Home > China, federal reserve, politics, World Issues > China RMB IS NOT UNDERVALUED!


There is rhetoric worldwide that states “China RMB is undervalued”. This is one of the scientific proofs that if you say a lie enough times, people will believe it. The truth is that China RMB is not undervalued. Chinese people are paying the same money for goods as the people in America and England. But hearing the politicians and bankers, you would never know that is true.

BBC said “It is a controversial topic. So controversial that Mr Lamy noted to general laughter that his briefing notes told him “to shut up” should the topic come up at Davos.

Still, he listed what everyone generally agrees on: The Renminbi is undervalued, should be “internationalised” (which means allowed to float freely).”

What this is really saying is that every western country wants China to simply inflate its currency so that their country’s debt lowers without any real work.

America is also guilty of wanting free money from China. Our Treasury Secretary is one of the biggest repeaters of this lie.

US Treasury Secretary Timothy Geithner complained Friday that China is still keeping the Renminbi below its fair value

Humans are simple animals. We so often ignore factual evidence and side on extreme beliefs. Even Nobel Prize winners fall into this trap.

The yuan’s undervaluation has become so considerable that economists now blame it for stifling the economic recovery and pushing us into a liquidity trap. Nobel laureate Paul Krugman has even urged the Treasury Department to formally label China a currency manipulator so the U.S. could then institute tariffs and other trade barriers without running afoul of the World Trade Organization.

What he is really saying is that if China did not fight the inflation of it’s currency, then the money traders of the world would push it up on speculation. If left unregulated by the China government, the currency would rush towards a 4 to 1 trading against the USD and crush the China economy in just a few months. So the Chinese government is protecting their people against the money traders in America and England, but why?

Lets forget the fact that China has already given up 25% of the RMB’s discount against the American dollar. Lets forget that every Chinese has lost 25% of their life savings against a currency in a country that has one of the lowest individual saving rates of any industrialized country. Lets look at the two main factors of a country’s currency value.

Factors: Income : Cost of goods

These are the only two things that matter in the world of true currency values. How much are Chinese workers making? What can their money buy? Is the price of good for them less than the price of their American counterparts?

Lets take a closer look…..

The wages in China are low for factory workers and entry level professionals. They are not the lowest in the world by any measure, but they are much lower than the United States. Entry level in the US is about $2000 per month take home pay and entry level in China is about $500 take home pay.

Price of goods is equal, and sometimes more expensive in China than the American counterparts.

Buying a home in China : More expensive than the US
Buying a car in China : More expensive than in the US
Buying meat : Beef more expensive : Chicken and pork a little cheaper.
Buying fruits in China : Same prices as USA
Buying vegetables in China : a little cheaper than the USA
Buying clothes and shoes : same prices as in USA
Buying a vacation trip or international flight : same price as in USA
Buying books, technology, phones, computers etc: Same price as in the USA

The PRICE IS THE SAME. The people are paying the same amount of money for goods! They are earning LESS money per month, and spending the same amount of money for the same goods. How could anyone think that the currency is undervalued??????? It is completely insane thinking.

So how to Chinese people do better at saving than their American counterparts?

1) They commute with public transportation instead of owning a car.
2) They rent or combine income with all family members to buy a home.
3) China government has sensible home buying mortgage programs.
4) Health care is affordable even at their salaries and many companies offer health insurance at no cost to their employees.
5) Restaurants offer many simple noodle and vegetable dishes for only $2 or $3.

These combined variables add up to a similar standard of living (just not as much space taken up per person, or beef consumed per person) as other industrialized countries. But this standard of living depends on the value of the RMB to remain stable and equal to other currencies.

If American and England get their way, Chinese people will be paying 50% more for foods, cars, clothing and homes (based on the price of each item per $) That is why the Chinese government is standing in the way. It is protecting its own people from the speculative trading habits of international money traders and fraudulent organizations like The Federal Reserve in the United States.

I am an American, but seeing the prices Chinese people pay, first hand, I know that my country is running a scam against the Chinese government and I want to make them stop.

The RMB (Renminbi) is properly valued now….IF NOT A LITTLE OVERVALUED….according to the price index of goods and services paid by the people of China. Get that through your thick head Geithner!

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