The truth is that no country truly subjects its currency to the dictates of the market forces because that would be folly. In saying that, China is religiously resolute on this issue and has thwarted many efforts on the part of the Americans and Europeans to talk them into letting its currency, The Yuan, compete in the financial markets without any help from internal Chinese manipulation.
For example, China has its Yuan pegged to the American dollar at an exchange rate of almost seven Yuans to the dollar - this arbitrary setting according to the West adversely affects trade to the detriment of West and a benefit to the Chinese. The Americans and the Europeans were expecting the Chinese to finally ease up on the control of its currency during the coming scheduled G-20 meeting.
Apparently, Secretary of The Treasury Geitner had delayed a scathing Treasury report on the Chinese interference in its currency - and the report included punitive actions if the Chinese insisted in not allowing the Yuan some latitude. The Americans, in particular, thought that they had persuaded the Chinese to ease up on its control of its currency because a prominent Chinese official Zhou Xiaochuan had intimated this easing. The political and financial pundits are saying that because of the financial woes in Europe (Greece, Spain, and Portugal), have made the Chinese to maintain their vice-like grip on its currency. This critique of the Chinese on their undue influence on its currency is not new – we have heard it for several administrations.
Chairman Levin of the House Ways and Means Committee has threatened some sort of punishment if the Chinese do not float the Yuan… but there are skeptics in the United States who doubts that Washington will get tough with the Chinese because they are the ones providing the money needed to fund our massive debt.
To punctuate the Chinese position and resolve, Vice Foreign Minister Cui Tiankai said that, “The Yuan is China’s currency and this is not an issue the international community should discus.” Once again, the Chinese has found away to put off discussing its floating of the Yuan and Washington and the West are left pondering what to do to engender some balance in competing with their respective currencies in the market place.
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الجمعة، 18 يونيو 2010
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