That the balance of trade between the US and China is becoming more
and more lopsided in favor of China should come as no surprise to
anyone. In fact, economists yawned when the August trade data revealed a
33% jump in the Chinese trade surplus. As a result, many are beginning
to argue that China can allow the Yuan to appreciate at a faster pace
against the Dollar, since it is obvious that China’s export sector will
not be materially affected by a stronger Yuan. In addition, China now
exports more goods and services to the EU than to America, yet another
statistic which supports the notion that China can allow its currency to
appreciate against the Dollar (the implication here being that the
Euro-Yuan exchange rate should be more
important to China at this
point). Finally, China’s inflation rate is now hovering around 6.5%,
its highest level in over a decade. A more valuable Yuan would
presumably make imports less expensive, thus lowering prices across the
board for Chinese consumers. Bloomberg News reports:
The Chinese currency is selling for about 7.51 to the
dollar. It has risen almost 6 percent against the U.S. currency in the
past year while falling more than 3 percent against the euro, leaving
the overall competitiveness of China’s exports little changed.
Read More:
Rising Euro Is What China Needs to Dump Dollar
No comments:
Post a Comment