Posted on 10/13/2007 3:15:19 AM PDT by bruinbirdman
Pressure on Beijing to revalue its tightly managed currency is set to intensify in Europe after booming exports to the region powered China to a $24bn trade surplus in September as growth of sales to the US slowed.
China’s trade surplus jumped 69 per cent to $185.65bn for the first nine months of the year, surpassing the amount for the whole of 2006 and adding to rising angst in the European Union over Beijing’s currency regime.
Growth in exports from China to Europe has been outpacing sales to the US, even before recent scares in North America over the safety of some Chinese-made goods. This year, Europe overtook the US as the biggest destination for Chinese exports. “The rise of European market is good news for sustaining Chinese export growth, but, in the end, it might prompt Europe to become more actively engaged in pressing on China’s currency,” said Yiping Huang, of Citigroup, in Hong Kong.
The 13-nation eurozone’s ministers broke new ground this week with a statement that identified the renminbi’s level as a greater source of concern to Europe than the dollar or the Japanese yen.
The renminbi has risen about 10 per cent against the dollar since mid-2005, when Beijing broke its long-standing peg to the greenback, but has fallen against the euro during the same period.
In the nine months to the end of September, Chinese exports to the EU and the US increased 37 and 16 per cent year-on-year respectively, reflecting the strength of Europe’s economy and the euro exchange rate, according to Bank of America.
China pledged to manage the renminbi against a basket of global currencies when it broke the dollar peg. However, the currency since then has appeared to track the greenback.
Few economists believe that a stronger renminbi will transform bilateral trade relations with Beijing, as China’s export growth reflects in part its repositioning as the last point of assembly for Asian goods shipped overseas. But the renminbi has become a political symbol in Washington and now Brussels of what many say is Beijing’s policy to keep its currency low to support exports.
Robert Kimmitt, US deputy treasury secretary, said yesterday China needed to “move considerably more quickly to valuing their currency based on underlying economic fundamentals”.
Meanwhile that low dollar...and those record exports? Not as bad as the media would have you believe...
I believe it. Yesterday's mail brought me a package from a friend in central Russia. Included was (in response to me sending black FBI hats and CIA labeled t-shirts for one of their relatives in the FSB!) a couple of t-shirts with the old Soviet CCCP letters across the back. Shirts were purchased locally in Kazan, Russia. One shirt labeled "Made in China"; the other "Made in India! Both labels in English ONLY!
No matter what others say we give depreciating pieces of paper (currency)for real goods and services. Heckuva deal!
With their surplus the Chinese then buy our treasury paper that also depreciates. They sure are smart!
They just keep building more warships with that cheap piece of paper.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.