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Your View e-polls e-paper Subscription Weather RSS Feeds e-poll document.write(''); content = document.getElementById("pollcontainer").innerHTML; myReg=/Sorry/; myAr=myReg.exec(content); if (myAr == "Sorry") { // document.getElementById("pollcontainer").style.height="0"; document.getElementById("pollcontainer").style.display="none"; } document.write(''); Yuan debate is pointless – and hurts recovery Last Updated: April 05. 2010 7:13PM UAE / April 5. 2010 3:13PM GMTThere are few areas of sovereignty so dear to a country as its currency. Telling a country to revise its exchange rates is akin to asking it to change the colours on its flag or the words to its national anthem. So it is hardly surprising that the war of words between Washington and Beijing as to the relative strengths of the dollar and the yuan is growing increasingly heated. American economists, who should know better, are arguing that the yuan is pegged artificially low to the dollar, allowing the Chinese an advantage to help sell their goods. China has held its currency fixed to the dollar since the middle of 2008. During that time it appreciated against many of the world's other currencies, before sliding back as the fear of a global meltdown receded and investors once again started looking for returns rather than just safety.
Some Americans now argue that their country's massive trade deficit can be attributed to this currency mismatch – China after all accounts for about 40 per cent of it. They argue that either the yuan should be revalued, or tariffs imposed on imported Chinese goods. Revalue the yuan, they say, and up to a million jobs can be created in the United States.This is palpable nonsense. It is not as if the Chinese have never revalued their currency. True, an expansion of the trading band within which the yuan's value now moves would allow the currency to respond more nimbly to fluctuations. This would reduce jarring discrepancies in rates between the yuan and a host of currencies.
Nevertheless, changes put in place in 2005 did allow the yuan eventually to rise by 20 per cent against the dollar over three years, until Beijing feared that any further rise would hit exporters. That period was hardly a golden age of American job creation. Nor would suddenly changing the exchange rate produce a sudden and marked improvement. As Stephen Roach, the chairman of Morgan Stanley Asia has pointed out, changes in relative prices “re-slice the pie rather than expand or shrink it”. What is needed to correct the imbalance is for Americans to save more and the Chinese to spend more on consumption goods – not just on houses and flats, which are another form of savings.
document.write('');The US Treasury has been preparing a report on this thorny topic, publication of which has been delayed. It would good for everybody if it were permanently shelved. The consequences of escalating protectionism would mean a return to the politics of the 1930s, and make last year's financial crisis look mundane.
Send to friend Print var addthis_pub="noahkhan"; var addthis_brand = "The National"; var addthis_logo = "http://www.thenational.ae/images/the_national_logo.gif"; var addthis_logo_color = "3261A5"; Bookmark & Share Yuan debate is pointless – and hurts recovery Last Updated: April 05. 2010 7:13PM UAE / April 5. 2010 3:13PM GMTThere are few areas of sovereignty so dear to a country as its currency. Telling a country to revise its exchange rates is akin to asking it to change the colours on its flag or the words to its national anthem. So it is hardly surprising that the war of words between Washington and Beijing as to the relative strengths of the dollar and the yuan is growing increasingly heated. American economists, who should know better, are arguing that the yuan is pegged artificially low to the dollar, allowing the Chinese an advantage to help sell their goods. China has held its currency fixed to the dollar since the middle of 2008. During that time it appreciated against many of the world's other currencies, before sliding back as the fear of a global meltdown receded and investors once again started looking for returns rather than just safety.
Some Americans now argue that their country's massive trade deficit can be attributed to this currency mismatch – China after all accounts for about 40 per cent of it. They argue that either the yuan should be revalued, or tariffs imposed on imported Chinese goods. Revalue the yuan, they say, and up to a million jobs can be created in the United States.This is palpable nonsense. It is not as if the Chinese have never revalued their currency. True, an expansion of the trading band within which the yuan's value now moves would allow the currency to respond more nimbly to fluctuations. This would reduce jarring discrepancies in rates between the yuan and a host of currencies.
Nevertheless, changes put in place in 2005 did allow the yuan eventually to rise by 20 per cent against the dollar over three years, until Beijing feared that any further rise would hit exporters. That period was hardly a golden age of American job creation. Nor would suddenly changing the exchange rate produce a sudden and marked improvement. As Stephen Roach, the chairman of Morgan Stanley Asia has pointed out, changes in relative prices “re-slice the pie rather than expand or shrink it”. What is needed to correct the imbalance is for Americans to save more and the Chinese to spend more on consumption goods – not just on houses and flats, which are another form of savings.
document.write('');The US Treasury has been preparing a report on this thorny topic, publication of which has been delayed. It would good for everybody if it were permanently shelved. The consequences of escalating protectionism would mean a return to the politics of the 1930s, and make last year's financial crisis look mundane.
