Daily VideoNovember 12, 2010
China and U.S. Debate Currency Values
This week, a meeting of the world’s 20 largest economies, called the G20, is taking place in South Korea. One of the major conflicts being addressed at the meeting involves the value of the world’s currencies, specifically China’s. Many countries accuse China of purposely holding down the value of its currency, which makes its exports to other countries cheaper but gives Chinese products and countries a supposedly global edge.
The U.S. would like the value of the dollar to go down against the Chinese currency, called the renminbi. If this were to happen, the U.S. would be able to sell more of its goods to other countries and import fewer goods, which would create more jobs in the U.S. and help address the country’s trade deficit. But, the problem is that China wants the exact same thing for its people.
According to MIT Professor Yasheng Huang, the Chinese export sector employs a large number of people in China, and cutting exports would have a negative effect on the Chinese unemployment rate. Currently, the U.S. is flooding Chinese banks with dollars used to purchase Chinese goods, money which China is, in turn, lending back to the U.S. As David Steck of the firm Nomura Securities puts it, “China is basically lending us the money to buy stuff from them.”
“It is very difficult to make the argument with the Chinese and say, you do something about your exchange rate, but, by the way, we can spend the way we want, right?” – Yasheng Huang, MIT professor
“So, if you make shoes in Brazil, it’s a lot more difficult to compete, even in the local market, against Chinese imports. And a lot of it is coming because the Chinese have tied their currency to the dollar.” – Liran Blum, Nomura Securities
Warm Up Questions
1. What is a currency?
2. What are imports and exports?
3. What kinds of things does the U.S. import from China? How many of the items currently in your possession do you think were made in China?
4. What is a deficit?
1. Why do both China and the U.S. want other countries to buy a lot of their exports? How does this help each country?
2. Do you think the imagined scenario in the video where a Chinese professor discusses the fall of the American empire could actually happen as a result of American overspending? Why or why not?
3. According to the video, how are the U.S. and China interconnected? Why might it be hard for the countries to negotiate a currency policy that works for both of them?
4. What kinds of things does the U.S. export? Do you know anyone who works to manufacture or manage any of those exports? What do you think would happen to that person’s job if the U.S. drastically cut its exports to other countries?
Tooltip of related stories
Tooltip of more video block
Submit Your Student Voice
Today’s Daily News Story provides video, key terms and discussion questions to help teachers talk with their students about the events in Charlottesville, Virginia. Continue readingArts & CultureEconomicsHealthScienceSocial StudiesU.S.UncategorizedWorld
Montpelier, the home of James Madison, the fourth president of the United States, recently opened a new permanent exhibit at the Virginia estate to inform visitors about Madison’s slaves and the lives they led. Continue readingArts & CultureEconomicsHealthScienceSocial StudiesU.S.UncategorizedWorld
As high-density, industrial-scale livestock feeding operations become the norm, farmers have had to take extra steps to keep animals healthy. Illnesses and diseases grow and spread quickly when large numbers of similar animals are kept in close proximity. Continue readingArts & CultureEconomicsHealthScienceSocial StudiesU.S.UncategorizedWorld
Rose-ringed parakeets have multiplied by the thousands on the Hawaiian island of Kauai since the 1960s, when a few parakeets kept as pets escaped. The birds have since caused problems by damaging native plants and farm crops. Continue readingArts & CultureEconomicsHealthScienceSocial StudiesU.S.UncategorizedWorld
Health care reform has occupied the spotlight on Capitol Hill in recent months, but an equally contentious issue is on the Republican agenda next: tax reform. A team of six Republican leaders has already developed some broad policy goals. Continue readingArts & CultureEconomicsHealthScienceSocial StudiesU.S.UncategorizedWorld