NC/1NR Inherency #1—US Taking Steps to Solve Currency Manipulation

2NC/1NR Inherency #2—China not Manipulating

They say __________________________________________________, but

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1. 
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(it’s newer) (the author is more qualified) (it has more facts)

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and this reason matters because: ______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

1NC Harms (US Economy) Frontline

1. China’s currency manipulation has not negatively affected U.S. trade or unemployment.

Slaughter, January 2016 Matthew, Paul Danos Dean of the Tuck School and the Earl C. Daum 1924 Professor of International Business at Dartmouth College, Jan. 8, “The Myths of China’s Currency ‘Manipulation” http://www.wsj.com/articles/the-myths-of-chinas-currency-manipulation-1452296887
Second: Movements in the nominal yuan exchange rate have almost no long-term impact on global flows of exports and imports or on broader considerations such as average wages. The exchange rate that matters for trade flows is the real exchange rate, i.e., the nominal exchange rate adjusted for local-currency prices in both countries. The real exchange rate, in turn, reflects the deep forces of comparative advantage such as technology and endowments of labor and capital. These forces drive trade regardless of monetary policy. Think about the companies involved in trade. Yuan depreciation tends to be partly offset by Chinese companies raising their yuan prices. A large academic literature has repeatedly found that profit competition among a country’s exporting companies typically undoes about half of that country’s nominal exchange-rate swings. Today more companies operate in global supply networks—in which trade and investment link different stages of production across different countries. Because these networked companies incur both revenues and costs in many currencies, their trade competitiveness tends to vary little with the movement of any one currency. Long-term movements in nominal exchange rates often have nothing to do with the evolution of global trade flows. In the generation after the Bretton Woods system dissolved, the dollar steadily depreciated against the Japanese yen, from its fix of 360 yen per dollar to an average of just 94 in 1995. Over that time did the U.S. swing into a massive trade surplus with Japan? No. From $1.2 billion in 1970 the U.S. trade deficit with Japan rose by a factor of 50, to $59.1 billion in 1995. From 2004 to 2014 the dollar similarly depreciated—note, not appreciated—against the yuan by about 25%. Over that decade the U.S. trade deficit with China soared—not fell—from $161.9 billion to $342.6 billion.

2. No Impact: The U.S. and global economy are resilient.

Behravesh, 2006 Nariman, most accurate economist tracked by USA Today and chief global economist and executive vice president for Global Insight, “The Great Shock Absorber; Good macroeconomic policies and improved microeconomic flexibility have strengthened the global economy's 'immune system.'” 10-15, http://www.newsweek.com/id/47483
The U.S. and global economies were able to withstand three body blows in 2005--one of the worst tsunamis on record (which struck at the very end of 2004), one of the worst hurricanes on record and the highest energy prices after Hurricane Katrina--without missing a beat. This resilience was especially remarkable in the case of the United States, which since 2000 has been able to shrug off the biggest stock-market drop since the 1930s, a major terrorist attack, corporate scandals and war. Does this mean that recessions are a relic of the past? No, but recent events do suggest that the global economy's "immune system" is now strong enough to absorb shocks that 25 years ago would probably have triggered a downturn. In fact, over the past two decades, recessions have not disappeared, but have become considerably milder in many parts of the world. What explains this enhanced recession resistance? The answer: a combination of good macroeconomic policies and improved microeconomic flexibility. Since the mid-1980s, central banks worldwide have had great success in taming inflation. This has meant that long-term interest rates are at levels not seen in more than 40 years. A low-inflation and low-interest-rate environment is especially conducive to sustained, robust growth. Moreover, central bankers have avoided some of the policy mistakes of the earlier oil shocks (in the mid-1970s and early 1980s), during which they typically did too much too late, and exacerbated the ensuing recessions. Even more important, in recent years the Fed has been particularly adept at crisis management, aggressively cutting interest rates in response to stock-market crashes, terrorist attacks and weakness in the economy. The benign inflationary picture has also benefited from increasing competitive pressures, both worldwide (thanks to globalization and the rise of Asia as a manufacturing juggernaut) and domestically (thanks to technology and deregulation). Since the late 1970s, the United States, the United Kingdom and a handful of other countries have been especially aggressive in deregulating their financial and industrial sectors. This has greatly increased the flexibility of their economies and reduced their vulnerability to inflationary shocks. Looking ahead, what all this means is that a global or U.S. recession will likely be avoided in 2006, and probably in 2007 as well. Whether the current expansion will be able to break the record set in the 1990s for longevity will depend on the ability of central banks to keep the inflation dragon at bay and to avoid policy mistakes. The prospects look good. Inflation is likely to remain a low-level threat for some time, and Ben Bernanke, the incoming chairman of the Federal Reserve Board, spent much of his academic career studying the past mistakes of the Fed and has vowed not to repeat them. At the same time, no single shock will likely be big enough to derail the expansion. What if oil prices rise to $80 or $90 a barrel? Most estimates suggest that growth would be cut by about 1 percent--not good, but no recession. What if U.S. house prices fall by 5 percent in 2006 (an extreme assumption, given that house prices haven't fallen nationally in any given year during the past four decades)? Economic growth would slow by about 0.5 percent to 1 percent. What about another terrorist attack? Here the scenarios can be pretty scary, but an attack on the order of 9/11 or the Madrid or London bombings would probably have an even smaller impact on overall GDP growth.

