P11_Beijing_can_afford_to_stand_firm_in_Seoul - The group 1...

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The group 1’ presentation Beijing can afford to stand firm in Seoul Yao Yang From: Financial Times 2010/11/11 There is a fear about the coming of a currency war that make the G20 want to reach an agreement in which large countries co-ordinate their currency. American has an intent that revalues the Renminbi, which is the same with Plaza Accord in 1985 forcing depreciating the US dollar in relation to the Japanese Yen. However, China is a country always standing for its point. We can easily realize the fact that it is very hard to convince China to appreciate its Renminbi. The US’s loose monetary policy has largely raised a row among analysts, officials and academics in China. Moreover, when FED set up a second round of quantitative easing (QE2) of $600 bill, it has been reinforced this view. In the way that American takes its domestic problem to other countries, a double standard is realized very clearly in China that will make up an un-fair atmosphere in the relationship between China and American. The discussion between the leaders in G20 cannot help convince the china’s leader to revalue the renminbi. Although the way that China makes undue gains by keeping the currency in a low value is blamed but the nation is also contributing to the world by supply cheap goods and credit. Besides, fears over employment, exporter’s lobbying and the desire to see “the stronger” China among populace are motivating its leaders to take the stern position. The latter prevents the China’s Leaders to revaluation is “yielding” to foreign pressure because fifty percent of China’s export is contributed by foreign-owned companies The real question is posed: “China has the power, long enjoyed by the US, to base steadfast against outside pressures?”. In other words, China will only undertake a fast review if other countries can believably threaten punishment. The long-standing view in China is that the US and its allies lack the will to punish, even if they may have the means. “If in the midterm elections, the political dust of falls to earth, Americans will see they benefit from the cheap goods a weak renminbi provides”, China’s leaders believe. Research suggests that even a 20 per cent appreciation will have minimal
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impact on the US economy. On the other hand, China, will see employment and GDP drop by over 3 per cent. No astonished there is a firm belief among China’s elites that consistent American policymakers are not serious about appreciation, because it makes no sense for a rational actor to inflict costs on others without profits. America’s efforts to discuss the currency issue at forums such as the G20 will work or not; there is no sign that other countries are going to leap on the American bandwagon. The European Union expressed concerns at a recent Sino-EU summit, but it too faces
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P11_Beijing_can_afford_to_stand_firm_in_Seoul - The group 1...

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