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Sheesh. It’s about time.
China has finally walked the plank (or was prodded with sticks until they lept) and is now dog-paddling in the sea of flexible exchange rates. The word on the street? China has decided it’s time to cease pegging the Yuan at artificially low rates against the US Dollar, thereby allowing it to gradually rise over the course of time.
Well. That’s certainly special. What the heck does a free-styling Yuan potentially mean for Gord and Gordette McCanadiana?
The Financial Post has some thoughts. (You may wish to pack some hip waders to slog through the jargon.)
Ever the vaguely conservative optimist, I see this move as a potentially magical “unicorns & sparkles” scenario for Canada.
- We’re going to pay higher prices for our daily dose of imported, melamine spiked baby formula and sawdust enhanced dog food if it was made in a Chinese factory –> This should discourage some of the mindless purchasing of cheaply made import products that seem to saturate our market on every level, and encourage us to purchase domestic-made products.
- Levels the export playing field, allowing us to send Canadian made products/materials off more competitively than they have been for years *The flagging BC forest sector does a happy dance *
- Increase in export goods/materials = spin off jobs = spin off investments.
- Canadian GDP continues its upswing trend as the rock star economy of ye olde G20.
Alternatively, everything goes to shit really quickly, and we’ll be watching interviews with the Four Horsemen of the Apocolypse on CNN by early 2012.
I’m going to roll my dice and put my marker on the first scenario. Blow on ’em for me, will ya?
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i see China as being a kind of loss leader champion. it’s summer so the supermarket puts 2L’s of Coke on for 99 cents to drag all the HFCS addicts in.
it stays like that for a while, then they whip it up to $2 each. or even up to just $1.25 because the price is right.
China is now inelastic. we are so dependent on their crap that they can set their price and we’ll buy it. they are, i think, setting their price by bringing their currency up from the insanely/unjustifiably low level.
in fact, they are taking a page out of Walmart’s book: open 2 stores in close proximity to not just close most of the competition, but to obliterate it all. then close one store and everyone is dependent on the remaining Walmart.
where are we going to go to get our shit in the volume that China has developed?
nowhere.
they own us now.
unless we can get off affluenza, consumerism, global trade, GDP growth worship and blue sweater vests.
I don’t disagree that we’ve been totally pwnd by China, or are in the last stages of being pwnd by them. We’re totally cooked, unless something extremely drastic happens (and it won’t.) In the interim, I think we’ll see some benefits from this move in the short-term.
Example of benefit from this- Worksafe BC is trying to clamp down on the lifting & rigging aspect of OH&S in construction industry. There is a horrible, horrible influx of cheaply made, totally untraceable off-shore products saturating construction sites. They’re cheap for developers to buy, and have a high ROI for distributors who import them. They are hunks of junk, and lead to horrible workplace accidents, and when someone is hurt/killed on the site, no mfr is ever accountable. Worksafe BC tries to mandate the use of traceable, quality made domestic product, that comes with safety certification, markings, and a mfr that can be held liable if an accident happens. Domestic product, naturally, is more costly up front, and has a lower profit margin for the distribution. By making the cheap crap from China higher priced, it will displace some of the garbage out there, and the domestic producers will gain back some lost marketshare.
yes, that scenario certainly will work out.
the grander solution to crappy construction components is better governmental regulation that protects workers and end users of constructions projects.
in a deregulated, neoliberal environment, the market dictates quality. cheap=good; caveat emptor. when weird things like currency changes that underming cheap=good, we accidentally end up with a better safety environments.
too bad we didn’t just initially choose to legislate safe standards.
If lead based baby food wasn’t bad enough we will now get cheap Chinese double hulled tankers threatening the delicate environment of the Gulf Islands and Juan De Fuca, not to mention Vancouver itself. The Canadian Government has dropped the tariff on foreign made vessels from 25% to zero.
http://www.cbc.ca/money/story/2010/10/01/shipping-tariffs-reduced.html
Meanwhile, back in wonderland: Kinder Morgan is working with Vancouver port authorities to sail huge, one-million barrel Suezmax tankers into harbour there, in hopes of boosting exports, which have already seen a dramatic rise this year. (1 million bbls – 4.5 X Exxon Valdes)
And what’s in it for BCers? Very few jobs and the chance to win the lottery from hell and realize our nightmares if one of those tankers goes on the rocks. Actually, it’s not if – it’s when.