Chinese Defiant Over the Value of the Renminbi

[pscot]

http://www.nytimes.com/2009/12/28/business/global/28iht-yuan.html?_r=1&partner=rss&emc=rss

BEIJING — Prime Minister Wen Jiabao of China struck a defiant note Sunday about the country’s exchange rate policy, saying the government would not give in to foreign demands that it let the renminbi rise in value.

Mr. Wen said in an interview with Xinhua, the official Chinese news agency, that the currency was facing growing pressure to appreciate, but he insisted that China was committed to keeping it stable, having virtually pegged it to the dollar since the global financial crisis worsened in the middle of last year.

“We will not yield to any pressure of any form forcing us to appreciate,” he said. As I have told my foreign friends, on one hand, you are asking for the yuan to appreciate, and on the other hand, you are taking all kinds of protectionist measures.” The renminbi is known informally as the yuan.

The true purpose of these calls is to contain China’s development, he said.

The renminbi has fallen against the currencies of most of China’s trading partners this year because it has been fixed to the weakening dollar, while China’s economy has bounced back strongly. U.S. senators have asked for an investigation into whether current renminbi policy represents a subsidy that would justify tariffs on Chinese imports (more)

[FreakinDJ]

1. Of course it justifies tariffs

The US still has a 2% tariff in place against China's 20-40% tariff on American made goods

This is ridiculous

[bossy22]

2. this is not unexpected

their economy thrives off their exports due to a depreciated currency. Most analysts believe that if the yuan (or renminbi) were allowed to float that it would appreciate 25-35%...this would be a major blow to their economy