| 1 - if the RMB increase it limit also the inflation on imported price (raw material, such as oil) 2 - if the RMB incease it mean that the product china export are more expensive, (china earn more each time china export one product) but not enough to be relocalized in western countries, and if we want to transfer these product to another developing country he needs an industrial base. Thus most of the production will stay in China for long. Thus china may win more as the RMB increase... it just need not too be too quick. 3 - if China sell to quickly is USD/american bound, this will cause the slump of USA and American economy... thus China foreign reserve will loose value, and china export will suffer a lot. Thus China has a lot to loose. 4 - buy buying for so long USD, China has support USA, and has support her own growth...thus it was not stupid without that China will not be so develloped. 5 - This kind of way of working (I buy your USD, You buy my product and invest in my country) is reaching a point in which it can not be sustain for long (as china economy is quite big now) thus China will need to focus more on internal consumption and less export to continue to grow. 6 - what block China internal consumption ? the excess of saving from familly (if my memory is right around 40%) why chinese people save so much ? because of an unsure future (need to pay the education fee of my son, need to have money when I will retired, need to have money in case I am ill, etc...) 7 - One way to decrease this fear is to increase the state social security system in china 8 - Hu Jintao government is increasing the state social security system. yeah you are right, it is maybe not only to be nice with people but also because China need it to continue to grow. |
China-US Economy Discussion