Now I have heard everything about China. Just when you thought the yuan issue could not get any more political, Chinese business executives are saying that they would be supportive of a freely traded yuan. How can business leaders be political? This is China which has to be viewed through a lens of all statements having levels of complexity.
They argue that the yuan would strengthen which would be good for consumer purchasing power and cut import costs. For example, a steel maker is arguing that a higher yuan would allow for importing cheaper ore. Bankers are arguing that the yuan peg distorts their money markets. Lenovo's president stated that yuan appreciation would not be a"bad thing". Of course, not all agree with these arguments. Firms which face tight margins could face bankruptcy if there is a higher yuan.
China reported a trade deficit for March of $8 billion.
It looks like China will increase the yuan sooner than expected. I had believed that this would occur during the late summer. Now, I think that the increase will happen sooner as long as the Chinese do not feel pressured by the US government.
They argue that the yuan would strengthen which would be good for consumer purchasing power and cut import costs. For example, a steel maker is arguing that a higher yuan would allow for importing cheaper ore. Bankers are arguing that the yuan peg distorts their money markets. Lenovo's president stated that yuan appreciation would not be a"bad thing". Of course, not all agree with these arguments. Firms which face tight margins could face bankruptcy if there is a higher yuan.
China reported a trade deficit for March of $8 billion.
It looks like China will increase the yuan sooner than expected. I had believed that this would occur during the late summer. Now, I think that the increase will happen sooner as long as the Chinese do not feel pressured by the US government.
No comments:
Post a Comment