Home>News Center>China
       
 

RMB no scapegoat for US woes
By Tao Zhipeng and Xu Ruiheng (China Daily)
Updated: 2005-02-05 01:32

Some US financial heavyweights, including Fed Chairman Allen Greenspan, have been raising their voices in recent years over the "appreciation of renminbi," while dodging the issue of the plummeting US dollar's exchange rate. They claim that renminbi must be revalued if the Chinese economy is to avoid overheating.

It is still fresh in people's memory that China, in the face of great risks and pressure, made painstaking efforts to maintain stability of the renminbi exchange rate during the 1997 Asian financial crisis. In this way, China contributed greatly to defusing the crisis and reversing the declining trend of Asian and global financial sectors. It should not be forgotten that all this was done at the expense of China's own interests.

Recently, a number of banking, research and media institutions, including the Hong Kong & Shanghai Banking Corp, Morgan Stanley, Business Week and the Washington-based Cato Institute issued their research reports, criticizing the unjustified insistence that "renminbi should appreciate." They suggested the strategy of "maintaining a weak dollar" adopted by the US Government is directly targeted at Asian currencies, China's renminbi in particular.

This kind of monetary policy of shifting crises to others has been questioned by some US economists as well as by some media. The US-based Business Week says in an article that the way out for the United States' budgetary and trade deficits lies in relying on domestic efforts instead of targeting others.

As early as four or five years ago, a school of US economists trumpeted hard for the dollar to be devalued by large margins against other major currencies. They argued that in view of the mounting US trade deficits stemming from the overvalued US dollar, it was necessary to devalue, a move which, in turn, would sharpen the competitive edge of US commodities on the world market. Otherwise, the US dollar was bound to make a forced and hard landing.

Against this backdrop, plus some unpredictable factors in the world economy, the dollar's exchange rate against the euro has continued to drop in recent years, once hitting a low of one US dollar for 0.76 euro. The falling margin reached 50 per cent.

The devaluation, however, has not redressed the United States' huge trade deficits as expected. So people cast doubt on the "dollar-devaluation" theory. They found that the root cause behind the sharp rise of US trade deficits was not the greenback's high exchange rate, but the extremely low bank savings rate of Americans who excessively spend future money on current consumption. The comparatively weak demand for US goods in some sectors of the world market is also to blame.

Jeffrey E. Garten, provost of the School of Management of Yale University, criticized dollar-devaluation policy, arguing it was wrong because the US Government was failing to resolve the fundamental problems which caused the trade imbalances. The United States borrowed heavily from overseas because Americans consumed a lot but saved very little. The average American today, for example, put only 0.2 per cent of his or her disposable income into the bank, the lowest savings rate in the past 45 years. A low bank savings rate meant there was not enough money to finance investment. Hence the United States borrowed considerably from overseas lenders. At the same time, the US Government needs foreigners to buy its treasury bonds to make up for increasing budgetary deficits. Unfortunately, the "dollar-devaluation" theory had the ear of Greenspan and US Treasury Secretary John Snow.

Garten also refuted the theory that devaluation could help lower the price of US goods and boost US exports. Garten believed devaluation was not likely to help reduce imports by large margins because one-fourth of US expenditure on those was used to buy oil and oil prices are calculated in US dollars. So in this scenario, dollar devaluation would result in declining incomes for the oil producers of Organization of Petroleum Exporting Countries (OPEC), which in turn, would force OPEC to raise prices. In view of all this, dollar devaluation does not work in the way its advocates anticipate.

Given this reality, the United States should not let the dollar value go down again and again. Instead, US policymakers need to cut financial deficits sharply and increase tax revenues in order to reduce trade deficits. This kind of monetary policy, however, is obviously not to the liking of the Bush administration, which pursues a conservative ideology. As a result, the policy has been formulated to make the international community share the economic baggage exclusively the making of the United States.

US-based Newsweek magazine came up with a vivid metaphor recently: The United States, faced with its own economic problems, is trying to forge a "dollar-devaluation alliance" as it did an "anti-terror alliance" when confronted with the issue of terrorism. In doing so, it hopes its own problems can be resolved at the expense of Europe, Japan and the whole of East Asia.

Western analysts widely believed China seemed not opposed to Washington's insistence that the renminbi should revalue, but that it hoped to act at its own pace, rather than yielding to pressure from outside. They also believed changes in the exchange rate of the renminbi could only be decided by China's own economic and political interests.

Western analysts also note that Chinese leaders are very much concerned with the trajectory of the dollar.

During a meeting with US President George W. Bush at the APEC summit, President Hu Jintao made it clear that China is greatly concerned about the downward trend of the US dollar. Premier Wen Jiabao, while attending the ASEAN 10+1 summit, also remarked that China is maintaining a close watch on the weakening dollar. He said China is a responsible country, as demonstrated by its maintained stability of the renminbi during the Asian financial crises in the face of overwhelming pressure.

Clearly, the Chinese leaders are telling the world that China will never succumb to pressure from outside and will act on the principle that any action it takes will be one that benefits the Chinese economy, while holding itself responsible to the international community.

(China Daily 02/05/2005 page4)



 
  Today's Top News     Top China News
 

US knocked for trying to block EU arms ban end

 

   
 

Private enterprises expanding quickly

 

   
 

Female journalist kidnapped in Baghdad

 

   
 

Japan to talk about the end of loans- Media

 

   
 

44 babies rescued from traffickers

 

   
 

Bombings, arson and rape cases on the dive

 

   
  Meningitis brought under control in east China
   
  Homeward-bound told to travel light
   
  Snazzy logo sought for Forbidden City
   
  Citizens' life expectancy reaches 79.87 years
   
  Homeward-bound told to travel light
   
  Auto imports on sound footing
   
 
  Go to Another Section  
 
 
  Story Tools  
   
  News Talk  
  It is time to prepare for Beijing - 2008  
Advertisement
         
主站蜘蛛池模板: 欧洲精品无码一区二区三区在线播放| 国产成人tv在线观看| 噗呲噗呲好爽轻点| www.免费在线观看| 绝美女神抬臀娇吟| 最近免费中文字幕大全免费版视频 | 国产乱妇无码大片在线观看 | 中文在线最新版天堂| 没带罩子让老师捏了一节课| 国产成人综合久久精品尤物| 丁香花高清在线观看完整版| 欧美孕交videosfree黑| 国产SUV精品一区二区883| 97人妻人人揉人人躁人人| 日本黄色小视频在线观看| 免费无遮挡无码永久视频| 日本三级视频网站| 快拨出来老师要怀孕了| 亚洲国产精品yw在线观看| 老子影院午夜理伦手机| 国产精品自产拍在线网站| 丰满妇女做a级毛片免费观看 | 国产精品成年片在线观看| 中文字幕免费在线看电影大全| 欧美极品另类高清videos| 国产一级一级一级成人毛片| 97无码人妻福利免费公开在线视频 | 亚洲一区无码中文字幕| 人人妻人人澡人人爽精品欧美| 午夜成人理论福利片| 国产在线五月综合婷婷| 国产福利免费视频| 国产青青草视频| 日本一区二区三区免费观看| 色综合久久伊人| 日韩精品视频在线播放| 免费无码又爽又刺激高潮视频| 色婷婷免费视频| 国产精品JIZZ在线观看老狼| 777米奇色狠狠888俺也去乱| 成品网站nike源码1688免费|