China to raise prices on U.S. consumers by 30%
China devalues U.S. buying power by 30%, but preserves the present value of Chinese-held Treasury Bonds.
This means that by summertime, and certainly by next holiday season, Chinese goods will be 30% more expensive, for the same low-quality merchandise. This may cause some buyers, like Walmart, to look at manufacturing in other countries. And may cause American merchandise to sell better in comparison, thereby decreasing the trade deficit.
The reason for this is an increase in the commodities market, which caused an increase in food prices in China. The government had to cap increases in food prices for the people, and decided instead to pass along the price increases foreign buyers.
Keep in mind that the picture above is deceiving. While China's economy grew many times faster than the U.S. economy did recently, the Chinese GDP is still 1/3 the U.S. GDP. Many many Chinese continue to live in poverty even though they work.
This means that by summertime, and certainly by next holiday season, Chinese goods will be 30% more expensive, for the same low-quality merchandise. This may cause some buyers, like Walmart, to look at manufacturing in other countries. And may cause American merchandise to sell better in comparison, thereby decreasing the trade deficit. The reason for this is an increase in the commodities market, which caused an increase in food prices in China. The government had to cap increases in food prices for the people, and decided instead to pass along the price increases foreign buyers.
Keep in mind that the picture above is deceiving. While China's economy grew many times faster than the U.S. economy did recently, the Chinese GDP is still 1/3 the U.S. GDP. Many many Chinese continue to live in poverty even though they work.
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