3. Domestic consumer practices have a bigger impact on the health of our economy.

Suranovic, 2012 Steve, Ph.D., faculty member at the George Washington University since 1988. He has served several terms as the current Director of the International Trade and Investment Policy M.A. program at the Elliott School of International Affairs, The Institute for International Economic Policy, “Should the US Retaliate against China’s Currency Manipulation?” http://www.internationaleconpolicy.com/international-finance/should-the-us-retaliate-against-chinas-currency-manipulation/
For starters, China has not actively lowered its currency value. Like many other U.S. trading partners, China has adhered to a fixed currency regime for over two decades. To maintain that fixed rate, and because of high demand for the yuan during the past decade, China’s central bank has purchased over a trillion dollars of currency reserves that are invested mostly in U.S. treasuries. These actions by China’s central bank are what Romney and others refer to as currency “manipulation”. However, this characterization overlooks three important things: first, a fixed currency regime is not unique to China; second, the yuan has been appreciating against the dollar for almost a decade; and third, currency appreciation does not automatically eliminate trade deficits. According to the International Monetary Fund (IMF), over 100 countries have some form of a fixed exchange regime. Thus, it is misleading to single out China as a currency manipulator when other U.S. trading partners engage in the same practice. Regardless, China has adopted a crawling peg system, which permits the central bank to periodically adjust the yuan with respect to the dollar. Since 2005, the yuan has appreciated by 23 percent in nominal terms. Taking into account inflation, that number increases to almost 50 percent. To put a nearly 50 percent appreciation into context, as well as provide a historical touchstone, Congress proposed legislation back in 2005 that would slap a 27.5 percent tariff on all Chinese imports. Why 27.5 percent? At the time, this was estimated to be the amount the yuan was undervalued. Fast-forward to today, the Chinese yuan has appreciated by almost twice that amount and the U.S. still has a trade deficit with China! One might argue that a 50 percent increase in the value of the yuan simply wasn’t enough to do the job. In this case, consider the 1980s when the U.S. faced worrisome trade deficits with Japan. Since the 1980s the yen has appreciated by 220 percent to the dollar and yet this has not prevented a sizeable US trade deficit with Japan in every year since. This evidence alone should give hesitation to anyone who thinks a simple currency adjustment will eliminate the trade deficit and create U.S. jobs. Trade deficits are influenced by much more than just the currency value; notably low U.S. savings and high consumption levels.

4. Solvency Turn- a trade deficit with China will actually improve long-term economic growth.

Lincicome, 2012 Scott is an international trade attorney, adjunct scholar at the Cato Institute and Visiting Lecturer at Duke University, January 20, “Almost Everything Donald Trump Says About Trade With China Is Wrong” http://thefederalist.com/2016/01/20/almost-everything-donald-trump-says-about-trade-with-china-is-wrong/
However, as I explained in The Federalist last fall, the U.S. manufacturing sector has been (until the last month or so) setting production (and export!) records, and almost 90 percent of the decline in U.S. manufacturing jobs between 2000 and 2010 was caused by productivity gains (robots and computers), rather than import competition. In fact, a recent Ball State study found that, “Had we kept 2000-levels of productivity and applied them to 2010-levels of production, we would have required 20.9 million manufacturing workers. Instead, we employed only 12.1 million.” So unless Trump wants to destroy all the robots, those jobs just aren’t coming back, tariff or not. Furthermore, the idea that the U.S.-China trade balance proves that we’re “losing” at trade is the height of economic ignorance. For one thing, there’s actually a strong correlation between U.S. economic growth and an expanding U.S. trade deficit. As Cato’s Dan Griswold wrote: An examination of the past 30 years of U.S. economic performance offers no evidence that a rising level of imports or growing trade deficits have negatively affected the U.S. economy. In fact, since 1980, the U.S. economy has grown more than three times faster during periods when the trade deficit was expanding as a share of GDP compared to periods when it was contracting. Stock market appreciation, manufacturing output, and job growth were all significantly more robust during periods of expanding imports and trade deficits. Moreover, basic economics teaches us that trade balances reflect national savings, consumption and investment, not trade policy. Thus, every dollar traveling overseas to buy imports (in excess of our exports) eventually comes back to the United States in the form of investment, and our “trade deficit” is matched by a “capital account surplus.” In other words, we buy goods and services from foreigners, and they buy an equal amount of our exports plus our financial assets (aka foreign investment in the United States).

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