WASHINGTON — As the Obama administration escalates its battle with Chinese leaders over the artificially low value of China’s currency, a growing number of countries are retreating from some free-market rules that have guided international trade in recent decades and have started playing by Chinese rules.
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| Currency War is Coming Right after a Sovereign Debt Crisis |
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In "More Countries Adopt China's Tactics on Currency", we can read about the beginnings of this global currency war. Countries in recessions devalue or weaken their currencies to be more competitive and increase exports on the world export stage. When all countries are weak, then there is no 'stronger' currency in which to weaken one's currency. Currency weakening is relative to another currency. After the spendthrift countries of Europe with vast socialism programs, etc., hit the skids with sovereign debt, they will have to contend with a currency war which is starting now. Japan and Brazil have taken measures recently to devalue their currencies, or at least prevent them from appreciating further against the Chinese currency, the renminbi. The House of Representatives last week overwhelmingly passed the first legislation to allow the United States to slap huge tariffs on Chinese goods unless China allows the renminbi to appreciate, another mechanism for making Chinese goods more expensive here and American exports more competitive in China.
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