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President Obama's meeting with President Hu Jintao right around the corner our next guest says that the US should tone down its rhetoric if they want to play -- if they want China to play nice.
Joining me now from Baltimore Maryland -- a Fox Business exclusive is -- nor the chief economist for Americas region.
Of you -- Hermes and we appreciate you being here Dan I look at this the war of words escalates just as.
We're supposed to have this big diplomatic meaning what does that.
Well I think you kind of have that leading up to any of these meetings for instance last week.
-- secretary Geithner came out and gave a speech which is exactly what you'd expect saying.
You know China did -- is -- way undervalued almost cheating.
Would you please let -- appreciate.
Sort of been rough terms.
And then the meeting itself will be a little bit nicer between the two presidents but the point is you can't really have success negotiating with the Chinese by saying in public.
You -- change from her you know you must do what we want you to do.
There's no way that are gonna accept that there aren't gonna seed at the end of this meeting President Hu Jintao commands say OK I guess you're right -- -- level at the -- appreciate.
I think you're right we will never see this but let's first explain to people how this works China boosts.
Its exports by unfairly.
Sort of under valuing their currency is so of course their products become cheaper to us so instead of buying -- -- products we buy their products.
That in and of itself is okay fine except that they want to be part of this global trade World Trade Organization and don't.
Have to play by the rules do they not understand that.
-- I think they do understand that and I think that's why you starting to actually see some very slow appreciation of the currency it's.
Something like 3% over the past few months and that's the way they're gonna do it again -- not admit up front how loud but they will let slide slowly.
Because they do know eventually it is in their own self interest.
To not run -- enormous trade surpluses.
And enormous budget deficits here in the states.
That eventually will make them port to the so they do need to come in line at some point.
They're just gonna do it at their own -- Well here's a quote because he didn't respond Hu Jintao did respond to some questions submitted to him by the Wall Street Journal and the Washington Post and here's the journal.
He said quote we both stand meaning US China we both stand to gain from a sound China US relationship.
And stand to lose from confrontation.
So that's sounds reasonable but then he goes on to say that for example the current international currency stance which is of course that the US dollar is the currency of of record.
Is quote the product of the past now that to me ill are fighting words.
Well yes it's a little bit indelicate I think really -- pointing to the future and saying.
You know we really -- have a strong position here we're going to be growing -- decades and we're gonna overtake the states.
At some points you know the US.
Dollar might not be the reserve currency anymore so you need to deal backs.
How does this affect people watching us right now ganymede and bring it home to the average investor who is wondering -- right so they're not.
They're not changing their currency at the moment they're not letting it really move with the rest of the world in a free market how does that affect the US.
Why I think -- a couple ways one that quite honestly there's some.
About Chinese and other countries stealing our jobs from so this kind of feeds fees that fire a little bit I'm afraid.
And it's it is true that they -- hurt our export position.
But there's no way that those American jobs lever come back from China and you have to realize got the flow goes the other way as well so we do have our benefits.
From trade from trading with China well but it's it plays in the populist.
Feeling a little bit there.
Well if they beat us and beat us fairly OK but if they're doing it unfairly I think that's where the issues start to and it's great to see -- thank you very much for joining us.
Thank you Dan north of -- -- --
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