The dollar value of Chinese apparel exports to the UK fell 9.7% year on year in the six months after Britain’s June 23 referendum on EU membership, after increasing 2.8% in the previous six months
Donald Trump announced on January 14 his abandonment of a central campaign pledge about China.
Just about every apparel industry commentator on the planet is constantly going on about rising cost prices. But do any of them look at what buyers are paying?
The Indonesian rupiah has devalued 16% against the US dollar in the past year. Which is worrying Indonesian retailers.
Trade association, unhappy at euro’s “21% devaluation” wants its government to “support the industry by keeping currency at realistic value to mitigate the impact of high cost of doing business for maintaining competitive advantages.”
Apparel and textile vendors in India’s Tamil Nadu started complaining in public on March 11 about falling income from European contracts, after the Euro fell 12.5% against the Indian rupee.
…but key website predicting likelihood of legislation being passed gives it a 1% chance of making it into law.
The US Treasury twice a year analyses other countries’ policies on their currencies and solemnly declares the Chinese government is interfering with its currency’s values, but not so scandalously it should be called a “manipulator” – which would force the US President to say things the Chinese might get upset about.
Will calling China a currency manipulator let an American government slap new tariffs on China?
Does all the fuss about currencies really matter for the world garment trade?
Since the middle of the decade, we’ve had a series of fashionable theories, first voiced by consultants, then taken up by the media and finally parroted by every politician. And never reflected in how garments were bought and sold. Now it looks as if “Currency Wars” are the latest in a long line of fads whose time never seems to come.
The likely increase in the value of the Chinese Yuan may well be the most over-rated issue in the world garment trade since commentators seriously argued that Bird Flu would make exports from China impossible.
China’s currency is likely to appreciate against the US dollar about 5% between mid-June 2010 and summer 2011. So common sense implies garment prices will go up 5%: even customers in the Eurozone negotiate most of their Chinese contracts in US dollars, so many people assume the currency appreciation will just pass itself straight on. But that belief misses three crucial points.
America’s backing down from confrontation with China over currency management almost coincided with its agreeing to work with Brazil on a solution to the anger its cotton subsidies are causing.
Both disputes – like America’s handling of anger among its NAFTA partners over bans on foreign trucks and foreign manufacture of airport security uniforms – demonstrate an important principle of international trade that’s discussed far too rarely.
The louder people shout about China and its undervalued currency, the harder you have to think about why it matters – at least in the garment industry.
US politicians are getting crosser and crosser about how China’s being a very bad girl in the way it treats its currency. And they think someone should jolly well do something about it. Just as the Europeans were saying a few weeks ago. Though, looking at their proposals, I’m not that sure just what it is they want someone to do.
The President Obama speaking about trade with China on February 3 was a very different man from the one who promised to be tough on Chinas while campaigning for office.