China Will Strengthen Its Currency In Response To Obama Administration's Concerns

nytimes.com:

HONG KONG -- The Chinese government is preparing to announce in coming days that it will allow its currency to strengthen slightly and vary more from day to day, a move being taken for domestic policy reasons in China but likely to please the Obama administration, people with knowledge of the emerging consensus in Beijing said on Thursday.

Read the whole story: nytimes.com

Comments

[jumperpin]

10:33 AM on 04/09/2010

Incremental currency tweaks are mutual face saving for US/Chinese political leaders. Oh, please ignore multi-nationals behind the curtain ushering our race to the bottom.

[Nicole Bourbaki]

05:47 AM on 04/09/2010

Jim Rogers "the 19th century was the century of the UK , the 20th century was the century of the US , the 21 st century is going to be the century of China "

http://jimrogers1.blogspot.com

[Harrier]

02:33 AM on 04/09/2010

This is a good accomplishment. This should help the US economy and more treasuries would not be as needed. It would be a win win for both

[Anarchyus1]

09:59 PM on 04/08/2010

The U.S. wants China to float their currency solely for the reason to devalue our own currency to attempt to attract business. This cannot work. The problem is that currency devaluation can only work if ONLY one country can do it. When more than one country can devaluate then it becomes a competitive race to the bottom. We are ignoring that production is offset by consumption. We cannot expect and goods to be produced here unless we increase our savings and give more money to investment in the early stages of production. We have inverted the structure of production toward late stages of production and show no signs of turning back. Despite what we are fed by the government we are currently heading toward HYPERINFLATION.

[DismayedRepub]

07:07 PM on 04/08/2010

The problem with clamoring for the Chinese to allow the Renminbi is that it will allow the average Chinese to buy a lot more oil for their currency unit. This in turn will raise demand for oil and the price will rise in response to this increased demand. This will be felt by the American consumer at the pump and in the general economy as well.
I expect not only gas prices to rise but other commodities as well due to this. This is going to turn into a huge mistake by the administration and in the economy’s current weakened state could very possibly lead to another catastrophic decline in our economic activity. $144 per barrel oil had a lot to do with our current contraction. It would not surprise me at all to see that price again if not even more. What are those guys in DC thinking? Certainly not of our well being.

[DismayedRepub]

07:10 PM on 04/08/2010

Should read: The problem with clamoring for the Chinese to allow the Renminbi to appreciate is......

[Greg Logan]

08:03 PM on 04/08/2010

Should read: We are now working actively on ending dependence of petroleum based energy.

[ThinkingPatriot]

05:55 PM on 04/08/2010

Shouldn't we at least match the tarrifs other countries put on our goods?

[OMEGA MAN]

04:10 PM on 04/08/2010

TARIFFS ! Flexible tariffs should be enacted with an automatic trigger activation.

[Soule23]

04:32 PM on 04/08/2010

No. Currency valuation should be enforced. Tariffs are a bad idea, because they will be reciprocated, and even more American workers will lose their jobs.

[Soule23]

03:53 PM on 04/08/2010

The lack of interest in this story is appalling. The willful manipulation of the value of the remnibi is responsible for an overwhelming percentage of the suffering experienced by the bottom 90% of income earners in both the US and China over the past four decades.

[LunaPark]

04:45 PM on 04/08/2010

China yes, but not the US. Chinese goods are cheap for the US. When China lits the remnibi strengthen, it will cause prices of everything made in China to rise. China will benefit as their currency has more purchasing power. China is already starting to consume its own production. Chinese retail sales were up 15% last year. China already buys more cars than the car loving US. Removing the peg will hurt the US. Not sure why Geithner keeps pushing for it.

[Soule23]

04:51 PM on 04/08/2010

Cheap goods are kind of a joke when your own currency is so overvalued that it destroys entire sectors of your economy (manufacturing), isn't it?

[jeffrey678]

03:40 PM on 04/08/2010

China has developed a new way to GAME the system, business week magazine has the details. They call it "Indigenous Innovation" strict standards that only Chinese companies can meet.
http://www.businessweek.com/magazine/content/10_14/b4172032516519.htm

[DismayedRepub]

06:51 PM on 04/08/2010

There is nothing "new" to this. It's been going on for a long time.

[jumperpin]

10:48 AM on 04/09/2010

Grown-ups already knew we couldn't export our way out of this. The core problem is our unrestricted appetite for out-of-sight-sweatshop produced goods. China is largely a hired host for the multi-nationals.

[guveqzero]

02:42 PM on 04/08/2010

It was almost impossible to lose this one, we hold all the cards. But if this puts them back on their gradual appreciation schedule, the victory will be hollow. As far as Treasury purchases, I would rather China investing directly in US manufacturing companies instead, because that's how jobs will be created in large quantities. This could be a blessing in disguise for us, where we might have real investors willing to put money into companies that will create real jobs instead of financing government activites like road repair. It's unfortunate, however, that we can't find the investors here in America that will invest in America.

[LunaPark]

02:37 PM on 04/08/2010

We are in trouble. Better prepare for inflation. According to Peter Schiff, "China de-pegging would cause the economic equivalent of cardiac arrest. Our economy is currently on life support provided by an endless flow of debt financing from China.

Contrary to the conventional wisdom, when China drops the peg, the immediate benefits will flow to the Chinese, not to Americans. Yes, prices for Chinese goods will rise in the United States – but so will prices for domestic goods. As a corollary, the Chinese will see falling prices across the board. As anyone who has ever been shopping can explain, low prices are a good thing."

[guveqzero]

03:05 PM on 04/08/2010

Inflation scare tactics have been used to destroy our economy for years now for the benefit of rich bondholders. And as a result, we are at the highest unemployment rate since the Great Depression. I lived through the high inflation years of Carter; and you know what, jobs were everywhere and the country was booming. Yes, I had a mortgage close to 20% interest; but, I was easily able to make payments. Yes, I was able to find work. Yes, the future did look brighter than ever. Today, can you say the same? Low prices are not always a good thing. Low prices that result in low wages causes low standards of living.

[LunaPark]

03:59 PM on 04/08/2010

In the 1970s, the US debt load was small, the savings rate was much higher, flush with cash and better able to absorb inflationary pressures. Today, we are in a situation like Argentina circa 2000-2001, an inflationary depression with high unemployment.

[Soule23]

03:56 PM on 04/08/2010

Inflation is a great way to transfer wealth from heirs who do not know how to manage it to real income earners who can use it more wisely. A little inflation would be a good thing.

[LunaPark]

04:31 PM on 04/08/2010

Inflation is a great way to destroy the working class, the poor, the seniors on fixed income. It is an immoral hidden tax. Forget about ever retiring.

[Soule23]

04:49 PM on 04/08/2010

The devaluation of the US dollar would allow us to become an export oriented nation. Sure, we wouldn't be able to buy as much junk from China. But our food, housing, education, and health care costs would not increase too much, since all of those things are produced domestically. I'm not talking hyperinflation--I'm just saying that enough uncertainty to cool down the value of the US dollar relative to other global currencies could pay huge dividends to the working class and the poor, while taking money from those with undeserved, fixed wealth. Many of our policies, SS included, need to be indexed to inflation. I wouldn't disagree with you there.

[munki]

02:13 PM on 04/08/2010

If we put pressure politely, it will work.

This rule applies to us as well.