The heat is on for China to revalue

D

drsteph

Seems like everyone is ganging up on China to revalue its currency (or to do something) before Paulson's visit in a few weeks. Check out Sarkozy! Boy, this must be a mutual love-fest between Bush, Merkel, Sarkozy, (and Blair) these days....

It all hinges on the Chinese. Their answer this december will likely decide the economics of the next three years. And I have absolutely no idea what they are going to do. For that matter, I don't think anyone else does either - although I think that they are showing some signs of being willing to play along.

Do we inflate or do we deflate? It is Hu Jintao's decision how much pain he is willing to suffer & how closely he can hold onto power if he chooses to test the US and Europe at this time.

If those chinese spies are combing ET like the rest of the net I hope they consider one thing closely - just remember the hubris of the "Japan that could say no" and their decade long deflation after the real estate debacle and the nikkei crash. Is this now the "China that can say no?"

http://biz.yahoo.com/ap/071125/china_france.html?.v=1
 
Check this out from bloomberg:

http://www.bloomberg.com/apps/news?pid=20601087&sid=adDSm7aGbHrU&refer=home

``A great country must have a strong currency,'' Sarkozy said today at a conference organized by the French chamber of commerce in Beijing. ``China has a great role to play, in concert with other players, not to let imbalances accumulate to a point where we wouldn't be able to get out of them,'' he said.

``Global harmony, which is dear to China, must translate into a fair balance between large currencies, whether it is the dollar, the euro, the yen or the yuan,'' the French president said on the first day of a three-day state visit in China, after an earlier dinner with Chinese President Hu Jintao.
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Well, if that isn't a veiled threat, I don't know what is.

As of August chinese income per capita is only at $1,740(08/18/06) as per chinese embassy web site. Still short of the magic $6000 -$9000 number needed for political stability.

Is this a "slow down or else" statement?
 
Here's a fun snip from the opening remarks at Paulson's current china summit:

http://www.fmprc.gov.cn/eng/zxxx/t389102.htm

Whether the United States can increase its export to China hinges on what policy it will follow. I hope the US side will change the outdated mindset and see the new horizon. My point is clear: Expand export of civilian-use high-tech products to China, and you can enlarge your market share in China. This is where your interest lies. At the recently-concluded 17th National Congress of the Communist Party of China, General Secretary Hu Jintao outlined the policy measures we will adopt to build a moderately prosperous society in all respects in China by 2020. We will promote coordinated development to ensure both sound and fast economic growth. We aim to quadruple China's per capita GDP of 2000 by 2020. We will promote a conservation culture. This means we will basically achieve the goal of making China's economic structure, model of growth and mode of consumption energy-efficient and environment-friendly. These policy steps have sent a very important message to the world: China will greatly expand its domestic consumption. This, in turn, will greatly increase the size of China's domestic market and sustain the balanced development in China. China's demand for products and particularly environment-friendly products will grow more rapidly.
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In other words: we want your high technology.

Note GDP growth target and my previous posts. 4 x = ?
 
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