The Chinese currency reevaluation

Now that the most erstwhile demand of the United States and other western countries has been somewhat met with the announcement of a de facto devaluation of the Chinese Currency (although they will still keep a tight control of how much they do), it will still be not enough to satisfy the United States Congress. They are still trying to punish the Chinese that they have not gone far enough in their currency devaluation. But even if they do would American trade balance will reduce from roughly 200 billion to like maybe 100 billion realistically. It may initially help but the Chinese are master at adapting to business realities and I believe that they have been preparing for the day when the Chinese currency will be freely convertible.

It is not just the currency problem, but a whole lot of other problems like the low savings rate, the outsourcing of jobs, the high wages (as compared to China) and the lack of lower case industrial products that needs to be addressed before the trade imbalance with China can be tackled. Most of the stuff that China makes is no longer been made in USA and even if somebody tries to make it the cost is so prohibitive that even with the cost of transportation from China to the US, it is still cheap. Even if the currency is made one to one (highly unlikely) the balance of trade will still be in favor of China since we consume more and they save more.