| WJS, if you intend to open a discussion on this, you should probably start topic of its own. Rimbaud, China's leadership has deliberately chosen to manage its currency against the USD and has thus gained early front-loaded benefits (export growth + job creation in the export sector). Now they are incurring back-loaded costs (currency losses, pressure on the PBoC to continue incurring currency losses to keep the RMB from appreciating amid the global slowdown). It seems as it this was an unwise decision. However, we always have to put everything into perspective. While we believe China's leadership is responsible for China's losses, Victor Shih - a well-known blogger - reports that "officials [in China] blamed the United States and believed the controversial assertions set forth in the book “Currency War,” a Chinese best seller published a year ago. The book suggests that the United States deliberately lured China into buying its securities knowing that they would later plunge in value. A lot of policy makers in China, at least midlevel policy makers, believe this." I agree with you that the China's leaders have made a wrong decision. The question now is, how do we solve this problem? And who needs to act first? Is it up to China now to act? Or do Chinese politicians take the position that the bad and deceitful Americans, who have taken the Chinese to the cleaners, must take action first to clean their hands and compensate China for the currency losses? In any case, this is and will remain a very exciting issue, and there are many great blogs covering the intertwinement of economies and the excessive global flow of capital at great length. |
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