China Currency Manipulation About To Trigger Protectionism Crisis

The Market Oracle ^ | 11-15-2009 | Bryan Rich

[blam]

China Currency Manipulation About To Trigger Protectionism Crisis

Currencies / China Currency Yuan
Nov 15, 2009 - 06:38 AM
By: Bryan_Rich

I’ve written several times here in Money and Markets about the geopolitical time bomb surrounding China’s currency manipulation. The most recent was in my October 31 column.

I expect this issue to grow in intensity and become a major point of contention for the global economy in the coming year. In recent days the chatter about China and its artificially weak yuan has been picking up.

The Europeans have become more vocal about the problems a weak yuan is causing for their exports. The euro has gained 20 percent against the yuan in the past eight months, putting its exports at a disadvantage.
And this week European industry leaders called for the EU to step up its pressure on China to start letting the yuan appreciate again.

The IMF explicitly included commentary on currencies in its recent report to call out China’s currency as “significantly undervalued.”

And with President Obama making his first trip to China next week, the pressure for the U.S. to start taking a harder stance on China’s unfair currency policies are elevating.

Since Obama has taken office, the Chinese have virtually returned their currency to a peg against the dollar.
And since March, with the resurgence in global risk appetite and the subsequent bounce in global currencies against the dollar, the Chinese have enjoyed a de facto devaluation against other major trading competitors around the world.

Will President Obama be able to persuade the Chinese to strengthen the yuan?

Most importantly, China has kept its exchange rate constant against the recently declining U.S. dollar, the currency of its main trading partner.

[snip]

[mamelukesabre]

strengthen chinese currency so they can buy up factories in the west?

[Last Dakotan]

...the pressure for the U.S. to start taking a harder stance on China’s unfair currency policies are elevating.

Pressure from whom? Like the tire companies, the American producers have already moved their plants to China. If anything the pressure will be to keep the $10 toasters flowing, - who cares about a manufacturing base anymore?

[BfloGuy]

The world cannot find sustainable growth until economies like the U.S. and China become more self-sufficient. That means deficit trading countries like the U.S. need to start consuming less, saving more and producing more. And export-centric countries, especially China, need to start exporting less and building more domestic-led growth.

Utter nonsense. The problem is entirely that of the unstable and ever-shifting currency exchange rates caused by the games our government plays with deficit spending and Federal Reserve manipulations.

That America imports more than it exports is an interesting but meaningless statistic. And the first person who says that China is funding our buying goes and sits in the corner. They're not -- they are, however funding much of our government's predilection for spending more than it has.

That's the problem -- it's the spending, stupid.

[katagious]

I wish someone could explain in somewhat simple terms what China's yuan pegged to US dollars really means to common every day people. It's very confusing to me.

[Nuc1]

To all the euroweeies and our dimtard friends. Have a capitalist economy and your currency will be valuable too.

[blam]

China Has Now Become The Biggest Risk To The World Economy

[The Comedian]

China should completely screw this entire funny money fantasy into oblivion by announcing that effective immediately, the yuan is now backed by gold.

Watch the banksters and their congressional puppets scream bloody murder then.

Frowning takes 68 muscles.
Smiling takes 6.
Pulling this trigger takes 2.
I'm lazy.

[Kenny500c]

Weak Yuan = good for consumers.

Strong Yuan = good for unions.

[Wiz]

Unfair trade = American jobs stolen