China capturing Pakistans export market to Australia

[Renegade]

Yuan appreciation is not favorable for the world economy? | Ecommerce Journal December 7, 2009

The research institute of China's Ministry of Commerce published an essay that touched upon the issue of yuan appreciation and its adverse effects on the global economy. The essay notes that increasing the value of the Chinese currency would hurt rather than help world economic recovery.

"Forcing the renminbi to appreciate would undoubtedly be unfavorable for the Chinese economy, and likewise do no good for the sustained recovery of the world economy," said the essay, which appeared in the Chinese-language International Business Daily, an official newspaper of the Ministry of Commerce.

China's "renminbi exchange rate policy is appropriate and successful," it added.

"The (economic) recovery remains fragile and under these circumstances, appreciation would present major risks for the Chinese economy."

Meantime, Yu Yongding, an economist and former central bank adviser, in separate comments on Monday said that China should adjust its economic structure, including lowering its dependence on exports, as it faces the possibility that a growing U.S. current account deficit will lead to dollar depreciation and rising U.S. protectionism.

"Lowering the current account surplus is in line with China's own interests," Yu was quoted as saying at a weekend forum.

Still, the Ministry of Commerce institute insists that the yuan should not grow otherwise it would sap China's economic recovery by dampening foreign investment, cutting into business profits and job growth, and threatening to increase financial deficits and bad bank loans.

China's cheap goods have helped foreign consumers facing hard times, and raising the value of the yuan could hinder global economic recovery, said the think-tank.

"If Chinese production costs rose due to shifts in the (yuan) exchange rate, then naturally the United States would expand its imports from other developing countries," it said, "and the trade balance as a whole would not improve."

Had no idea that the Propoganda Department of the PRC dictated economic news too. What is surprising about the article is that it fails to mention as to why Yuan appreciation will be bad for the Global economy, it just makes a statement that it will be bad but not why & how?

Care to explain as to how the appreciating of Yuan will hurt the global economy??

 

[grey boy 2]

Had no idea that the Propoganda Department of the PRC dictated economic news too. What is surprising about the article is that it fails to mention as to why Yuan appreciation will be bad for the Global economy, it just makes a statement that it will be bad but not why & how?

Care to explain as to how the appreciating of Yuan will hurt the global economy??

Propaganda department ? so going by your smart logic, anything

from GOI will be propaganda too?

I post this article for the sake of showing the point of view from

Chinese side, anybody will be welcome to share their opinions.

Mind you to stop trolling and flaming instead of sharing your POV.

 

[Destructlord]

It has also affected us, companies in Iran are also not very about this fact. Therefore we are using some kind of standard for the foreign products which is like some sort of recommendation actually the products which can't obtain this standard are not allowed to be import in the country. On this website here ????? ????? ????? ??? ???? you can see if the code on the product is valid or not! I think you should do the same! Every store must have several computer connected to Iran code network so the customer can buy the stuff with ease!

 

[Renegade]

Propaganda department ? so going by your smart logic, anything

from GOI will be propaganda too?

I post this article for the sake of showing the point of view from

Chinese side, anybody will be welcome to share their opinions.

Mind you to stop trolling and flaming instead of sharing your POV.

Yes you are welcome to share your opinion. But then my friend you have still failed to explain as to how the appreciation in the value of the Yuan will hurt the global economy?? Please elaborate on that claim of yours.

 

[grey boy 2]

Yes you are welcome to share your opinion. But then my friend you have still failed to explain as to how the appreciation in the value of the Yuan will hurt the global economy?? Please elaborate on that claim of yours.

Did you actually read through the whole article ? if not , read again.

As i said before, the article i posted share the POV from Chinese side

which including me, Ok ?

China's cheap goods have helped foreign consumers facing hard times, and raising the value of the yuan could hinder global economic recovery, said the think-tank.

 

[Renegade]

Did you actually read through the whole article ? if not , read again.

As i said before, the article i posted share the POV from Chinese side

which including me, Ok ?

China's cheap goods have helped foreign consumers facing hard times, and raising the value of the yuan could hinder global economic recovery, said the think-tank.

Will respond to that shortly. Short of time. On the contrary the world will do better with a floting yuan, that represents the actual value of the currency and not a defalted version.

Since explanation will have to detailed it will take some time to type it down. wait for my reply.

 

[grey boy 2]

Push for stronger Chinese yuan does no good now: U.S. expert
By Daniel at 23 November, 2009,

WASHINGTON, Nov. 21 (Xinhua) — Nobel economics laureate Paul Krugman’s recent push for a stronger Chinese currency “was wrong,” and such a move currently does no good to the U.S. and Chinese economies, a U.S. expert said recently in an article on Forbes’ website.

