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Brave new world: China expert in the lion’s den
The category is: The Bravest Man to Address a Furniture Industry Group.
And the winner is: Albert Keidel!
You may not have heard of Mr. Keidel, who is a fellow at the Carnegie Institute and a former Treasury Department official. Our Larry Thomas had not heard of him, either, until he popped up on the agenda at a recent American Home Furnishings Alliance Finance Division meeting.
The fearless Mr. Keidel used that unlikely setting to deliver a message that many people in the furniture industry don’t believe: China’s currency is not a real issue in U.S.-China trade relations.
But not stopping there, Mr. Keidel said that calls for China to revalue its currency are misguided and would do little to help China’s trade imbalance with the U.S. And, for good measure, he asserted that currency revaluation is a “total red herring” that could slow the influx of capital into China and could curtail Chinese purchases of U.S. Treasury Securities.
He also said the U.S. needs to boost its productivity and technology.
Mr. Keidel is an expert on the Chinese economy, Thomas noted in our recent story on his talk, which was in our June 25th issue. When I think about the chorus of criticism that I have heard from U.S. producers about the unfairness of China’s currency policies, it is shocking to think about Mr. Keidel taking his message to an AHFA event.
I don’t mean to imply that he should have been rudely received; we are an unfailingly polite industry when it comes to our meetings. But his message is so far removed from the conventional wisdom in many domestic quarters of the industry that he must be one brave man to share those views.
Now is he right and are the “China is cheating” guys wrong? Hey, I’m not an economist and I don’t know. But I do know that is healthy for industry groups to get a broad range of opinions on the issues. Kudos to AHFA for putting Mr. Keidel on its agenda.
Undetermined commented:
I think let the yuan trade freely on world markets would be better.The unexpected change often brings the unexpected consequence. Boosting U.S. exports to China is the right step to narrow the trade gap. China exports millions of pairs of jeans, or millions of boxes toys in exchange for an airplane. If the U.S. government allows more high-tech products to be exported to China, the trade imbalance could easily be improved. Demand for many US products in China are very strong,but there are few, if any, effective methods for US SMF's to access Chinese buyers and meet the demand. www.acb2b.cn. which attracts a large number of Chinese importers and distributors looking for American products to import to China. Together with AmeriChinaB2B's recently launched keyword advertisement services or Baidu.com. AC-Baidu, AmeriChinaB2B provides the most effective marketing and sales online platforms for US SMFs to find buyers, distributors and sales representatives in China. Welcome to AmeriChinaB2B(www,acb2b,com) to begin your business trip of China.
Undetermined commented:
I think it is absolutely unforgivable that our politicians have given away our used to be great nation!China and other foreign countries own the USA.All manufacturing plants have moved there,we do not even have a factory to produce rubber anymore,our food is imported!When are the people going to wake up!!!!!it is a tragedy for our future generation,No jobs,No enterprise,No pride!...there is virtually nothing made in the USA,and that is a terrible terrible legacy to leave our children.
Undetermined commented:
Neil: Thanks for that post. You make some great points, especially about the U.S. industry not taking a long-range view. Short-term thinking will get you, in the long term. -Dave
Undetermined commented:
Sorry...I spelled Mr. Keidel''''''''s name wrong in my response..
Undetermined commented:
I''ve read some of Mr. Kiedell''s articles, and his observations are from a good macro base of factors. Though, China''s effect on the world marketplace is still an evolving situation. For instance, the factors of their trade balances with Europe and the rest of Asia are now changing. The good points that he makes are 1) Capital inflows (rather than trade) is a significant factor, and 2) The USA has to focus more on increasing worker productivity through capital investment here (new factories, machinery and equipment). Looking at the effect China has had on the furniture industry here, one has to remember what has happened in this industry. Like many other businesses, the focus became too focused on short term profits. And, the low costs of production (in China and other countries) looked very attractive to management of many companies. But, they were not looking at the long term effects, which is becoming obvious now, from their financial statements. And, though it is true that some of the poor results stem from the marketplace - There are also logistical, production and other factors that stem from shifting production to the low wage countries. For the furniture industry itself (and other industries here), of course a re-vaulation of China''s currency would help those producing here. But, as Mr. Kiedell, and the Chinese Government, feels - The re-valuation should be done in accordance to the overall economics. And, in all likliness, this is what will occur. The furniture industry (and others here) should look at re-bulding their production facilities here (with modernized equipment). And, as Mr Kiedell stresses - This will make the factories and workers here more productive and competitive.
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