TOKYO - China, faced with factory closures and slowing export growth as the global economy slows, is apparently prepared to weaken the value of its currency against the US dollar in defiance of a key policy goal of the United States, even as US Treasury Secretary Henry Paulson visits Beijing this week. A weaker yuan, which would signal an about-turn by Beijing after three years of appreciation, will help to hold down prices of China's exports, raising the likelihood of further increases in its already contentiously high trade surplus with the US. At the same time, a lower yuan will make imports to China from the US more expensive at a time when American workers are fast losing jobs as factories there close on falling demand at home and abroad.
Chinese Vice Premier Wang Qishan opened the two-day Strategic Economic Dialogue by calling for the United States to stabilize its own economy.Wang also urged Washington to protect Chinese investments in the United States. The Chinese vice premier said China is willing to work with the United States on the most pressing issue - coping with the global financial turmoil.
Dec. 4 (Bloomberg) -- U.S. Treasury Secretary Henry Paulson is pressing for a stronger yuan at talks that started in Beijing today, just three days after the currency's biggest drop since the nation scrapped a fixed exchange rate in 2005. "A spanner's been thrown into the works," said Dwyfor Evans, a strategist with State Street Global Markets in Hong Kong. "It may mean a more heated debate on the currency." The fifth round of the Strategic Economic Dialogue between China and the U.S. is a swansong for Paulson, who initiated the talks and will exit with the Bush administration. The currency appreciation that he's applauded -- a 20 percent gain since the end of a peg to the dollar -- may be wound back as President Hu Jintao seeks to protect exporters from the global recession.
Dec. 4 (Bloomberg) -- U.S. Treasury Secretary Henry Paulson is pressing for a stronger yuan at talks that started in Beijing today, just three days after the currency's biggest drop since the nation scrapped a fixed exchange rate in 2005.
"A spanner's been thrown into the works," said Dwyfor Evans, a strategist with State Street Global Markets in Hong Kong. "It may mean a more heated debate on the currency."
The fifth round of the Strategic Economic Dialogue between China and the U.S. is a swansong for Paulson, who initiated the talks and will exit with the Bush administration. The currency appreciation that he's applauded -- a 20 percent gain since the end of a peg to the dollar -- may be wound back as President Hu Jintao seeks to protect exporters from the global recession.
China's mercantilist policies can work as long as they are willing to finance US debt, and it seems they are. It won't solve the overall crisis, it will just mean that Americans still live above their (reduced) means, and the problem remain for later... In the long run, we're all dead. John Maynard Keynes
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
Some of its increase may be due to grocery and drug sales to customers that previously shopped more up-scale shops. Those stores, J.C.Penny, Macy's, etc have been hit hard, down double digits in many cases. They also bought from China and are cutting back hard. It will get much worse, and soon. Unemployment is accelerating. Can China live by Wal-Mart alone? As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
HONG KONG (Reuters) - China Investment Corp, the sovereign wealth fund that has incurred steep paper losses on its stakes in U.S. financial firms, said on Wednesday it is "not brave enough" to invest in foreign financial firms and lacks confidence in the shifting U.S. financial regulatory situation. "It's changing every week. How can I be confident?," Lou Jiwei, chairman of CIC, said during the Clinton Global Initiative event in Hong Kong, referring to U.S. government efforts to rescue the devastated financial services sector. He said the fund continued to make investments overseas, and was looking to diversify geographically to include emerging economies. "We are still actively making investments outside, and we will continue our investments," he said during a panel discussion. Lou made his remarks just ahead of talks scheduled in Beijing between U.S. Treasury Secretary Henry Paulson and Chinese officials in the fifth round of a so-called "strategic economic dialogue" that Paulson initiated in 2006. Lou said the world should not look to China to resolve the financial crisis.
HONG KONG (Reuters) - China Investment Corp, the sovereign wealth fund that has incurred steep paper losses on its stakes in U.S. financial firms, said on Wednesday it is "not brave enough" to invest in foreign financial firms and lacks confidence in the shifting U.S. financial regulatory situation.
"It's changing every week. How can I be confident?," Lou Jiwei, chairman of CIC, said during the Clinton Global Initiative event in Hong Kong, referring to U.S. government efforts to rescue the devastated financial services sector.
He said the fund continued to make investments overseas, and was looking to diversify geographically to include emerging economies.
"We are still actively making investments outside, and we will continue our investments," he said during a panel discussion.
Lou made his remarks just ahead of talks scheduled in Beijing between U.S. Treasury Secretary Henry Paulson and Chinese officials in the fifth round of a so-called "strategic economic dialogue" that Paulson initiated in 2006.
Lou said the world should not look to China to resolve the financial crisis.
