China's Currency Distortion Affects U.S. Workers
MARY LOUISE KELLY, Host:
In the meantime, lawmakers like Ohio Democrat Tim Ryan are saying things like Chinese currency distortion is putting a lot of Americans out of work. And if you're wondering what a decision by the Central Bank of China has to do with workers in Ohio, we have an explanation from Alex Blumberg of our Planet Money team.
ALEX BLUMBERG: Here's one - a guy named Emron Kareem(ph).
EMRON KAREEM: My business is called Trophy Skin. We produce medical devices that treat skin conditions using light therapy.
BLUMBERG: Picture a medical-looking lamp with a blue light that kills acne bacteria. Kareem has his lamps manufactured in China at a factory he found online. Every couple of months he wires the Chinese factory money for a new order - American money.
KAREEM: They always quote in U.S. dollars. I found that across pretty much every supplier that I've worked with.
BLUMBERG: Kareem is not the only person in America wiring dollars to Chinese factories. No, no, no. Every day thousands of American companies send billions of dollars to Chinese suppliers. And what we're interested in - what happens to those dollars when they get to the Chinese factories?
LOUISE KELLY: Paul Wachtel at New York University's Stern School of Business.
PAUL WACHTEL: Those Chinese factories need to buy electricity. They need to pay their labor. They've got to pay for transportation. But if they're operating, obviously, in the Chinese economy, they need to do it with the local currency. So they take those dollars and they buy Chinese currency.
BLUMBERG: Except that the supply isn't constant, and this is where the manipulation comes in. Someone is increasing the supply of renminbi. Who has the power to do that?
WACHTEL: The Central Bank of China. Whenever it sees the value of the currency beginning to rise, they're ready and willing to supply the renminbi to make sure the price doesn't increase.
BLUMBERG: Again, Paul Wachtel.
WACHTEL: China should be importing more, which would increase exports from developed countries like the United States, and the lead the robust growth evenly around the world.
BLUMBERG: For NPR's Planet Money, I'm Alex Blumberg.
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