Changes in the value of the renminbi (yuan) will be gradual, China’s central bank said Sunday, according to The New York Times. If the Chinese currency rises, could this spell the doom of Walmart—the world’s largest retailer that’s chock full of Chinese-made goods?
Walmart’s motto is “Always low prices.” But if the Chinese currency value rises against the dollar, then the cost of Chinese imports will rise, translating into higher retail prices. Low income and lower middle income America might not be so happy with that. Walmart says, “Save money. Live better.” Others in the world don’t live as good as we do in America, but in a tough economy, millions of people want more jobs in the United States.
The People’s Bank of China says it will “keep the renminbi exchange rate at a reasonable and balanced level of basic stability, and safeguard macroeconomic and financial market stability.”
But that might not be enough for some members of Congress who want faster changes in the valuation of Chinese currency. Senator Charles E. Schumer, a New York Democrat, says he’ll move forward with legislation to put some restrictions on Chinese exports, The New York Times reports.
Some economists believe that China will allow the renminbi to inch higher against the dollar by no more than 3 percent by the end of this year. The renminbi has already increased in value 15 percent against the euro over the past two months, thanks to serious problems in the European economy.
What do you think? Is the Chinese currency valued correctly? Or does the Chinese government keep its value low to keep the price of exports low? Should the Chinese currency be valued higher? Or should the cost of Chinese exports remain low?
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