Global economy: trading blows Essay

There has been discretion subtle between the US exchequer and China over the Chinas exchange rate. The leave has dominated the relationship of the two largest economies that would determine and shape the future of the world scrimping. US has however received occasional support from Europe and other selected appear markets. The dispute is that, the Chinese currency policy unbalances the world economy and disadvantages the unusual companies.This has caused the white house to face challenges in the management of its employment deal and enthronisation relationship with capital of Red China as it has been evident in the way the American businesses are discontented and fuelled by incidents such as the Google China censoring spat. US is however frustrated by the fact that it lacks the instruments to conduct the transnational mint policy in the modern economy. The tools it has are inadequate to get it on with the interlocking web that China has used to distort the planetary tra de and investment patterns whereby it uses state-sponsored policies.The US has in the past used old forge architecture of the trade policy of a metal bashing economy that is predictable as it focus on the exchange rate on its manufacturers competing bearing on with Chinese companies in the American market. Though America has trade defense instruments like the antidumping, countervailing duty and safeguard measures , Chinese imports have not been stopped as evident September last year when star such tool was used provoking a storm of knowledge from free-traders.When China joined the WTO, US and Europe have got to use a lot of efforts to tame Chinas dominance in the global market. However China has experienced growth as it becomes increasigingly interested in locating production locally and selling services like the telecommunications, teaching Technology and media under the rubric of its indigenous innovation policy. China has self-made tamed the influence of US in its economy by claiming that she is modernizing her economy while it ascend the value of chain and ease way from dependency on irrelevant companies for investment and engine room.Procurement is used to favor Chinese companies through idiosyncratic technical standards like the homegrown wireless technology which deny licensing to more familiar international standards. This has made the foreign business representatives criticize the policy publicly claiming that they are less and less welcomed in china. The menu of options available to mitigate such problem is limited. The most explicit is the litigation at the WTO. This option is one of the attractive ones that has made Beijing accepts the normal part of trade relations, not a declaration of war.It has drawback from the issue like IPR after it lost a case on the enforcement of IPR. On the issue of revaluing renminbi that is allowing its currency to enlarge, China has made a bold whole tone of abandoning its currency peg to the US dollar an d adopting a more negotiable exchange rate policy. This decision would temporarily cause international upbraiding as evident at the Canadian G20 summit that almost off into a bash-China session before Beijing announced that that it was changing the policy.The US administration however notched that this was a victory for behind the scenes diplomacy as there was the risk that the currency dispute that would descend to into a trade war. This dispute had now been solved, the Obama administration claimed The economic impact of the policy has however been limited as renminbi has only appreciated by 0. 3 percent. Chinese officials have ruled out any significant increase in the value of currency given that there is a downslope in the current account surplus.However there is some part of politics and Beijing is desperate to avoid an impression that it is giving into the foreign pressure as well as avoid a relate criticism by the US that she is gaming the trading system collectible to a foreseeable slow appreciation of the Chinese yen against the US dollar. References Alan Beatie. (2010, July5). Global Economy Trading Blows. Financial Times 2010. Retrieved July 6, 2010 from