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The Invisible Manipulator of Global Trade: How Currency Manipulation Affects Your Life
In the globalized market, currency manipulation has become an important issue in the economic policies of various countries. The U.S. government has from time to time accused certain countries of engaging in "unfair monetary policies" to gain trade advantages, especially at a time when the trade deficit is growing. This operation not only affects the pattern of international trade, but also has a profound impact on the lives of ordinary people.
Currency manipulation refers to a country intervening in the foreign exchange market to influence the exchange rate of its own currency against other currencies, further affecting trade and economic policies.
The U.S. Treasury Department regularly reviews foreign exchange policies under the Comprehensive Foreign Trade and Competitiveness Act of 1988. They call countries that manipulate the exchange rate of the US dollar "currency manipulators," so that these countries may face trade sanctions or restrictions on participating in US government procurement contracts.
When designated as currency manipulators, countries can be subject to "remedial measures" pushed by the United States, which can include higher import tariffs or bans on transactions through specific trade channels.
The United States' currency manipulation policy is mainly aimed at countries that have trade surpluses and have significant trade impacts on the United States. For example, countries such as China, South Korea and Taiwan have been listed as currency manipulators by the United States many times in history. Especially in the context of the trade war, such accusations have become more frequent, increasing trade tensions.
In addition, currency manipulation is not only an action against foreign countries, but also exposes the United States to internal conflicts. For example, Washington accuses other countries of manipulating exchange rates to boost exports, but ignores the quantitative easing policies and market interventions implemented by the United States itself after the financial crisis.
The quantitative easing policy is intended to promote economic growth, but its essence may also be regarded as a form of currency manipulation, which is an obvious double standard problem.
The impact of currency manipulation on the manufacturing industry is particularly significant. Taking China as an example, according to a research analysis, local monetary policy policies directly led to a reduction in the labor force in the US manufacturing industry. In addition, depending on the proportion of manufacturing in a region, local legislators are more likely to call China a "currency manipulator" in the hope of protecting local economic interests.
A 2013 study showed that for every one percentage point increase in the local manufacturing workforce, the likelihood that a regional lawmaker would call China a currency manipulator increased by 19.6 percent.
Under the influence of the global epidemic, the trade deficits of many countries have widened, especially trade tensions with countries such as Switzerland and Vietnam continue to escalate. Many countries have proven extremely vulnerable in this economic crisis, which has further shaken financial markets around the world.
For example, the Swiss National Bank responded to the economic crisis with a series of intervention measures aimed at controlling the influx of foreign funds. The Central Bank of Vietnam also expressed the need to curb inflation and maintain macroeconomic stability through foreign exchange policy. U.S. Treasury officials hope to resolve frictions with these countries in the short term.
As the global economy enters a new period of adjustment, governments around the world may reconsider their monetary policies to maintain economic stimulus and stability. Under such circumstances, the discussion on currency manipulation may no longer be limited to trade frictions between certain countries, but will extend to deeper global economic structures and policy adjustments.
Behind these negotiations and changes, how will the lives of ordinary consumers be affected?
In the face of a potential crisis in the global economy, the debate over currency manipulation will become increasingly important. As countries strive to pursue their own economic interests, whether in terms of reducing trade deficits or growing their domestic economies, how will the effects of these policies be reflected in people's daily lives? This requires the attention and reflection of the entire world.
