Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Yes, but the US economy is far from the only growth driver for China ... there is Europe and Japan as well as domestic growth ... and indeed, to the extent that China is simply financing the export of Chinese output to try to keep labor intensive producers afloat, that can be done by providing finance to LDC's to purchase Chinese products, with long term resource contracts from shaky governments certainly at a rough par with US Treasury securities ... a shaky command over something (material resources) certain to be of value against a reliable command over something (USD) of shaky value.

If imported inflation threatens to upset domestic growth, then sacrificing competitiveness in the US market may be the lesser of two evils, and China always reserves the power to reduce domestic inflation by increasing the weight of the Euro in its basket peg at the expense of the USD.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Apr 28th, 2008 at 07:17:25 PM EST
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Carrie 4