Currency Manipulator? ".... China said it was scrapping a two-year peg to the dollar and allowed a 0.8 percent gain in the last three weeks."
As noted in this blog before - being a debtor country hinders/limits U.S. ability to conduct foreign policy and pursue its economic interests, particularly in regards China (as a leading purchaser of U.S. paper). And since the U.S. prints the world’s fiat currency, America’s debtor status, and our national debt’s influence over our economic and foreign policy, is magnified still further. Debt does indeed, make countries do strange things.
Our national debt is being leveraged against U.S. interests, by China. Is it time for America to pursue its economic interests against China's currency/exchange rate intransigence? With a sky high unemployment rate and an underperforming economy, one would hope. We should demand that our politicians insist upon reciprocity from China, in terms of trade, and nothing less.
- J.M.H.
http://blog.jmhamiltonpublishing.com/2010/07/05/thinking-the-unthinkable.aspx
July 9, 2010/NYTIMES
Exports Hit Record in China as Trade Gap Surges
By BLOOMBERG NEWS
China’s trade surplus for June widened to the highest level this year and exports for the month climbed more than expected, hitting a record. The gains add pressure on the government to let the nation’s currency appreciate after a report from the United States Treasury said the currency, the renminbi, “remains undervalued.”
The trade gap rose 140 percent, to $20.02 billion, compared with a year earlier, the customs bureau said on its Web site on Saturday. That compares with the $15.6 billion median estimate of 24 economists surveyed by Bloomberg News. Exports surged 43.9 percent compared with a year earlier and import growth moderated for the third month, rising by 34.1 percent.
Treasury Secretary Timothy F. Geithner said Thursday that he would “closely and regularly” monitor the pace of the renminbi’s appreciation after China said it was scrapping a two-year peg to the dollar and allowed a 0.8 percent gain in the last three weeks. Policy makers in China, the world’s biggest exporting nation, may be reluctant to move too quickly as Europe’s sovereign-debt crisis threatens external demand just as the domestic economy is slowing.
“The Chinese government may still be willing to allow the yuan to appreciate as long as exports expand at a reasonable pace,” Xing Ziqiang, an economist in Beijing at China International Capital Corporation, said before the release.
The value of outbound shipments rose to a record $137.4 billion last month, the customs bureau said. The previous high was $136.68 billion in July 2008, before the global financial crisis deepened. The 43.9 percent expansion compared with the median 38 percent forecast in a Bloomberg News survey of 24 economists.
Imports climbed to $117.4 billion, the third highest this year. The 34.1 percent gain compares with the median forecast of 35.4 percent in the Bloomberg survey.
China took a “significant step” last month when it began to allow markets to drive its currency higher, the Treasury Department said in a report to Congress released on Thursday, after postponing the release in April. It’s not yet clear whether the policy shift will correct the renminbi’s undervaluation, it said.
Comments