As the United Nations convenes for its fall meetings, world leaders gather in New York, which creates the opportunity for traffic jams and face-to-face bilateral meetings for heads of state. Chinese Premier Wen Jiabao will take the time to discuss serious issues with President Obama–and, of course the trade issue will take center stage. Premier Wen will make his case that the Chinese trade surplus is not a question of currency value but rather economic structure. Wen will argue that the huge trade surplus will correct as the structure of China’s economy becomes more domestic demand driven. The Chinese believe that capitalist history is replete with trade surpluses as a part of any capitalist society’s development. The U.S. and Great Britain both ran massive surpluses as their economies transitioned from agrarian-based to industrialized nations.
Posts Tagged ‘NAFTA’
Notes From Underground: Wen to meet Obama Thursday; Zapatero gives the European debt crisis the boot
September 22, 2010Notes From Underground: Kan shakes off the threat from Ozawa
September 14, 2010The political turmoil that has roiled the markets has been resolved and Japanese Prime Minister Naoto Kan handily defeated the old warhorse, Ichiro Ozawa. The DOLLAR/YEN was sold off as the markets were attune to the Kan victory. Ozawa was presumed to lead a battle for Japanese intervention to stem the YEN strength. Now it seems that the markets have been resolved and the present regime will allow the markets to set the YEN rate, which is being interpreted as further YEN appreciation.
Notes From Underground: Chinese announce that they will make YUAN more flexible
June 20, 2010The weekend’s financial news is being dominated by the announcement from the People’s Bank of China, who said it will break the dollar peg and give the Reminbi greater flexibility. The PBC said it would allow greater currency flexibility but will not let the currency move more then 0.5 percent per day in keeping its present bands in place–that is, up or down. Directly from the PBC statement:
“With the Balance of Payments[BOP] accountmoving closer to equilibrium,the basis for large-scale appreciation of the RMB exchange rate does not exist … the People’s Bank of Chinahas decided to proceedfurther with reformof the RMB exchange rate regime and to enhance the RMBexchange rate flexibilty.”