Shaun Rein, founder and managing director of the China Market Research Group, a strategic market intelligence firm, said that revaluing the Chinese yuan right now would “jeopardize the world’s fledgling economic recovery.”

Krugman, who is also The New York Times columnist, wrote recently in an article headlined “World Out of Balance” that China severely undervalued renminbi, and he called on the U.S. government to push for a stronger Chinese currency.

Citing Krugman’s view that China needed to strengthen the yuan to reduce America’s trade deficit and spur worldwide recovery, Rein argued that “it is better for American businesses for China to maintain current yuan rates until the worldwide recovery is on a firmer footing.”

He stated that if the renminbi were to appreciate, billions of dollars of purchasing power would be taken from American consumers, which he said satirically would not make the upcoming holiday season “such merry time.”

With the U.S. unemployment rate standing at 10.2 percent, the worst in more than 26 years, American consumers are already stretching their shopping dollars farther than they have in a longtime, he wrote.

Regarding the impact of a stronger yuan on China, which is not immune from the ongoing global financial crisis, Rein said that even a small currency appreciation would cause thousands more factories to shut down and leave millions more unemployed.

“That wouldn’t be good for China or anybody else,” he said, warning that the possible crisis in the Chinese economy would affect American exports to China.

“Even if China’s currency were to appreciate, production would just move to cheaper countries like Vietnam, not back to America,” he added.

“Unless there are structural reforms to America’s economy, a stronger renminbi will not lower the trade surplus in any meaningful way,” he stressed.

Rein further pointed out that the biggest currency problem in the world right now “is not a weak yuan but a weak dollar”.

A weak dollar is dangerous “because it means countries will be less likely to buy Treasury bills and finance America’s recovery,” Rein said.

“A weaker dollar won’t help create more exports. It will just make things more expensive for Americans,” because he said that foreign companies would turn to other low-cost labor markets like Vietnam.

In his article, Rein also urged the administration of President Barack Obama to focus on how to strengthen the dollar by paying down debts, instead of “wasting time” on the renminbi issue.

The U.S. deficit hit a record 1.42 trillion U.S. dollars in the2009 fiscal year.

Coincidentally across the Atlantic Ocean, a business commentator from British renowned newspaper Daily Telegraph wrote an article on the Chinese currency, expressing a view similar to that of the U.S. expert. The article was headlined “It’s time to stop beating China up over its currency” and posted last Wednesday on the website of the Daily Telegraph.

Jeremy Warner argued against the Western press which he said unites against China’s approach to currency reform and showed much sympathy for the Chinese point of view.

Regarding the revaluation of the reminbi, Warner said it is perfectly reasonable for China to do it at its own pace. “Beijing dare not go faster to appreciate its currency because the internal demand is sharply growing.”

“The West has enjoyed a free ride off the developing world for an awfully long time,” he said, calling for rebalancing geo-political and economic power for the sake of the whole world and the next generation.

Special Report: Global Financial Crisis

 

[Renegade]

I would take any news reporting from Xinhua, especially about China with a pinch of salt. Xinhua is government controlled and owned news agency and so it only says what the Chinese government wants the people to hear.

Paul Krugman is a Noble Prize winner in Economics where as Shaun Rein is not. This is more of a spin article. The US governments concer about the artificial low rate of the Yuan is well know. Top Obama administration officials like Timothy Girthner have openly been critical of China's policy in this regard. Surely if the economic top guns of the Obama administration & a Noble Prize winner in Economics (Paul Krugman) speak in one voice about it, then the topic surely has some merit.

As pointed out by the article that cheap Chinese goods help the world tide out of recession is only a partial truth.If the Chinese government stops manipulating its currency, the same cheap goods can be produced by other countries; that also will enable to help the world come out of recession. When Chinese government keeps the Yuan artifically low it is the third world that gets mostly effected as labour rates in these countries are lower than that of China, but by keeping the exchange rate of the Yuan fixed the Chinese governmnet artificially keeps the Chinese goods competitive though they take slightly more money to produce.

So it is the West that is losing but moreso the Third World countries are the biggest loosers. As the west can afford the trade imbalances but China is denying the third world countries their legimitate right to produce and export as cheap labour costs are their advantage but by the currency manipulation this advantage stands negated.

By the way even the IMF has asked China to move away from the unfair practice of manipulating its currency.