Final Paper

Final Paper - Pham Kaitlin Pham Allen K. Settle Political...

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Pham Kaitlin Pham Allen K . Settle Political Science 112 6 December 2010 Handling the Hybrid Holistically History has taken note of hybrid creations , marvels that have the best of both worlds, and take advantage of it . Greek mythical demi-god Hercules was unstoppable , half-human half-god . His super human strength combined with his human empathy provided him with a deadly combination , which provided him with success in all his endeavors (“The Life”). Similarly , China can be seen as a type of unbeatable force to be reckoned with. Recently , China’s government can be seen as a communistic dictatorship , in contrast to their capitalist economy . During a September congressional committee conference , CEO Daniel R. DiMicco has addressed China’s currency manipulation saying , “For far too long our government has tried ‘quiet diplomacy’ to address currency manipulation . This approach has failed .’ China has been contributing money to help the United States with our ongoing thirteen billion dollar deficit , and their undervalued currency. China has denied that its currency manipulation , but it has shown that their “renminbi” has made their products 40 percent cheaper when sold in the United States . This conversely acts as a tax of 40 percent on American made goods sold in China (Malhotra) . China’s hybrid country is continually growing in power , and already exceeds the United States in size . How must President Obama approach a structurally diverse government that already demonstrates an impending threat on the United States economy?
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Pham Although the United States have had a long history of diminishing the communist’s light upon independent countries , should the United States bite the hand that feeds them? This paper will speculate the structure of China’s hybrid economy and undervalued currency , as well as discuss the possible policies the United States may take towards handling this threatening country . When the United States dipped in recession earlier in 2007 , we resorted to selling our bonds , which China invested in. Chinese exports companies received United States money to pay the goods and services that they export . They then convert the U .S. dollar to their domestic currency , the Yuan, to pay salaries and raw materials. Since China exports more than they import , there will be an excess demand for the domestic currency, pushing the Yuan and United States exchange rate up higher . This would make the Chinese exports more expensive and make the Chinese economy less competitive in the international markets; but to avoid this situation , the Chinese central bank interfere in the foreign exchange markets, buying the excess United States Currency against the Yuan , maintaining a constant exchange rate. As a result , China has become the largest holder of U .S. Treasury bonds in the open market. China’s technique of subsidizing its export industries to manipulate the currency has
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This note was uploaded on 01/06/2012 for the course POLS 112 taught by Professor Settle during the Fall '08 term at Cal Poly.

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Final Paper - Pham Kaitlin Pham Allen K. Settle Political...

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