Yuan Rising

I wish that I could have been a fly on the wall -- a multi-lingual fly to be exact -- during the trade discussions last week between US Treasury Secretary Hank Paulson and Chinese officials. For both countries have so much riding on the need to reach a compromise position on the appreciation of the Yuan (which many consider to still be significantly undervalued relative to the dollar, despite its quasi-floating status). It would appear from the appreciation in the Yuan in the days following the recent talks that the Chinese are compromising on US demands for the currency to float to a more reasonable level. This is a good thing, as it's in no one’s interest -- except, perhaps, for protectionist, populist US Senators on both the left and the right -- to slap "an across the board 27.5 percent duty on Chinese exports to the United States," as they have promised if the Yuan remains artificially undervalued.

You can read past Spend Matters commentary on the Yuan and US / China trade relations in the following posts:

- The Dollar Euro and Yuan: A Spend Management Perspective

- The Yuan Can Move in Both Directions

- Three Quick Thoughts on the Yuan

As an ardent free trader who believes that global sourcing is at risk from both the left and right at the moment in the US, I believe it is imperative to let your local representatives -- for US-based Spend Matters readers -- know the importance of global sourcing to the future prosperity of this country and the rest of the world. For sourcing globally is not just about saving money. It's also about improving everyone's lot on the other side as well. And for Spend Matters readers from Europe and Asia, I would also encourage you to contact your local trade and government officials as well to ensure that the free trade voice is heard for the same reasons.

Jason Busch

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