12-15-2008, 02:50 AM
Maybe you missed this paragraph in your "paragraph-by-paragraph"? The one that says:
I seem to recall making this point earlier, that the Chinese consumer is taking the brunt of this in terms of quality of living. Also, this one:
That would be the point about the Chinese keeping their currency undervalued.
And then there's the concluding paragraph of the China section, on page 18.
... which is a polite way of saying that the Chinese have to revalue their currency, because it's causing massive distortions to both their domestic and foreign sectors. Now, the US has a series of obvious interests, and a treasury department document isn't going to just out and say the unvarnished truth. But it is quite clear that, as far as the economics are concerned, they can see which way is up.
-Jester
Quote:Chinaâs exchange rate policy impedes the needed shift towards domestic private consumption â and away from net exports and investment â as the drivers of Chinese growth; is a major impediment to financial sector development; and, constrains the development of an autonomous monetary policy tailored to stabilizing inflation and domestic economic growth.
I seem to recall making this point earlier, that the Chinese consumer is taking the brunt of this in terms of quality of living. Also, this one:
Quote:The gap between the real exchange rate and its equilibrium level remains wide and the renminbi
remains substantially undervalued, according to a number of estimates.
That would be the point about the Chinese keeping their currency undervalued.
And then there's the concluding paragraph of the China section, on page 18.
Quote:Faster and more decisive implementation of exchange rate reform is essential for maintaining
sustained, stable growth in China. If the current macroeconomic imbalances continue, in a
period in which growth has slowed materially in the rest of the world, then the vulnerability of
Chinaâs economy and the ultimate costs of adjustment will become much larger. China needs to
move more quickly towards a market-determined exchange rate and allow greater appreciation of
the renminbi against the dollar in the near-term. The pace of appreciation against the dollar
demonstrated in early 2008 is welcome and should be continued. Treasury continues to use
every opportunity, both in bilateral and multilateral settings, to impress upon Chinese authorities
the urgency and central importance of exchange rate reform.
... which is a polite way of saying that the Chinese have to revalue their currency, because it's causing massive distortions to both their domestic and foreign sectors. Now, the US has a series of obvious interests, and a treasury department document isn't going to just out and say the unvarnished truth. But it is quite clear that, as far as the economics are concerned, they can see which way is up.
-Jester