Irony Central: Beijing creates its own inflation, wants to tame it
Posted by scapozzola on 08/31/2011
China deliberately undervalues its currency to gain an export advantage. The practice has certainly worked in terms of competing with U.S. manufacturing: China racked up a $273 billion trade surplus wit the U.S. in 2010.
The only drawback is that an undervalued currency means inflation at home.
However China's Premier, Wen Jiabao says that the currency peg isn't going anywhere: “Stabilizing general price levels still is the most important mission of macro-controls and the orientation of macro-controls cannot change.”
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