TOYING WITH YUAN WON'T HELP US
Fan Gang
China Daily, March 26, 2010
Fan Gang
China Daily, March 26, 2010
Fundamental problems in the US economy need to be remedied; potential dangers for both nations loom if renminbi is revaluated
The renminbi exchange rate has once again become a target of the United States Congress. China-bashing, it seems, is back in fashion in the US.
But this latest round of disparagement appears stranger than the last. When the US Congress pressed China for a large currency revaluation in 2004-2005, China's current-account surplus was accelerating. Now China's current-account surplus is shrinking significantly due to the global recession caused by the US financial meltdown.
China's total annual surplus (excluding Hong Kong) now stands at $200 billion, down by roughly one-third from 2008. In GDP terms, it fell even more as GDP grew by 8.7 percent in 2008.
Back then, pegging the renminbi to the dollar pushed down China's effective exchange rate because the dollar was losing value against other currencies, such as the euro, sterling and yen. But currently, with the dollar appreciating against other major currencies in recent months, the relatively fixed rate between the dollar and the renminbi has caused China's currency to shore up.
Of course, there are now other sources of friction that did not seem as pressing five years ago. The US' internal and external deficits remain large, and its unemployment rate is extremely high. Someone needs to take responsibility, and since US politicians don't want to blame themselves, the best available scapegoat is China and its exchange rate, which has not appreciated against the dollar in 18 months.
The renminbi exchange rate has once again become a target of the United States Congress. China-bashing, it seems, is back in fashion in the US.
But this latest round of disparagement appears stranger than the last. When the US Congress pressed China for a large currency revaluation in 2004-2005, China's current-account surplus was accelerating. Now China's current-account surplus is shrinking significantly due to the global recession caused by the US financial meltdown.
China's total annual surplus (excluding Hong Kong) now stands at $200 billion, down by roughly one-third from 2008. In GDP terms, it fell even more as GDP grew by 8.7 percent in 2008.
Back then, pegging the renminbi to the dollar pushed down China's effective exchange rate because the dollar was losing value against other currencies, such as the euro, sterling and yen. But currently, with the dollar appreciating against other major currencies in recent months, the relatively fixed rate between the dollar and the renminbi has caused China's currency to shore up.
Of course, there are now other sources of friction that did not seem as pressing five years ago. The US' internal and external deficits remain large, and its unemployment rate is extremely high. Someone needs to take responsibility, and since US politicians don't want to blame themselves, the best available scapegoat is China and its exchange rate, which has not appreciated against the dollar in 18 months.
(...) [artículo aquí]
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