While avoiding the label of “currency manipulator,” China’s currency, the renminbi, continues to face criticism by the US Treasury Department for being “significantly undervalued.” Now, an analysis of global trade data seeks to end the correlation between trade surplus and currency exchange rates.
With China’s economy slowing in recent months and the US economic recovery still sluggish, both countries have emphasized trade as a means of promoting and sustaining growth. While the possibility of economic friction between China and the US certainly exists, increasing trade does not need to be a zero sum game.
It does not have to be “Quantitative Easing III (QE-III)”, or in any case QE-III can take a very different form from QE-I and QE-II. The World economy desperately needs a healthy U.S. economy and the whole World wishes the Federal Reserve Board every success.
Recently, there has been an increasing call from the global sphere for the Chinese government to faster globalization of the RMB, since stronger economic growth in China can also help pull the rest of the world out of its current financial slump. The next question comes to whether China is ready for the challenge in next five to ten years.
The next few months will reveal whether the central government can really turn the growth taps on and off at will. Quality now matters far more than quantity alone. Following through on much needed and talked about reforms to spur domestic consumption will create a more stable environment.
Recently, the U.S.-Chinese Strategic & Economic Dialogue (S&ED) was overshadowed by international politics, rapid escalation of challenges in the Eurozone, and debates on the slowdown in Asia. Nonetheless, the Dialogue was surprisingly productive, in light of the magnitude of challenges facing the global economy and Sino-U.S. bilateral relations today. Most importantly, it precipitated a major [...]
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