Setbacks lead China to tone down anti-US rhetoric

[TomCADem]

Source: Associated Press

BOAO, China (AP) -- China is softening its recent muscular global posture, muting criticisms of the U.S. at a time of delicate negotiations with Washington and simmering economic troubles at home.

The rhetorical time-out comes as President Hu Jintao heads to Washington this week, after months of friction with the U.S., and was in full evidence this weekend at an international meeting designed to showcase China's growing reach as an economic and diplomatic powerhouse.

Senior Chinese officials repeatedly sidestepped major issues roiling the global economy. Asked about the Chinese currency -- which Washington wants to see rise in value to right trade imbalances -- the central bank governor said now was not the time to discuss it. When it comes to regulating the risky Wall Street practices that contributed to the global economic meltdown, China's chief banking regulator sheathed his former critiques and instead called for teamwork and more financial prudence.
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With the economy awash in money, housing prices are soaring and inflation is rising. The domestic demand created by supercharged investment may flag as the stimulus winds down, leaving China still partly in need of export markets in the U.S. and Europe. The Chinese currency -- which the government pegged to the U.S. dollar at the start of the crisis -- has come under attack from the U.S., Europe and other trading partners as undervalued, thereby allowing China to flood the world with cheap exports.


Read more: http://finance.yahoo.com/news/Setbacks-lead-China-to-tone-apf-218023177.html?x=0&sec=topStories&pos=7&asset=&ccode=

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It will be interesting who wins out in China. Manufacturers who are seeking subsidies in the form of an artificially low exchange rate designed to help exports, or Chinese consumers who are now suffering from high inflation due to the exchange rate.

[wickerwoman]

1. The yuan was only pegged to the dollar before July 2005.

The peg was then lifted and it's now pegged to a basket of foreign currencies including the dollar, Japenese yen, South Korean won, British pound, etc. The value of the yuan increased from 8.2 to the dollar to 6.8 today (damn I wish I was still getting paid in RMB!)

This: "The Chinese currency -- which the government pegged to the U.S. dollar at the start of the crisis -- has come under attack from the U.S., Europe and other trading partners as undervalued, thereby allowing China to flood the world with cheap exports." is incorrect unless they're talking about the period prior to July 2005.