1. college crap.... yes. my school had a sino soviet institute in the 80s and some of my econ professors were interesting. 2. in my early years as a lawyer my law partner spoke a few dialects and I learned a bit from him. I watched him spend a few years cultivating relationships which at that time always screwed him the first chance they had to take his buck or his time. I learned all about having to include a major or a general for protection from the army, I reviewed all sorts of piece of shit import export agreements. I reviewed quite a few contracts where clients never got paid. But all this was in the 90s before wal mart became huge.
China did not trade out of dollars is because all other options sucked. Euro is useless, Gold is useless. Oil is the same as dollars so no point losing money on transaction fees. The more dollars they have, the more leveraged options they have on the world scale. And if it happens to fuck everybody over, then so be it. But generally if everybody wins, then that's the ideal route. You've seen it first hand before. Because they can. All this crap about undervalued currency is a waste of time. The US has given them Money, Industries, Power, everything. And now they want some of it back. It's not going to happen, the only option is to keep kicking the can down the road and see what happens next.
this may have appeared earlier on this thread... but I think this sums it up pretty well.... just posted on another thread... "... China's worst abuse involves its undervalued currency and its promotion of export-led economic growth. The United States isn't the only victim. China's underpricing of exports and overpricing of imports hurt most trading nations, from Brazil to India. From 2006 to 2010, China's share of world exports jumped from 7 percent to 10 percent. One remedy would be for China to revalue its currency, reducing the competitiveness of its exports. American presidents have urged this for years. The Chinese acknowledge that they need stronger domestic spending but seem willing to let the renminbi (RMB) appreciate only if it doesn't really hurt their exports. Thus, the appreciation of about 20 percent permitted from mid-2005 to mid-2008 was largely offset by higher productivity (aka, more efficiency) that lowered costs. China halted even this when the global economy crashed and has only recently permitted the currency to rise. In practice, the RMB has barely budged. How much the RMB is undervalued and how many U.S. jobs have been lost are unclear. The Peterson Institute, a research group, says a revaluation of 20 percent would create 300,000 to 700,000 U.S. jobs over two to three years. Economist Robert Scott of the liberal Economic Policy Institute estimates that trade with China has cost 3.5 million jobs. This may be high, because it assumes that imports from China displace U.S. production when many may displace imports from other countries. But all estimates are large, though well short of the recession's total employment decline of 8.4 million. If China won't revalue, the alternative is retaliation. This might start a trade war, because China might respond in kind, perhaps buying fewer Boeings and more Airbuses and substituting Brazilian soybeans for American. One proposal by Reps. Tim Ryan, D-Ohio, and Tim Murphy, R-Penn., would classify currency manipulation -- which China clearly practices -- as an export subsidy eligible for "countervailing duties" (tariffs offsetting the subsidy). This makes economic sense but might be ruled illegal by the World Trade Organization. A House committee last week approved this approach; the full House could pass it this week. Ideally, congressional action would convince China to negotiate a significant RMB revaluation. Less ideally and more realistically would be a replay of Smoot-Hawley, just when the wobbly world economy doesn't need a fight between its two largest members. Economic nationalism, once unleashed here and there, might prove hard to control. But there's a big difference between then and now. Smoot-Hawley was blatantly protectionist. Dozens of tariffs increased; many countries retaliated. By contrast, American action today would aim at curbing Chinese protectionism. The post-World War II trading system was built on the principle of mutual advantage, and that principle -- though often compromised -- has endured. China wants a trading system subordinated to its needs: ample export markets to support the jobs necessary to keep the Communist Party in power; captive sources for oil, foodstuffs and other essential raw materials; and technological superiority. Other countries win or lose depending on how well they serve China's interests. The collision is between two concepts of the world order. As the old order's main architect and guardian, the United States faces a dreadful choice: resist Chinese ambitions and risk a trade war in which everyone loses; or do nothing and let China remake the trading system. The first would be dangerous; the second, potentially disastrous. Copyright 2010, Washington Post Writers Group"" http://www.realclearpolitics.com/ar...ina_107310.html
I had a radical thought. America should use Russia or India as a escrow for all imports from China. i.e China should route all its exports via Russia or India to America.