How does devaluation of Chinese currency affect the US? The world?

LCDR Private RallyPoint Member — Wed, 12 Aug 2015 12:45:12 -0400

China has devaluated the Yuan for a second day in a row. This has (probably) intended consequences as well as unintended ones. What are your thoughts?

http://www.nytimes.com/2015/08/13/upshot/the-more-chinas-currency-falls-the-more-it-looks-like-a-currency-war.html?_r=0&abt=0002&abg=0

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Response by SSG Trevor S. made Aug 12 at 2015 1:19 PM

SSG Trevor S. — Wed, 12 Aug 2015 13:19:03 -0400

We could seize the opportunity to pay a large portion of our debt at the currency exchange rate.

Response by SGT James Elphick made Aug 12 at 2015 1:31 PM

SGT James Elphick — Wed, 12 Aug 2015 13:31:57 -0400

It is my understanding that China is trying to make the yuan more attractive than dollars or the euro by keeping the price lower. In essence, as China grows, they want the yuan to become like the dollar or the euro. So for us it means that imports would be cheaper, for the Chinese, it means they lose some purchasing power in relation to the dollar.

Response by SGT James Elphick made Aug 12 at 2015 1:33 PM

SGT James Elphick — Wed, 12 Aug 2015 13:33:30 -0400

But apparently I may have been incorrect in my original post. Here is an article from Foreign Policy for a more in-depth look.

https://foreignpolicy.com/2015/08/11/china-currency-devaluation-global-race-to-the-bottom/?utm_source=Sailthru&utm_medium=email&utm_term=%2AEditors%20Picks&utm_campaign=2015_EditorsPicks_Aug11

Let the Global Race to the Bottom Begin

Why China's big currency devaluation is bad for it, for America, and for the world.

Response by SGT Jeremiah B. made Aug 12 at 2015 2:13 PM

SGT Jeremiah B. — Wed, 12 Aug 2015 14:13:46 -0400

We live in a globalized economy. That's been one of my major beefs with the whole political conversation that's happened over the last 6-8 years. The US economy no longer stands or falls on its own merits. A Chinese currency collapse would have problems for us all over the place.

That said, it may actually be a good thing long-term. China tightly controls its currency (bad thing) and this is a sign that they're MAYBE going to start letting their economy grow and shrink without constant direct intervention.