How about a link to this story? Oh, by the way, welcome to FreeRepublic.com
Posted on 01/26/2005 12:59:33 PM PST by dilbert80
Economist: China Loses in Dollar Stability Wednesday January 26, 3:47 pm ET By Edith M. Lederer, Associated Press Writer China Has Lost Faith in Stability of U.S. Dollar, Top Chinese Economist Says at World Forum
DAVOS, Switzerland (AP) -- China has lost faith in the stability of the U.S. dollar and its first priority is to broaden the exchange rate for its currency from the dollar to a more flexible basket of currencies, a top Chinese economist said Wednesday at the World Economic Forum. At a standing-room only session focusing on the world's fastest-growing economy, Fan Gang, director of the National Economic Research Institute at the China Reform Foundation, said the issue for China isn't whether to devalue the yuan but "to limit it from the U.S. dollar."
But he stressed that the Chinese government is under no pressure to revalue its currency.
China's exchange rate policies restrict the value of the yuan to a narrow band around 8.28 yuan, pegged to $1. Critics argue that the yuan is undervalued, making China's exports cheaper overseas and giving its manufacturers an unfair advantage. Beijing has been under pressure from its trading partners, especially the United States, to relax controls on its currency.
"The U.S. dollar is no longer -- in our opinion is no longer -- (seen) as a stable currency, and is devaluating all the time, and that's putting troubles all the time," Fan said, speaking in English.
"So the real issue is how to change the regime from a U.S. dollar pegging ... to a more manageable ... reference ... say Euros, yen, dollars -- those kind of more diversified systems," he said.
"If you do this, in the beginning you have some kind of initial shock," Fan said. "You have to deal with some devaluation pressures."
The dollar hit a new low in December against the euro and has been falling against other major currencies on concerns about the ever-growing U.S. trade and budget deficits.
The U.S. currency came under some pressure Wednesday, drifting lower versus most currencies including the Japanese yen and the euro, as dealers mulled the Chinese official's statements.
Fan said last year China lost a good opportunity to do revalue its currency, in July and October.
"High pressure, we don't do it. When the pressure's gone, we forgot," Fan said, to laughter from the audience. "But this time, I think Chinese authorities will not forget it. Now people understand the U.S. dollar will not stop devaluating."
Asked how speculation about revaluation could be curbed, he noted that China imposed a 3 percent tariff on Chinese exports.
Some Chinese experts say that perhaps inflation can be reduced this year, "but I'm not that optimistic," Fan said, noting that fuel prices keep rising.
"So maybe China (will) have 4-5 percent inflation in 2005," he said.
Fan, whose nonprofit institute specializes in analyzing the Chinese economy, stressed that the country's development is a long-term process that will take decades, maybe a century.
Since China's economic modernization began over a decade ago, 120 million rural laborers have moved into cities, but another 200 million or 300 million people need to move into the cities from the countryside to spur development, he said.
"The income disparity is huge, and income disparity will stay with us for a long time, as long as those 200 to 300 million rural laborers stay in the countryside," Fan said.
Nonetheless, William Parrett, chief executive of Deloitte Touche Tohmatsu, told the panel that Chinese companies are making significant progress in becoming global giants, led by state-owned companies.
"It's probably at least 10 years before the objective of the government of 50 of the largest 500 companies in the world being Chinese" is achieved, he said.
Sounds like they are going to try to peg to a basket. That shpould be pretty funny to watch. BTW, this guy is not an official of the government.
I'm pretty sure the data is truthful.
Perhaps your interpretation is dishonest.
why don;t you run that graph back to 1970 or so. It might not lok scary.
How about a link to this story? Oh, by the way, welcome to FreeRepublic.com
Thanks. I was going to ping you later, if you didn't show up on this thread. LOL!
The data is truthful. Everything else about the graph is structured to make the situation look as bad as possible. It's what you do.
Asked and answered.
Well, since you are not responding to questions....here is the link to the story:
http://www.forbes.com/business/feeds/ap/2005/01/26/ap1783904.html
Well, then...
We're DOOMED!!!
Oh! Wait a minute! The GSE's lend DOLLARS, not yuan! We have PLENTY of dollars...
Never mind...
why don't they tie it to gold
WRONG.
China buys our debt because they have to in order to keep their currency pegged. If they unpeg and the price of imports rises, that will be great for domestic manufacturing, more jobs etc. More jobs, more taxes, less deficit, less outsourcing etc. Free trade works.
Tying a currency to gold or anything else is just as artificial as tying a currency to the mutual agreement of what a currency is worth.
The dollar will do just fine, BTW. Bush is just ending the gravy train. Again, for globalism to work Japan, the EU and China have to develop internal demand and let every one in. If not, then sooner or later the USA has to stop being the market of the world and shut the door. Nothing could be more simple. All of this grousing about twin deficits is just a smokescreen to mask the failure of these other economies to generate growth. The real problem is that nnternal growth is accomplished though great domestic economic freedom and that translates into greater political freedom for "the masses." And none of the power elites in any of those blocks desires that.
The US will be just fine, provided we get the sort of domestic reforms that Bush is talking about.
In truth, the monetary policies of the USA during the clinton administration waresetup to help EUrope and Asia, not the generat US population (preparing us for "globalization" dontchknow.) That is being corrected now.
Instead of bitching about "twin deficits" the rest of the world needs to build internal demand. But they are not set up for it, they are set up for predatory import/export relationships with the US.
China came out with growth figures today. I do not believe them. It is a ponzi scheme ready to collapse. Great pressures need to be brought to bear on China to go through a series of repeggings. I doubt it will happen but it should be one of the highest prioities on the Hill.
I'm having a hard time finding DXYO older than this:
Now put it on a logarithmic scale, beginning with zero.
I'll finance it. The Gov. will just have to pay me more.
This is another way of saying that they have lost faith in their own fixed exchange regime. By fixing the yaun against the dollar, they take a bath everytime the dollar goes down.
But they are between a rock and a hard spot. If they don't fix their currency against the dollar, it will be a whole lot harder for them to sell their stuff in the US.
Why on Earth would you use a log scale to relate the value of a currency to OTHER DEVALUING CURRENCIES?
Remind me what happened in 1987 again....It looks rather similar to our current situation.
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