Leave yuan to us, China tells Obama

With Obama facing domestic pressure to take a tough line against China and Beijing clinging to its dollar peg, the report could act as a tipping point.

If China flinches, it may soon resume the yuan appreciation halted in mid-2008 to cushion the country from the global credit crunch. Speculation that Beijing could revalue its currency in the coming weeks briefly flattened the curve for offshore yuan forwards on Friday.

But if China keeps the yuan locked in place, then scattered trade spats between the two giants could escalate into a full-fledged dispute, with Washington even considering across-the-board tariffs against Chinese products.

"The chances of a collision have never been higher," Stephen Green, China economist for Standard Chartered Bank in Shanghai.

This would definitely mean a trade war with China.

"A stronger yuan will hit exports and lead to a double dip in the Chinese economy, which in turn will hamper the global economic recovery," Li said.

CALM OVER INFLATION

Still, there are hints of division within China about the yuan. With inflation fast creeping up, investors are beginning to wonder just when the government will allow the yuan to rise again.

news.yahoo.com...

Just wanted to give this a bump.

depreciation of yuan = they sell more
appreciation of yuan = greater spending power for resources

China = wins either way.

After appreciation of Yuan, the greedy corporations may just simply go to India to manufacture their goods, no much difference to US I guess.

China's intentional depreciation of the Yuan is hurting them.

Their people are suffering because of their criminal governments actions.

If they let their currency value rise, their people would be able to buy their own products instead of shipping them overseas.

The action of intention depreciation is a crime against their own people.

reply to post by mnemeth1


You are right that they are suffering by their own governments action but to add complexity and magnitude, if they revalue the currency, their exporting will drop like a rock and Chinese employment goes with it.

If China gets an unemployment figure like we have here, the government will have a harder time keeping power. Imagine tanks running over unemployed factory workers in hundreds of Chinese cities.

But the funny thing is, the Chinese don't have the yuan pegged to the dollar just because they say so. They keep it pegged through currency manipulation as they buy U.S. debt.

All the U.S. has to do is to stop SELLING debt to China. There must be some kind of deal going on by both sides for the purpose of protecting political power.

reply to post by dreamspark


Yeah. And greedy western consumers will continue to buy their goods.

Originally posted by wutone

All the U.S. has to do is to stop SELLING debt to China. There must be some kind of deal going on by both sides for the purpose of protecting political power.

Yes, indeed. Quit selling debt to China. So to whom are we going to sell it?
Who is going to pay for the two present wars and maybe a third if certain monotheists have their way?

If China appreciates it's currency, the US dollar debt it holds will be worth less in yuan terms. China will lose money. The US is telling China to take less for it's debt than it paid for it.

And when China increases the value of it's currency, that means that things that it exports to the US will cost more. Go to Walmart or Dollar General. Go to Target. Go to JC Penny. See where the stuff is made. All of that is going to cost more. How many millions are out of work, living on unemployment or savings or their relatives? How many millions working shortened hours for shortened paychecks? How are they going to pay the higher prices? It is all very well and good to say that they should shop somewhere besides Walmart. It would be even better if someone could figure out a way for them to pay for it.

Yes, america could start making it's own shoes and TVs and toasters, but until the factories get going, how are the future american factory workers going to buy groceries and put shoes and clothes on the kids at the same time, and who is going to provide financing for the factories? Don't say China, we already told them to shove off. Every other country in the world seems to be having it's own problems, so nothing to get there, and this country has been living on pump since Nixon broke the link to gold. Really, before that, which is why he did it.