Reuters calls it like it is on China's undervalued currency
The world trading community has been putting heavy pressure on Beijing in recent years to properly revalue its currency. This is because China's deliberately undervalued currency not only provides a huge boost for Chinese exports, but also violates world trade agreements and has led to widespread distortions of global markets.
Ironically, the Chinese economy may be facing enough troubles of late that the nation's currency, the yuan, may actually stall on its own rather than appreciate in a previously hoped for manner.
Reuters reports that financial analysts are "reconsidering a widely-held assumption that the currency would appreciate 2-3 percent this year" due to a "slowdown in China."
This is a serious problem, coming as it does when Beijing has at least been brought to the table about getting its currency in order.
More significantly, it poses real problems for the U.S. America's manufacturing advocates have consistently argued that an undervalued Yuan is harming U.S. competitiveness:
The wild card, of course, is how the United States, which faces presidential election this year, will respond to a pause in yuan appreciation.
There has always been a strong diplomatic aspect to the yuan exchange rate, and much of the rises in its value against the dollar have been in reaction - albeit usually delayed - to U.S. pressure.
Related recent Blogs
- RADIO: AAM's Scott Paul on Leslie Marshall Radio Show, May 20, 2013 • by scapozzola • 05/21/2013
- May 21, 2013 Headlines: Tensions with North Korea, a stronger WTO, and more. • by LRaup • 05/21/2013
- Shoring up our security means addressing the China challenge • by mmcmullan • 05/20/2013
- Quote of the Day from Caterpillar's Doug Oberhelman • by LDonia • 05/20/2013
- May 20, 2013 Headlines: Manufacturing & social media, growth of the U.S. economy, and more. • by LRaup • 05/20/2013
- President Obama visits Baltimore factory to promote infrastructure investment as a means of revitalizing the middle class • by LDonia • 05/17/2013
- May 17, 2013 Headlines: Strengthening our national security, focusing on jobs, and more. • by LRaup • 05/17/2013
- Five reasons you should be concerned about the U.S. military's reliance on foreign manufacturers. • by LDonia • 05/16/2013
- Looking for a manufacturing job? Consider heading to one of these ten metro areas! • by mmcmullan • 05/16/2013
- National Retail Federation dismisses global safety plan for garment factories while Cambodian shoe factory collapses. • by LDonia • 05/16/2013