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The eurozone crisis underscores China's need to rebalance its economy, U.S. Secretary of...

The eurozone crisis underscores China's need to rebalance its economy, U.S. Secretary of Commerce Gary Locke tells investors in Beijing this morning, pressing again for a more flexible yuan. "You need to export less to other countries. And now that you're affected by the EU, it is all the more urgent to not be so reliant on exports to build your economy and instead to increase your domestic consumption."
Comments (3)
  • billddrummer
    , contributor
    Comments (1740) | Send Message
     
    Where are the adults? How dare the Secretary of Commerce snipe at the currency management policies of another country--indeed, a country that is immensely important to the future of the United States?

     

    The US is no longer the envy of the world. It's large, militarily strong, but no longer commands the respect it did merely 10 years ago.

     

    It's apparent to me that the long slide into oblivion has begun. The US is acting like a minor nation-state, not the most powerful country on earth.

     

    That is truly a shame. This society will now join the ranks of the Greeks, Romans, Spanish, and British.
    21 May 2010, 11:46 AM Reply Like
  • Tack
    , contributor
    Comments (14385) | Send Message
     
    Apparently, somebody needs to explain to the Secretary that his suggestion is absurd for China, most particularly because of the fallen euro.

     

    If China were to float or revalue the yuan, at the same time that the euro has fallen, then two things would happen, neither of which would be good for China (and probably not the rest of the world, either):

     

    1) the reverse directions of the yuan and euro would decrease China's exports to the U.S. and, even more, to Europe

     

    2) at the same time, the radically cheaper euro would provide an incentive for Chinese businesses and consumers, where possible, to substitute cheaper import product over those domestically-produced.

     

    So, as China has been spending many hundreds of billions trying to build its internal infrastructure, sources of supply and economy, it would suddenly be faced with less internal demand for products and would be generating less export income, at the same time.

     

    This sounds like a wonderful recipe for a large, "family-size" recession, or worse.
    21 May 2010, 12:01 PM Reply Like
  • sa_member_520531
    , contributor
    Comments (2) | Send Message
     
    Totally absurd. We should be thanking China right now. Can you imagine if they were in debt as much as we were? The quickest way to have equities and bonds both be in a bear market is having China/Japan walk away from our Treasuries. That would not be good for the housing market or anyone's economy.
    21 May 2010, 01:22 PM Reply Like
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