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Currency Imbalances: China’s Problem or Ours?


Currency Imbalances: China’s Problem or Ours?

By Susan Ozawa

Leading economists gathered at an EPI event today to discuss our trade deficit and labor problems caused by our imbalance with China. The conversation centered around how this imbalance can be solved by compelling China to appreciate its currency. Leo Gerard, the President of the United Steelworkers, did address domestic strategies to approach these problems, however, the central perspective of the panel appeared to view structural imbalances as a bilateral problem to be addressed through foreign policy.

I would broaden the conversation to consider this problem a historically multilateral problem of currency coordination, exacerbated by the neoliberal model of development and highlight our role in addressing these long-standing issues in both foreign and domestic policy. The dollar has fallen significantly since the recession began however, there are different domestic strategies we should pursue to address our structural trade deficit and lack of competitiveness. Looking forward, a new Bretton Woods, particularly the establishment of an International Clearing Union should be reconsidered alongside the neoliberal model of growth and development to address the international issues underlying these imbalances.

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