The United States is telling other countries that it's willing to make a simple bargain. We'll reduce our deficit and stop flooding the world with dollars if other countries promise to raise their currencies to give their citizens more buyer power, which will help close global trade imbalances. We get lower deficits and lower trade deficits. Other countries get buying power in the world economy. Sounds easy right?
Well, not everybody is going along with this plan because not everybody shares our interest in correcting these trade imbalances, especially vis a vis China. To wit:
Seven G-20 nations have trade surpluses with China - countries such as South Korea that sell half-finished manufactured goods for assembly in China, and exporters of raw materials such as Australia and Saudi Arabia that supply China's oil, minerals and other commodities. Those nations agree on the need for more balanced global trade but also benefit from China's export power.
There's also a confluence of interests between Germany and China. They both have economies that generate large trade surpluses and hope to keep it that way.
Read the full story at the Washington Post.
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