#3

Bixi Li
EAP1-RRJ#3
April 12, 2010
Business

China and the yuan: What's at stake?
Reference:
Isidore, Chris (2010, April 10), China and the yuan: What’s at stake. Retrieved April 11, 2010, from CNN.com
http://money.cnn.com/2010/04/09/news/economy/yuan_dollar_revaluation/index.htm

Summary:
The yuan made goods more competitive with Chinese exports. The U.S and China want to make an agreement that the yuan is raised. The person who is a harsh critic of both the Bush and Obama administrations advocates threatening China with steep tax penalties to make China solve problems. Some economists agree with the yuan having a great space of appreciation and they suggest China and the U.S should pursue a smooth adjustment, because a dramatic change will cause another big financial problem out though the world. An overly undervalued yuan led to an asset bubble in China and a deficit in the U.S.
Some U.S manufacturers think a stronger yuan and a weaker dollar is good. Actually it is not. Labor cost is still lower in China. That means goods that are made in China will be more expensive than before for Americans. Thus, China does not need buy more U.S Treasury bonds, which would lead to higher interest rates on U.S Treasury, higher borrowing costs for people and a weak dollar which makes the price of imports from other countries increase.
Reaction:
I have read this article and watched the video from the website. Donald Trump, chmn.& pres. of Trump org, said China is the biggest manufacturing country; China takes money out and then loan money back; and Mr. Trump pays a lot of tax exporting from China. He feels very dissatisfied. From the American points of view, the U.S economy is heading for a downturn. As Mr. Trump said, they are suffering painfully. News form Chinese reports said that most of the enterprises get benefit from the appreciation of the yuan. Only the export rag trade will be affected slightly. And China’s economy is increasing strongly, and policy is proper. There would not be an asset bubble in China. Thus, everything has two sides. We should think critically. Personally, a rise of the yuan would be good for me, because I would spend less in the yuan exchange to the U.S dollar. I am happy about the yuan being appreciated.

Vocabulary:
1. currency—money
2. conference—meeting
3. strategist—a person who is good at planning activities
4. modest—not very important
5. dent—hurt, to damage
6. adjustment—a change made to something become better
7. an asset bubble—not a true situation about economy
8. recession—a difficult time for the economy of a country
9. steep—sudden and a big change
10. penalty—a punishment for breaking a law or rule
11. intensive—involving a lot of work done in a short time
12. massive—giant, very large, heavy and soild