For over a decade, China has manipulated both the WTO and its currency. On Monday’s presidential debate, Trump was the only candidate willing to take on China’s “unfair advantage when selling its goods abroad.”
For far too long China has not been playing by the rules. By keeping a tight hold on the Yuan, the Chinese government has prevented the appreciation of the currency in order to keep American dollars rolling into Chinese hands.
More recently China hit a critical point when enough value had been gained in its economy in order to allow the currency to appreciate slowly, by manipulating the value of the currency.
The Chinese have made big steps to work with the International Monetary Fund (IMF) in order to create an SDR with the Yuan as the greatest contributor to its value. Aimed at an effort to eventually replace the Dollar as the world’s reserve currency. An SDR (or Special Drawing Rights) is a sort of currency or supplementary foreign exchange reserve asset that works exactly like money. The value of the currency is created by different nations contributing to the currency in varying quantities.
Through this currency asset, the Chinese want to debunk the dollar, but not replace it as the worlds reserve currency. Something they wish to avoid since they have been keen in observing the inherit problems of being the world’s sole reserve currency.
Instead of replacing it, the Chinese seek to depreciate the dollar, appreciate their own currency, and create a supplementary reserve currency that they have the greatest control over. The plan is to continue selling goods to the world while controlling the world’s currency, and appreciating their own currency against everyone else. This is the plan for currency and financial domination. As such, China’s goals have been to undermine the United States from the very beginning.
By tackling the manipulation of the currency, Trump seeks to define the rules that the Chinese have become very successful at dodging.
In the 1970s, China was permitted into the WTO organization; which began the slow opening of the Communist country to the world economy. Since then the Chinese have used every opportunity to undermine the policies and ideals of free trade. Which limits the use of barriers to level the playing field.
As a businessman Trump understands the way the Chinese are unfairly operating. He has a plan for future relations between the United States and the Communist party. Plans that go beyond the hokey-pokey diplomacy of Hillary Clinton. The former Secretary of State is someone who the Chinese have experience dealing with and do not respect.
Trump’s first step and plan for dealing with China, as is described on his website, is to:
- Instruct the Treasury Secretary to officially label China a currency manipulator, and
- Instruct the U.S. Trade Representative to bring trade cases against China, both in the country and at the WTO.
In a recent statement Trump is quoted as saying,
“China’s unfair subsidy behavior is prohibited by the terms of its entrance to the WTO, and I intend to enforce those rules and use every lawful presidential power to remedy trade disputes if China does not stop its illegal activities, including its theft of American intellectual property – including the application of tariffs consistent with Section 201 and 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962.”
On the other hand, during Hillary Clinton’s time as Secretary of State, America’s trade deficit with China soared by 40%. As the chief Statesman under Obama, Hillary Clinton stood by idly while China cheated with its currency, added a trillion dollars to our trade deficits, and stole hundreds of billions of dollars in our intellectual property.
While Clinton has done nothing nor proposed anything that will return the rule of law to international trade, Trump has made direct statements on how to address the issue. At a recent rally, Trump stated,
“Ladies and gentlemen it’s time to declare our economic independence once again, withdrawing the United States from the Trans Pacific Partnership, I’m going to appoint the toughest and smartest trade negotiators to fight on behalf of American workers, [and] direct secretary of congress to identify every violation of trade agreements a foreign country is currently using to hurt American citizen.”
With Trump, America will remain the world’s leading nation. With Clinton, we can foresee the trade deficit increasing while furthering American losses. Under a Clinton presidency, we can expect the bottomless pit of dumping money down a well and seeing it spring-up half way around the word in China.