Delaney on Dodson Chapter 8

In Bill Dodson’s China Inside Out he discusses many things about China, and in chapter eight the topic is about the Chinese Yuan. The Chinese Yuan is very undervalued in connection to the American dollar. It did not used to be this way, but as of right now “Peterson Institute for International Economics estimates that the yuan is undervalued by between 20 and 40 percent” (Dodson 161). Because the Chinese yuan is undervalued so much Americans have a cheaper means of buying certain products. For example a “Big Mac in America cost US$3.58 compared with the same Big Mac in China costing US$1.83” (Dodson 161). This exchange rate difference makes it more expensive for American companies to produce their goods in America and therefore entices American companies to outsource to places like China, providing more jobs in China. However, for the Chinese manufacturers this decreases the value of their product. This is all very important because, since the yuan is so undervalued it is much more costly for China to buy other places goods, such as America’s. This hurts America and China alike because Americans are buying Chinese products, that are really just American made in China and Chinese products are not being bought by anyone, but the Chinese.