Send to friend Print var addthis_pub="noahkhan"; var addthis_brand = "The National"; var addthis_logo = "http://www.thenational.ae/images/the_national_logo.gif"; var addthis_logo_color = "3261A5"; Bookmark & Share function storeCaret(textEl) { if (textEl.createTextRange) textEl.caretPos = document.selection.createRange().duplicate(); } if ((document.all) && (navigator.userAgent.indexOf('Opera')== -1)) { IE = true; } else { IE = false; } function doSubmitMessage(aFormId,aUrl){ aForumForm = aFormId; aCreateUrl = aUrl+"&omniture=0"; aForumMessageUrl = ''; aAjaxDiv = document.getElementById("cpost"); processForum(aAjaxDiv); }Have your say
Please log in to post a comment try { if (document.getElementById("_userEmail").innerHTML = '') { document.newmessageform.Body.disabled=true; document.newmessageform.post.disabled = true; } } catch(e) { document.newmessageform.Body.disabled = true; document.newmessageform.post.disabled = true; } Other Opinion stories Palestinian proposal needs a back-up plan Other ideas for police outreach Lebanon looks for cover as Tribunal takes on Hizbollah Yuan debate is pointless – and hurts recovery Fill the vacuum in the tribal areas or the Taliban will Legal net too loose to catch pirates document.write(''); Top stories English Premier League to be available on internet TV Fraudsters to face tougher sentences The craftsman whose model boat yard is made from scrap Time runs out for the pupils with no school British general election set for May 6 Cellucom shuts up shop amid legal row All eyes on Camp Nou for Arsenal's visit Your View How do you feel about performance related university fees? What can be done to keep online banking safe?Are Emirati women really under pressure to spend huge sums on clothes, jewellery and perfume?Are you looking forward to seeing City Of Life?Sheikh Ahmed: leave your message of condolence Most popular stories Most read Most e-mailed Israeli journalist to go on trial for treason over leaked papers Students who fail 'should pay for college' Cellucom shuts up shop amid legal row IPL comes to UAE cinemas The craftsman whose model boat yard is made from scrap Court asked to define 'Israeli' Lover of dead baby's mother pleads guilty Fraudsters to face tougher sentences First cheetahs born in UAE in 38 years UFC is caged and ready to rumble Prayers for Sheikh Ahmed begin today Jumeirah Beach plaza struggling for customers Women pushed to spend, spend, spend 'Phishing' raid empties bank accounts Pesticide spray investigated after baby boys die Gold souk vendors hold back rent as sales slow Meraas lawyer faces charge in corporate secrets case Fujairah fuels up to expand oil hub Israeli journalist to go on trial for treason over leaked papers Giselle Pettyfer, the strategist behind Dubai's sporting hopes var countries=new ddtabcontent("countrytabs") countries.setpersist(true) countries.setselectedClassTarget("link") //"link" or "linkparent" countries.init() Products & Services Your View e-polls e-Paper RSS Feeds Home UAE World Business Sport About us Contact us Terms & Conditions FAQ Site map© Copyright of Abu Dhabi Media Company PJSC.
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Some Americans now argue that their country's massive trade deficit can be attributed to this currency mismatch – China after all accounts for about 40 per cent of it. They argue that either the yuan should be revalued, or tariffs imposed on imported Chinese goods. Revalue the yuan, they say, and up to a million jobs can be created in the United States.This is palpable nonsense. It is not as if the Chinese have never revalued their currency. True, an expansion of the trading band within which the yuan's value now moves would allow the currency to respond more nimbly to fluctuations. This would reduce jarring discrepancies in rates between the yuan and a host of currencies.
Nevertheless, changes put in place in 2005 did allow the yuan eventually to rise by 20 per cent against the dollar over three years, until Beijing feared that any further rise would hit exporters. That period was hardly a golden age of American job creation. Nor would suddenly changing the exchange rate produce a sudden and marked improvement. As Stephen Roach, the chairman of Morgan Stanley Asia has pointed out, changes in relative prices “re-slice the pie rather than expand or shrink it”. What is needed to correct the imbalance is for Americans to save more and the Chinese to spend more on consumption goods – not just on houses and flats, which are another form of savings.
The US Treasury has been preparing a report on this thorny topic, publication of which has been delayed. It would good for everybody if it were permanently shelved. The consequences of escalating protectionism would mean a return to the politics of the 1930s, and make last year's financial crisis look mundane.
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Top stories English Premier League to be available on internet TV Fraudsters to face tougher sentences The craftsman whose model boat yard is made from scrap Time runs out for the pupils with no school British general election set for May 6 Cellucom shuts up shop amid legal row All eyes on Camp Nou for Arsenal's visit Your View How do you feel about performance related university fees? What can be done to keep online banking safe?Are Emirati women really under pressure to spend huge sums on clothes, jewellery and perfume?Are you looking forward to seeing City Of Life?Sheikh Ahmed: leave your message of condolence Most popular stories Most read Most e-mailed Israeli journalist to go on trial for treason over leaked papers Students who fail 'should pay for college' Cellucom shuts up shop amid legal row IPL comes to UAE cinemas The craftsman whose model boat yard is made from scrap Court asked to define 'Israeli' Lover of dead baby's mother pleads guilty Fraudsters to face tougher sentences First cheetahs born in UAE in 38 years UFC is caged and ready to rumble Prayers for Sheikh Ahmed begin today Jumeirah Beach plaza struggling for customers Women pushed to spend, spend, spend 'Phishing' raid empties bank accounts Pesticide spray investigated after baby boys die Gold souk vendors hold back rent as sales slow Meraas lawyer faces charge in corporate secrets case Fujairah fuels up to expand oil hub Israeli journalist to go on trial for treason over leaked papers Giselle Pettyfer, the strategist behind Dubai's sporting hopes var countries=new ddtabcontent("countrytabs") countries.setpersist(true) countries.setselectedClassTarget("link") //"link" or "linkparent" countries.init() Products & Services Your View e-polls e-Paper RSS Feeds Home UAE World Business Sport About us Contact us Terms & Conditions FAQ Site map© Copyright of Abu Dhabi Media Company PJSC.
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