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US-China Tensions

18 minutes
First broadcast:
Monday 03 October 2011

"The jig is up", says one American Senator to China: "revalue your currency or face the consequences."

During economic downturns there tends to be a rush to erect trade barriers as countries blame the unfair trade practices of others for the problems they've got at home.

Today Business Daily asks whether that is what is happening in the US where the senate wants to introduce legislation this week that would make it easier to punish China for undervaluing its currency?

This dispute has been rumbling on for years. The US claims that China has been been keeping the yuan relatively low against the dollar making Chinese goods cheaper in the US, thereby undercutting American companies and costing America jobs.

Over the last year China has allowed its currency to appreciate. But it doesn't seem to be enough for America's politicians who are trying to combat an unemployment rate of over 9% and are facing a presidential election in just over a year's time.

But would they really be willing to risk a trade war over the issue? We hear from the BBC's economics correspondent Andrew Walker and Justin Rowlatt interviews Dr Xiaobing Wang, a lecturer in economics at the University of Manchester.

Some people argue that these debates over currencies rather miss the point. They argue that America shouldn't be trying to compete with the Chinese on cheap manufactured goods anyway.

Rich, developed economies with a highly educated and skilled workforce should be producing high end products. On that argument the way to stay ahead in the global economy isn't to squabble about relative exchange rates but to ensure your workforce has the skills it needs.

So how can countries do that? Justin Rowlatt speaks to Laurent Thibault, the treasurer of WorldSkills London 2011 - an international skills competition in which young people from across the globe compete to be the best in their chosen skill.

Plus Lucy Kellaway on why companies shouldn't bother to try and justify vast bonus payments to their top staff.

  • 'Absurd and wrong' to blame China for US woes

    'Absurd and wrong' to blame China for US woes

    The US Congress is due to vote on measures which would penalise Chinese imports, as a row over the level of the Chinese currency threatens to reignite

    Watch Professor Xiang Songzuo on the BBC News website
  • China currency vote: US view

    China currency vote: US view

    The US Senate is preparing to vote on whether to raise duties on Chinese imports, with many politicians and businesses believing China is artificially keeping the value of its currency down to give it a trade advantage

    Watch Caroline Hepker's report on the BBC news website



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