China says it plans to unhook currency from U.S. dollar -but no timetable

[BrklynLiberal]

LONDON (AP) - China will free its currency from its peg to the U.S. dollar eventually, a central bank official told international officials Saturday, but emphasized that the weakness in the dollar is not China's concern.

China has come under heavy pressure at this weekend's Group of Seven finance ministers meeting, particularly from the United States, to move toward a flexible currency regime. Chinese officials have repeatedly suggested that the nation needs more time to reform its economy.

"We have a very firm determination leaning to a more flexible exchange rate," People's Bank of China Deputy Governor Li Ruogu said Saturday. "There is no timetable."

U.S. and European leaders argue that the yuan's peg has protected the currency from the decline in the U.S. dollar, and gives Chinese companies a huge competitive advantage -particularly in the large U.S. consumer market.

John Taylor, the undersecretary for international affairs at the U.S. Treasury, urged China to move to a more flexible currency system "as soon as possible" during talks Friday with Chinese officials.
<snip>

more...
http://story.news.yahoo.com/news?tmpl=story&cid=1821&ncid=732&e=9&u=/cpress/20050205/ca_pr_on_bu/britain_g7

[leanin_green]

1. They also are planning joint military manuvers with Russia. . .

later this year. Gee, I wonder what brought that on?

[mhr]

2. Also See Russia Is Decoupling Their Currency Form The US Dollar

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x103736

[Oversea Visitor]

3. It is a big move

Need to take it slow. Euro will be the new reserve currency. US can thank bush for this acheivement.

[BrklynLiberal]

5. This was supposedly one of the reasons W hit Iraq.. Saddam was going to

start trading oil in Euros instead of dollars....So it looks like the whole plan may have backfired.

[Oversea Visitor]

6. What a monkey of a solution

From a small pile of shit to a Mother of all Mountain pile of shit.

[msgadget]

4. Greenspan

...tougher budget discipline in Congress may finally start to restrain the growth of the trade gap".

IF the deficit doesn't continue to grow, as with Social Security hijacking or permanent tax cuts. And, IF China unpegs, which still doesn't seem likely.

[necso]

7. Humm.

So is this for real? And will it be a substantial, not just a token measure? -- Or is this just to please their American counterparts? (And that "well-intentioned" chorus comprised of those who would be much less effected by it.) -- Certainly the (avowed) communist leadership (of China) is the ultimate source of this statement.

Some of the neocons certainly would have no problem with Chinese goods becoming much more expensive (as a result of a revaluation). Their "theory" is that this would mean that we will send them less dollars. Of course, in practise this would probably mean that we send them more dollars -- and get less stuff -- at least for a time. (It would also make it cheaper for them to buy our debt, since they would have to send us less stuff to cover this expense.) And, of course, this also means that our goods may sell better over there -- insofar as they can penetrate the market -- and aren't just names on products produced by multinational corporations over there (licensing fees would be less in terms of the local currency). But this increase in "exports" is not to be expected to cover the increase in import costs -- at least not in the near term -- if ever.

And a Chinese revaluation of their currency relative to the dollar might well cause the dollar to fall relative to other currencies. (See the above "theory" -- and the above expected results.)

This could prove interesting. After all, it is effectively a "monetary" experiment -- a test of a "monetary solution" to correct an "imbalance" -- and we are the guinea pigs.

Yee-haw!

..

Now, I don't want to give the impression that monetary policy has no place -- but the time to do worry about this sort of thing is before you get addicted to all the stuff that it (the favorable exchange rate) brings. And more credible economists expect there to be stuff like "a decline in the growth rate of imports" (snore) when you reevaluate currencies. -- To wit, in the short term you get more misery (higher prices) -- and a greater imbalance.

[gizmo1979]

8. And yes there is a santa claus!!!!!!!