What the value of the yuan means for California exports
Exports are key to the country's productivity, and any economic recovery will likely depend on U.S. exports picking up. That's according to Obama administration officials, at least. President Obama even launched a campaign in March to double U.S. exports over the next five years in the hopes of spurring job growth.
But in Southern California, whose exports are increasingly bound for Asia, growth isn't tied so much to U.S. policies as it is to China's. And a report released Thursday indicates that Chinese policy could lead to an increase in exports from the region.
This requires a little background. As you may know, the U.S. has been locked in a debate with China over the value of its yuan. The U.S. accuses China of devaluing the yuan to make its exports more affordable. That, in turn, makes American goods more expensive, and thus less attractive to Asian markets, the U.S. worries.
But an international trade forecast from Cal State Fullerton predicts that the dollar will begin to depreciate 4% to 5% per year, and the yuan will appreciate 3% to 4% a year, increasing demand for American high-tech exports.
"We forecast China will allow its currency to fluctuate narrowly, which will help U.S. exports dramatically," said Mira Farka, a CSU economist who compiled the forecast with economist Adrian Fleissig.
That helps both Orange County, which is forecast to export $4 billion worth of computer and electronic products in 2012 (up from $3.6 billion in 2008), and Los Angeles County, which is forecast to export $12.8 billion worth of those products in 2012 (up from $11.6 billion in 2008).
Other nuggets from the report: Transportation equipment is the top export by value in both Los Angeles and Orange counties, followed by computer and electronic products, miscellaneous, chemical, machinery, petroleum and coal products, and food.
-- Alana Semuels
Photo: A Chinese container ship. Credit: cliff1066 via Flickr