From the "biting the hand that feeds you clean off" department comes a report that the United States Senate is looking to introduce legislation that "threatens China with punitive duties if it fails to lift the value of its currency".
There's an old law--going back to 1988--that requires the Treasury Department to "begin expedited negotiations with China to adjust its currency", so saith Reuters, but the new legislation coming from the worst possible sources for such a thing (Charles Schumer, Debbie Stabenow and Lindsey Graham), will actually amplify the law, which would in turn provide new tools for dealing with "a fundamentally misaligned currency".
The word currently floating around says that, if China WERE declared such, they would probably NEVER allow the renminbi to appreciate in value. They would do everything in their not-insubstantial power to hold the renminbi's value where it is, despite the IMF's own assertions that the currency is "substantially undervalued".
This in turn will likely do horrendous things to the world's geopolitical situation--and considering that China just recently bought an aircraft carrier from Russia they may be looking to do just that--but what this actually means is that you might, and I stress might, want to park a bit of savings in the renminbi. If China does allow the currency to climb a bit, and they just might, it'd mean a fairly substantial windfall for even a small investment.
Comments
TonyP4
March 27, 2010
First, no country including US has the right to tell other countries to appreciate their currency. The era of ââ¬Ëyouââ¬â¢re either my puppet or my enemyââ¬â¢ is long past and Obama is still living in the past glory. He blames China for all our ills, as he cannot fix our problems.
Keeping the Yuan low actually helps US's consumers and US in buying wind turbines or HSRs from China at lower prices. Not to mention the huge loans from China. China does not want to withdraw the bad loans as they do not want to kill the goose that lays the golden eggs.
The major products of China and US are not the same, so there are no direct competitions. If we do not buy the products from China, most likely we'll buy same products from Mexico or India.
Until China builds up its local market for its growing middle class, I do not see Yuan will appreciate by more than 5% a year.
A strong China is good for the world including US! China is just one part of the global economy. The other players are research companies from the west and the US, oil from Middle East and Africa, and commodities from Australia, Brazilââ¬Â¦ Everyone benefits including the consumers in every country.
Lord Obama and his 'advisers' including Uncle Ben and Tiny Tim can do a lot of good if they looked longer-term (more than 4 years for re-election). To give generous welfare to buy votes and creating jobs for the lazy government servants are definitely not good for the country. Have we learned from California?
Throwing money on HSR is stupid and reckless without calculating basic return of the investment. China is successful with HSR due to its dense population, but not here.
It was an error US and other country asked China to depreciate the Yuan during SE Asis crisis. China is not that dumb to be trapped like Japan and Japan suffered from the lost decade.
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