Ch. 8

From reading chapter 8, my understanding is that the Chinese currency’s value is very important to more than just the people of China, but in the US and Europe as well. The Chinese Yuan is not close to being equivalent to the US dollar or the Euro, this helps keep the prices of the goods China makes low for the countries they export to.  It is important to China to keep the value of the Yuan “pegged” to the US dollar because it is a way to assure that the US will keep doing business with them and not go looking in other countries for cheaper goods, such as Bangladesh, Southern India, or Cambodia.  Exporting companies always want cheap labor to offer international buyers the cheapest goods. But this creates a problem for the people who are the cheap labor; they end up being cheated by their bosses who take the money and invest it in the Chinese stock market and properties.  Although, another thing that China does with it’s money has made it’s economy and the US’s interesting sort of relationship.  Dodson gave me my first real, but basic since I don’t quite understand everything he says on the topic, understanding of how the US is indebt to China.  The money China gets from the US companies who use cheap Chinese labor goes right back to the US, to finance our debt, in US Treasury bonds.  This chapter helped remind me of how much the economy of one county can have an influence over all the countries it does business with.