Issues created by the crisis within Sino-US Conflicts:

Dear Readers,

(Sources: theoldspeakjournal)

According to an unofficial interview made with a deputy of city group based in Shanghai, since the subprime crisis and the crash of Lehman Brother, the Chinese government and PBOC (People Bank Of China) has bought T-bills, treasure Bills in order to consolidate his reserve, inside the capital account, therefore china has become the owner of the biggest reserve of the world (Kolesnikov-Jessop and Foroohar, Newsweek, 2010). According to an economist blog (economicshelp.org), China, without his actual GDP growth, could dramatically depreciate US dollar and therefore decrease the USA balance of Payment, by making his spending inside imports increasing, according to a deputy of city group based in Shanghai and over the world by related effect due his liquidity’s power, needed inside a shortage of liquidity by others riches countries. However, china also has a huge link within interdependency because the actual growth of Chinese is held by his external export; Chinese became at the end of 2009 the biggest exporting country after dethroning Germany, according to the BBC, “the exports value of china in 2009 was around 1 trillion of dollars”.(BBC website) In paradox the China is hold the pressure from outside more specifically with the Europe and United States of America pressure because the actual growth inside china due to low expansion on the weak part of china in the non coastal zone such as Tibet (China.org.cn).

The actual pressure, which is the main concern of the present, and analyse actually by all economist and professionals of the world, is about the exchanges rates of the RMB and the value which is about 1USD equals 6.6645 Yuan, (according to Forex website), and within a theory principle, “the currency of the country has to be based on the quota of the reserve hold by country, is the value of the invisible balance inside balance of payment, in other word the (deficit or)surplus of the exports and imports, is  positive the money has to be appreciate”, that why western countries push the PBOC to revaluate the Yuan (P. Tadaro, Smith, 2008).

The reason on the western size will be to push the exports inside China by making the price of foreign products cheaper and push the competitiveness of those companies, and also inside the western countries making the Chinese products more expensive. On this other hand the Chinese government has mentioned before by the BBC want to improve the internal competitiveness by push the price at the same level (hold back hyper inflation) in order to against three majors’ points, according to my opinion: (Sino-US Relation)

- “Possible lost of competitiveness of Chinese companies

- Destabilized the invisible balance

- Possible increasing of the unemployment rate, leads to increasing huge amount of investment by the government” (“such as creation of organisation like “man power”) (“Le point” magazine)

The Newsweek magazine pinpoints and emphasis those facts mentioned before by using “intensive protectionism policy”. The terms protectionism, according to a website is a “The doctrine or practice of restricting international trade to favour home producers, by tariffs, quotas, or (most frequently in modern times) by non-tariff barriers such as requiring and example, all Japanese video-recorders imported to France to be cleared through a small customs shed in Poitiers.”(Foreign policy website) In the same connotation, the Chinese government is using tariffs, taxation on imports making the price of the foreign goods more expensive. However the meanings of those techniques have others reasons, which do not need to be shown on this paper.

Secondly, china is using mass investments in order to maintain the equilibrium balance on the balance of payment (in this case in surplus), again in the purpose of controlling the value of the RMB, or Yuan over the dollars. Then those historical and recent facts lead to show the negative size of making international fair in danger, by using protectionism against the Adam smith theory, “invisible hand”. In order to appease the situation the actual administration of Obama and European leaders with the actual Chinese government try to find out better options. More intensively, due to a pick of conflicts between them, internationals leaders met, for example the European leaders Sarkozy and Merkel visit the Chinese government, in 16^th and 17^th of June 2010. Also, in terms of protecting the international atmosphere the WTO and the IMF are working independently to conciliate those international biggest economies. Nevertheless, the issue again is those two internationals organizations “controlling economic conflicts are very westernizes”, and may not be accurate. (James Gerber, 2010) The other point, the paper need to clarify is the term international relation is according to Kornberg and Faust, in 2005 say that: “Study of the relations of states with each other and with international organizations and certain sub national entities (e.g., bureaucracies and political parties). It is related to a number of other academic disciplines, including political science, geography, history, economics, law, sociology, psychology, and philosophy. The field emerged at the beginning of the 20th century largely in the West and particularly in the U.S. as that country grew in power and influence. The study of international relations has always been heavily influenced by normative considerations, such as the goal of reducing armed conflict and increasing international cooperation. At the beginning of the 21st century, research focused on issues such as terrorism, religious and ethnic conflict, the emergence of substrate and non-starter entities, the spread of weapons of mass destruction and efforts to counter nuclear proliferation, and the development of international institutions.”

Therefore what will be the issues of the conflicts in the future?

The future according to my opinion will need to tend for a reform of the Regional Agreement and the other institutes, such as WTO and IMF to give a better balanced position. Due to the fact that the protectionism and all economic conflict will need to increase the influence of those international in order to effectively solve all entry barriers (in MNE’s) destroy the relation between firms and the competitiveness of those, also in order to solve the actual financial and economic current situation.