January 23, 2009

Does China Manipulate its Currency?

President Obama thinks so as I pointed out in my election eve assessment of Obama's China Policy. Now incoming Treasury Secretary Geithner confirms this view.

But what can the USA do about it? Unlike Japan, the USA cannot tell Beijing what to do. So there will be no "Plaza Accord" with Beijing to force a major appreciaiton of the Yuan. Beijing is not afraid of the USA. That was amply demonstrated on January 11, 2007, when the Chinese shot down one of their weather satellites to demonstrate they can take out any rival's communications ability.

This week's Economist mag recognizes the currency conundrum: the choices for Obama are between the proverbial rock and a hard place: veto any Congressional measure to impose countervailing duties on Chinese imports or put them in place only to see them reversed by the WTO before massive price inflation occurs.

Labels: , ,

Comments: Post a Comment

Subscribe to Post Comments [Atom]

<< Home

This page is powered by Blogger. Isn't yours?

Subscribe to Posts [Atom]