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We all knew that China currency manipulation harmed trade, but its
always nice to get the government guys on the record saying it. I
don't have the link, so pasted Secretary Johanns Inside US-China Trade
story below the fold.
Inside US-China Trade
Date: September 5, 2007
USDA Report Says Chinese Currency Appreciation Could Boost U.S. Exports
A report released by the U.S. Agriculture Department on Aug. 22 found
that if China’s currency were to appreciate, prices for agricultural
goods would increase enough to attract more exports from the U.S.
Additionally, a more expensive yuan could reduce the competitiveness of
some of China’s agriculture exports, according to the report.
The report, published by USDA’s Economic Research Service, found that
the U.S. fruit and vegetable sectors suffer from the largest price
disparity compared to products grown in China, while Chinese exports of
those same products would suffer the most from currency appreciation.
For example, U.S. garlic costs more than 10 times what the average
Chinese consumer pays for garlic, according to the report.
Additionally, U.S. pears were found being sold in China at “about five
times the price of the most expensive domestic pears,” and U.S. apples
and red grapes were sold at prices well above their counterpart
versions, the report found.
The price disparity on such products makes the Chinese market less than
desirable for U.S. exporters and limits the purchasing power of Chinese
consumers for those products. If the yuan were to appreciate, the
report found, the Chinese market would receive more U.S. products and
the Chinese consumer would be more likely to purchase imported goods
due to the lower price.
The two largest U.S. agriculture exports to China, soybeans and cotton,
would also benefit from a more valuable yuan, as would wheat, according
to the report. These commodities are already sold at lower prices than
the domestic counterparts in China, and currency appreciation would
likely lead to more shipments. The price of some Chinese products, such
as corn, is close enough to the price of U.S. products that currency
appreciation may turn China into an importer of those products, the
report found.
The authors of the report said that Chinese officials would not move
quickly to allow their currency to appreciate “motivated in part by
farm income and food security concerns.”
“Currency appreciation would benefit Chinese millers, processors,
livestock producers and consumers by reducing raw material costs, but
Chinese farmers could be hurt by downward pressure on commodity prices
and farm income,” the report found.
The report noted that even with the undervalued yuan, the U.S. has an agriculture trade surplus with China.
CHINATRADE-7-35-4
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For non-major crops, I suspect that currency rebalancing would cause change--some that would be in US's favor and some (read a lot) that would not.