Renminbi is to blame for US woes, Financial Times

Published: December 14 2009 02:00 | Last updated: December 14 2009 02:00

From Mr Dan DiMicco.

Sir, The article “Alcoa says weak dollar is bad for US industry” (December 6) highlights a number of concerns about the state of the US dollar that are making the rounds today.

However, when you look closely at the data, you will find that the dollar is not weak on a trade- weighted basis when compared with the 1990s.

In fact, the dollar is stronger today than it was during most of the 1990s, which was a period of strong economic growth and lower trade deficits in the US.

Those who are concerned about the state of US industry and blame a weak dollar need to look elsewhere for the problem and the solution. The problem is China’s manipulated currency. China’s artificially devalued currency has decimated American manufacturing and driven up the US trade deficit over the past decade.

Chinese currency manipulation is having a negative impact on other countries as well. Since its currency is pegged to the dollar, a weaker dollar is making already cheap Chinese goods even cheaper. Simultaneously, the weak dollar is making European and Japanese goods more expensive in the US. By pegging its currency to the dollar, Chinese goods are gaining an additional competitive advantage over goods from our other trading partners.

What is good for American manufacturing is for China to end its manipulation and to revalue and strengthen its currency based on the strength of their economy.

Dan DiMicco,
Chairman and Chief Executive,
Nucor Corporation,
Charlotte, NC, US

http://www.ft.com/cms/s/0/32ca38de-e850-11de-8a02-00144feab49a.html