The euro has risen 18pc against the yuan over two years.
The EU's trade deficit with China may top $220bn this year
Posted on 10/25/2007 3:43:38 PM PDT by bruinbirdman
China has surged ahead of Germany for the first time to become the world's top exporter, prompting ever louder demands from the United States and Europe to revalue the yuan.
Data from the World Trade Organization show that the country vaulted past the US at the beginning of this year and has since moved at lightning speed to eclipse Germany's once indomitable export machine. It shipped $111bn (£54bn) worth of goods in August, up 55pc from a year earlier.
The euro has risen 18pc against the yuan over two years.
The EU's trade deficit with China may top $220bn this year
Now boasting 8pc of global exports – three times the Britain's dwindling share – China has jumped up the technology ladder. Machinery, equipment and cars now make up 46pc of total exports, while textiles are fading from the picture.
Beijing let the yuan break through the key barrier of 7.5 to the dollar yesterday, but seems determined to resist Western pressure for faster appreciation.
US Treasury Secretary Henry Paulson said it was in China's own interest to let the yuan rise, given the clear signs of overheating. -Beijing's policy of holding down the yuan through purchases of US and other foreign bonds has caused reserves to mushroom to $1,430bn, driving up inflation to 6.5pc.
Jim Rogers, the veteran US investor, told The Daily Telegraph he was pulling his money out of all dollar assets to buy yuan, yen and Swiss francs. The latter two have been hit by "carry trade" speculation, which must reverse at some point.
"The US economy is undoubtedly in recession. Many parts of industry are actually in a state worse than recession. If it were not for [Fed governor] Bernanke injecting huge amounts of money, the stock market would probably be down much more than it is," he said.
Japan said yesterday its exports to the US plummeted 9.2pc in August, a sign that contagion from the US downturn may be spreading.
In Washington, Congress has already drawn up plans for sanctions against China, accusing the regime of stealing market share by manipulating the yuan.
But now Europe is buckling under China's export blitz. The euro has risen 18pc against the yuan over two years. The EU's trade deficit with China may top $220bn this year.
Peter Mandelson, the EU trade commissioner, has warned Beijing that it must curb the tidal wave of goods flooding EU markets, or risk turning a friend into a foe. "It's a question of China... being more conscientious in shouldering their fair share of the demands of this trading relationship," he said.
The yuan has appreciated 8pc against the dollar since the creation of a crawling peg in July 2005, but the move has barely made a dent on exports. Wu Xiaoling, the deputy governor of the central bank, said China would move at its own pace. "Maybe we are not rushing things as some people wish us to do, but we are moving in a correct direction and in a smooth manner," she said.
By delaying, China is importing inflation. This will ultimately have the same effect on its competitiveness by pushing up labour costs, but at a greater cost to political and economic stability. Food price rises are now nearing levels that set off the Tiananmen Square protests in 1989.
I hate currency-traders who short the dollar, then find someone in the MSM who helps them trash the U.S. economy.
Our old friend Ambrose "Graft" Goldbug Evans-Pritchard.
yitbos
Anyways, I could see the US assisting Chinese Commun...er..businessman in putting down popular unrest.
You know, stability and all that.
Are you suggesting that the US would trash their principles and help a communist dictatorship put down a polular uprising, all in the name of business? You sound like one of the hate america first dummies over at DU
But this sh!t sells papers and attracts viewers: it is really no different than watching Entertainment Tonight in order to see the latest celebrity gossip. But while the story is the same the difference is the key players.
What gets glossed over is this story is this:
The euro has risen 18pc against the yuan over two years.
Look, here's the deal. China, like most economically-backward thinkers, has a 'make work bias'. They would rather go full bore on their production at the expense of their current consumption. China, with it's loose currency peg to the USD, could purchase and import a lot more stuff than they do right now if they wanted to un-peg. But China is in a unique position since it has steadily liberalized its markets and given its population more freedoms and a better standard of living that what they had before the liberalization. As more and more young Chinese leave the rural farms and seek work, the central planners have got to satisfy and accommodate, especially since agricultural production is actually increasing even as young people are leaving the farm.
Believe it or not, it's when people like Rodgers [in this story] buy Yuan denominated assets that's when China will have to start incrementally shifting toward a more balanced economic approach. The flip side of all this is that when (or if) China sees (or is forced to notice it through actions like those of Rodgers) the wisdom of foreigners -- foreigners to the Chinese -- buying their assets, they will also start noticing the capital inflows. these inflows will be used for investment, business expansion, and increased equity...the only question which will remain is who, exactly, will own this equity in China! But, can you imagine what the protectionist will say when these days do come (if they come): "Why are you buying China's stuff (their assets) and helping the ChiCom economy?" And we'll be there to remind the protectionists that, "Hey, at least the trade deficit is shrinking (or has disappeared)! Aren't you happy?"
President Bush to Kurds, “Rise Up”.
Ford to Hmong, Vietnamese, sorry.
Eisenhower to Hungarians and Checks “Tough luck”
Roosevelt to Poles, “We are with you”.
Now, you think a nuclear armed, inter faction, inter Chinese fight, we are not going to take the side of the nuke owners? Ever hear of Pakistan?
We’ll get rolled like a drunk in a casino ally.
But we don’t know, as I wouldn’t trust numbers from an enterprise that would make Enron look like saints.
But we don’t know, as I wouldn’t trust numbers from an enterprise that would make Enron look like saints.
That's not quite correct. The Chinese do realize gains, many of them are gainfully employed and their standars of living are rising. By definition, voluntary trade between two or more parties creates value for all parties involved...unless one or more parties are acting irrational and not in their own self-interest; it's the whole basis for trade/commerce. I'm simply asserting that the Chinese might do much better if their focus was a more balanced appraoch to growth. If you ask me, we're the ones who have benefited most from our exchange with them...they're the ones who have been causing the capital to flow, here, and expanding our economy.
ChiComs' greatest export: slave labor.
yitbos
yitbos
There might be a difference of opinion when it comes to the benevolence of ChiComs.
yitbos
Making a large totalitarian state wealthy is unwise.
At this juncture, it appears that there is little we can now do to stop Red China from being a vast economic success. With economic success will come political influence --- and the political influence of totalitarian states is not to the benefit of the free world.
The problem with this negative perspective is it is based on outdated paradigms. Many will marvel at "German Engineering" when finding out that Germany is (or was) the largest exporter.
But should we always assume, that China's currency is the sole reason for China becoming the largest exporter? After all, China is 16 time greater in population than Germany. SIXTEEN !!
What should surprising is not that China has surpassed Germany, but that China had not been the largest exporter all throughout the industrial revolution.
Currency issues should be addressed for sure. I'm not debating that. But don't be surprised, even if the currency issue is addressed, that in another 5-10 years, China is several times larger than Germany as an exporter.
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.