U.S-China relations MOOD : Working on it
A good update on the whole RMB fixing mishap is this series of articles from the Wall Street Journal:
First, early on the 13th of February, China's Dollar Link Could Be a Depression Stopper
or how "Nobody wants a trade war between two giant economies".
"Let's be clear here: First, there's no reason to believe that China does not desire a stable currency. Second, China bashing -- i.e., U.S. pressure to force Beijing to appreciate the yuan -- is misguided economic policy."
Actually, "Instead of being an exchange-rate question, the huge trade imbalance between the two countries has two related causes: net "surplus" saving in China, i.e. domestic saving far beyond that which is needed to finance domestic investment; and an even bigger net saving deficiency in America."
So, "Beijing knows that fiscal expansion in China would be most effective in buoying the Chinese economy when the exchange rate is stable. Thus having the Americans agree to stabilizing the yuan-dollar rate is the natural quid pro quo for China's engaging in a much greater fiscal expansion than the welcome half-trillion dollar amount announced last November."
Then, on the 15th, the natural follow-up to the previous article, "G-7 Softens Criticism of China's Currency Policy"
"in a shift that reflects the West's eagerness for Beijing's help in resolving the global financial and economic crisis.", [...]
Treasury Secretary Timothy Geithner on Saturday praised Beijing for "playing a very important stabilizing role in the international financial system today.'
"It's satisfying to see China putting emphasis on its domestic market and taking part in the global stimulus effort by boosting internal demand," French Finance Minister Christine Lagarde told reporters.
We'll see what tomorrow brings in U.S - China relations...
A good update on the whole RMB fixing mishap is this series of articles from the Wall Street Journal:
First, early on the 13th of February, China's Dollar Link Could Be a Depression Stopper
or how "Nobody wants a trade war between two giant economies".
"Let's be clear here: First, there's no reason to believe that China does not desire a stable currency. Second, China bashing -- i.e., U.S. pressure to force Beijing to appreciate the yuan -- is misguided economic policy."
Actually, "Instead of being an exchange-rate question, the huge trade imbalance between the two countries has two related causes: net "surplus" saving in China, i.e. domestic saving far beyond that which is needed to finance domestic investment; and an even bigger net saving deficiency in America."
So, "Beijing knows that fiscal expansion in China would be most effective in buoying the Chinese economy when the exchange rate is stable. Thus having the Americans agree to stabilizing the yuan-dollar rate is the natural quid pro quo for China's engaging in a much greater fiscal expansion than the welcome half-trillion dollar amount announced last November."
Then, on the 15th, the natural follow-up to the previous article, "G-7 Softens Criticism of China's Currency Policy"
"in a shift that reflects the West's eagerness for Beijing's help in resolving the global financial and economic crisis.", [...]
Treasury Secretary Timothy Geithner on Saturday praised Beijing for "playing a very important stabilizing role in the international financial system today.'
"It's satisfying to see China putting emphasis on its domestic market and taking part in the global stimulus effort by boosting internal demand," French Finance Minister Christine Lagarde told reporters.
We'll see what tomorrow brings in U.S - China relations...
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1 comment:
That's interresting to see how China and America try to dont lose the face, if currency is a problem, what about prtectionnist mesure by the USA? We should speak about this problem with Mr Chouraky! ;)
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