China's trade surplus dropped by 63% in February, according to their government. The above photo is from telegraph.co.uk
Wednesday, April 14, 2010
Unknown Calamity Ahead?
Time to finish up where I left off with "Circle of Life" - the predicament of China not allowing its currency to float. Many can argue that damage has been done by their currency peg. If they allowed the currency to float, their economy would be forced to downscale, allowing other South East Asian economies that are rich in resources to replace it, at least in some industrial sectors. The truth is, I don't know what will happen if they keep their currency pegged or if they end up devaluing it again. The feeling I have about it is that the government has a choice for the long run - take lots of damage or marginally less damage. Or maybe, China will revolutionize their economy/financial markets once again. Time will tell.
China's trade surplus dropped by 63% in February, according to their government. The above photo is from telegraph.co.uk
China's trade surplus dropped by 63% in February, according to their government. The above photo is from telegraph.co.uk
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Hey Nick,
ReplyDeleteI am glad you are worried with issue over Yuan, as many people are looking at this matter with straight eyes.
Interesting to think that China at the same it has been gaining on trade supluses, in the other hand, the country is sinking in its fiscal deficit. The government compensate this non-equilibrium with its huge sovereign fund, but this source of money won't last forever.
Many say that when chinese people stop to consume and the industry start to plummet, the bubble will burst! Wait and see!