Calling It Like I see It

Posted: June 7, 2011 in News
Tags: ,

China official says U.S. could pursue weak dollar policy.

BEIJING (Reuters) – China should guard against risks from “excessive” holdings of U.S. assets as Washington could pursue a policy to weaken the dollar, a senior currency regulator said in comments published on a website that briefly pushed the dollar lower. [China official says U.S. could pursue weak dollar policy]


Comments from Readers

Bill: Via Faceook

“When I read this article all I think about is how China is worried that we will manipulate our currency’s valuation much like they do and have been doing for decades.

Beijing engages in quantitative easing on a grand scale–hogging growth and exporting inflation. It is time to recognize what it does–currency manipulation and protectionism to gain competitive advantage–and address it forthrightly.

Each year, China maintains an undervalued currency by printing yuan to purchase about $450 billion in dollars and other foreign currencies. This reduces domestic Chinese consumption and places a 35 percent subsidy on Chinese exports, accelerates investment and jobs creation in China, and suppresses growth in the United States and Europe, which contributes importantly to sovereign debt problems on both sides of the Atlantic.

China also uses those yuan to subsidize purchases of oil and other scarce commodities it lacks, creating global inflation.

Stagflation results–slower growth and more inflation in the United States and Europe.

Diplomacy has failed to persuade China to relent–raising the value of its currency 10 percent doesn’t do much good when the intrinsic value of the yuan continues to rise, and it remains undervalued by several multiples of 10 percent.”

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