Last week, China devalued its currency (the Yuan) by a total of more than 4 percent against the U.S. dollar. Last Tuesday's drop alone of 1.9 percent was the largest daily decline since 1993 (22 years).
The move immediately made U.S. exports to China more expensive, and Chinese imports to the U.S. less expensive. The U.S./China trade deficit will worsen. Since many global currencies are either tied or correlated with the U.S. dollar, world impacts are similar.
China was desperate. Weaker exports, an economy that has slowed significantly, perilous drops in their stock market and related political risks encouraged the governing party to try a weaker Yuan. But global impacts are large and could be huge.
The Chinese devaluation caught everyone by surprise and could begin a currency war and global economic slowdown. Other countries may react by devaluing their currencies or enacting new tariffs. Any reduction in world trade slows the world economy.
The policy will cause some deflation and could even cause deflationary spirals. If buyers expect lower prices in the future, purchases are postponed, resulting in a drop in demand, which causes lower prices and profits, which cause lowered employment, investment and prices, which continues the cycle.
Hopefully, national and global economic policy-makers will act and react in a well-reasoned, intelligent and statesman-like manner to the surprise move by the Chinese government.
This world, including the economy, is filled with surprises. Some will be positive. Some will be negative. Some will present an unexpected joy. Some will be inconvenient or annoying.
Some surprises will be life changing. Others will be devastating. As citizens of the kingdom of God, how do we react to the unexpected? How should we react to surprise?
Many times when we get surprised with bad news, we do not know the reason. Job was blameless, upright, God fearing and avoided evil. The Lord had prospered him to the point he was the greatest of all the people of the East.
But suddenly, four messengers arrived with bad news. Before one had finished the next arrived. They told of the total loss of Job's oxen, donkeys, sheep, camels, servants and his 10 children due to four different causes.
Job had every opportunity to blame God. But his relationship was greater. He knew God.
"Then Job stood up, tore his robe, and shaved his head. He fell to the ground and worshipped. He said, 'Naked I came from my mother's womb, and naked will I return there. The Lord gave, and the Lord has taken away; blessed be the name of the Lord.' In all this Job did not sin, and he did not accuse God of wrongdoing" (Job 1:20-22).
Job's first reaction to devastating news was to mourn, worship and bless the Lord. If faced with bad news, we should do likewise.
Surprises can also be positive; life-changing positive. They can be an answer to years of hope, faith and prayer. Our gratitude and thankfulness to the Lord should be unbridled in words and actions. We should remember and acknowledge the source. We should be joyful, worship and bless the Lord.
Surprises did not rattle Paul or reduce his focus. Paul learned to be content in both abundance and need because he knew that regardless of the circumstance he could do all things through Christ. Our faith, confidence, hope and gratitude should be in Christ. Our outcomes do not depend on our circumstances.
"I do not speak because I have need, for I have learned in whatever state I am to be content. I know both how to face humble circumstances and how to have abundance. Everywhere and in all things I have learned the secret, both to be full and to be hungry, both to abound and to suffer need. I can do all things because of Christ who strengthens me" (Phil. 4:11-13).
Dr. James Russell is a professor of economics and undergraduate chair of the College of Business at Oral Roberts University.
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