2 September, 2014 AsiaNews.it Twitter AsiaNews.it Facebook            

Help AsiaNews | About us | P.I.M.E. | | RssNewsletter | Mobile





mediazioni e arbitrati, risoluzione alternativa delle controversie e servizi di mediazione e arbitrato
e-mail this to a friend printable version


» 12/07/2010
CHINA – UNITED STATES
US-China tug-of-war over currencies continues
Experts say that large asset bubbles created by US policy leads to inflationary pressures in China, is pushing Beijing to appreciate its currency. China instead wants a low yuan to favour exports.

Beijing (AsiaNews/Agencies) – The United States is pursuing its current monetary policy, aware that it might have inflationary consequences for other countries. China in turn will only let the yuan rise gradually, at its own discretion. Thus, the world’s two largest economies continue their tug-of-war.

Speaking on the CBS programme 60 Minutes aired on Sunday, Federal Reserve Chairman Ben Bernanke criticised China for keeping the yuan low. “China is growing very quickly,” he said. “They're risking inflation by importing US monetary policy. And that's a problem for them.”

The Fed's decision to buy bonds to keep rates low and support a fragile recovery has raised eyebrows overseas, especially in Asia, because it favours asset bubbles and worldwide inflation.

Many officials in emerging markets have accused the US central bank of actively trying to push down the dollar, saying the move risked stoking bubbles in unexpected places.

Ma Delun, a deputy governor of the People's Bank of China, last month said the Fed's programme “may add risks to the global economic imbalance, put pressure on emerging markets to adjust their international balance of payments and could also stir the formation of asset bubbles”.

In his interview with CBS, Ben Bernanke shot back. “Keeping the Chinese currency too low is bad for the American economy,” he explained, “because it hurts our trade. It's bad for other emerging market economies” as well.

Some analysts argue that Beijing undervalues its currency by 15 per cent to 40 per cent. At the same time, China’s status as an economic power requires a convertible yuan. However, the government’s policy is to hold it below its real value in order to boost exports even at the expense of other economies.

Back in 1993, Beijing had announced its intention to make the yuan convertible gradually, at its own discretion. Recently, Xiao Gang, chairman of the Bank of China, wrote in the China Daily, "The non-convertibility of the yuan is a major hurdle for China to grow into a real financial power”. However, he agreed that his country would make the yuan convertible on capital accounts in the next few years only in a gradual manner.

For years, the United States and other Western powers have called on China to make the yuan convertible. Many view the US Federal Reserve’s policy as a way to force China to revalue its currency.

In October, China’s inflation rate stood at 4.4 per cent, a 25-month high, with the highest increases in the price of basic items like food. For this reason, decision-makers in Beijing want to avoid more inflation, fearing popular unrest.

One way of stopping inflation from the United States would be to boost the value of the yuan. However, Chinese authorities have indicated that they would not slow economic growth to rein in inflation. Instead, they have adopted a series of steps to hold down prices of basic items as they did months ago for rising real estate.

For China, economic growth is also a way to maintain employment levels. Lower exports because of a higher yuan would boost the ranks of the jobless by several millions.


e-mail this to a friend printable version

See also
07/03/2009 CHINA
At G8 Summit China pushing for an alternative to US dollar
11/20/2009 CHINA – UNITED STATES
US Congress threatens sanctions over China’s yuan
01/28/2008 CHINA
Yuan continues its rise as China is covered in snow
04/12/2010 CHINA – UNITED STATES
Hu Jintao to meet Obama to talk about Iran but especially the yuan
11/12/2009 CHINA – UNITED STATES
Hu and Obama in the war over the yuan

Editor's choices
IRAQ-ITALY
"Adopt a Christian from Mosul," the thanks of the Patriarch Louis Sako; the concerns of the Bishop of Kurdistan
by Bernardo CervelleraThe head of the Chaldean Church is grateful for the AsiaNews campaign and hopes that "this chain of solidarity will reach far and wide”. Helping refugees to remain in Iraq. But many want to flee abroad. The bishop of Amadiyah where thousands of displaced people have found haven in churches and homes: We also help the Arabs (Muslims), and Yazidis, for free and without looking at our confessional differences.
ITALY - IRAQ
"Adopt a Christian from Mosul" to respond directly to Iraq's emergencyAsiaNews is launching a fundraiser to support Christians targeted by the Islamic State, thus responding to a request by the Patriarch of Baghdad and Pope Francis's urgent appeal "to guarantee all necessary assistance - especially the most urgently needed aid - to the great multitude of people who have been driven from their homes, whose fate depends entirely on the solidarity of others." More than 100,000 people have been forced to flee their homes leaving everything behind and now have nothing to live on. To help them, five euros a day are enough. The funds raised will be sent to the Patriarchate of Baghdad, which will distribute them according to the needs of each family.
CHINA - VATICAN
Wenzhou bishop and priests slam government's campaign against crosses and churches in Zhejiang
by Eugenia ZhangFor Mgr Vincent Zhu Weifang, from the official Church, the campaign of destruction is increasing social instability. It is real persecution against the Christian faith. The bishop apologises for failing to intervene sooner. He was hoping that the campaign would end quickly. Catholics and Protestants suffer injuries as they attempt to defend their sacred buildings. For priests in Wenzhou, the campaign is unfair and touches buildings that have all the right papers. Such "stupid acts" by the government are undermining social harmony.

Dossier
by Giulio Aleni / (a cura di) Gianni Criveller
pp. 176
by Lazzarotto Angelo S.
pp. 528
by Bernardo Cervellera
pp. 240
Copyright © 2003 AsiaNews C.F. 00889190153 All rights reserved. Content on this site is made available for personal, non-commercial use only. You may not reproduce, republish, sell or otherwise distribute the content or any modified or altered versions of it without the express written permission of the editor. Photos on AsiaNews.it are largely taken from the internet and thus considered to be in the public domain. Anyone contrary to their publication need only contact the editorial office which will immediately proceed to remove the photos.