Most Popular
1. Dow Max Drawdown Bear Stock Market 2022 - Accumulating Deviations from the Highs - 21st Feb 22
2.Putin Starts WW3 in Ukraine, Will Use Tactical Nuclear Weapons, China Prepares Taiwan Blitzkrieg - 28th Feb 22
3.World War 3 Phase 1 - Putin WINS Ukraine War! - 25th Feb 22
4.INVESTORS SEDUCED by CNBC and the STOCK CHARTS COMPLETELY MISS the BIG PICTURE! - 10th Feb 22
5.Will There Be A 2024 US Presidential Election? - 3rd Mar 22
6.Gold and SIlver, Precious Metals Sector Is at a Terrific Buy Spot - 6th Feb 22
7.Why Putin Wants the WHOLE of Ukraine - World War 3 Untended Consequences - 6th Feb 22
8.Dow Stock Market Expected Max Drawdown 2022 - 19th Feb 22
9.Stock Market Calm In the Eye of the Inflation Storm - 4th Mar 22
10.M = F - Everything is Waving! Stock Market Forward Guidance - 7th Mar 22
Last 7 days
Cathie Wood Goes All in on Teladoc, ARKK INSANE Noob Investing Strategy! - 17th May 22
This is Anything but Positive for US Housing Market - 17th May 22
What Should We Do If There Is No Fed Monetary Policy Pivot? - 17th May 22
All Possible Ways to Earn Free Litecoin - 17th May 22
How low Could the Amazon Stock Price Fall? - 16th May 22
Cathy Wood ARKK INSANITY There is NO Coming Back! - 16th May 22
NASDAQ 100 Stock Market LOWER LOWS & LOWER HIGH - 16th May 22
Sanctions, trade wars worsen US inflation - 16th May 22
AI Tech Stocks Earnings BloodBath Buying Opportunity - 14th May 22
Futures Contract – Trading Crude Oil With USO - 14th May 22
How to Get Kaspersky Internet Security for 80% Discount! Do not Pay Renewal Price! - 14th May 22
Sagittarius A* Super Massive Black Hole Monster at Centre of Our Galaxy REVEALED! - 14th May 22
UK Public Debt Smoking Inflation Gun - 13th May 22
What Happens When the Stock Market Dip Keeps Dipping? - 13th May 22
Biden Seeks Inflation Scapegoats; Gold Advocate Wins GOP Primary - 13th May 22
Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - 12th May 22
The War on Gold Ensures the Dollar’s Downfall - 12th May 22
Crypto Investors Stable Coins TERROR as Terra USD COLLAPSEs towards ZERO, Tether Next! - 11th May 22
INFLATION IS KILLING SILVER - 11th May 22
The Dominant Investing Theme of the Decade - 11th May 22
Is Bitcoin Headed to Zero? - 11th May 22
RECESSION RISKS 2023 - 10th May 22
The Future of the Dollar Seems So Bright It’s Blinding Gold - 10th May 22
Take Advantage When Markets Succumb to Fear - 10th May 22
How to Recognize a Less\ Than Obvious Opportunity (In focus: Corn) - 10th May 22
How to Ensure Financial Stability for Your Family - 10th May 22
The Stocks Stealth BEAR Market - 9th May 22
A Strengthening US Dollar Is A Double-Edged Sword - 9th May 22
Making Wise Investment Decisions - 9th May 22
Ways to legalize a Moving Company - 9th May 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Undervalued Renminbi Is The Greatest Threat To Economic Recovery

Economics / China Currency Yuan Jan 26, 2010 - 04:49 PM GMT

By: Peter_Navarro

Economics

Sir, Michael Spence is dead wrong in arguing that “the west is wrong to obsess about the renminbi” (January 22). An undervalued renminbi represents the single greatest threat to global economic recovery and a dangerous inflationary trigger within China.


The undervalued renminbi has helped to overheat the Chinese economy by attracting far more foreign direct investment into China than would otherwise exist – too much of a good thing. Currency speculators are also flooding into China in anticipation of an inevitable appreciation of the renminbi; this hot money is further fuelling the stock market and real estate bubbles. A floating renminbi would solve both of these problems.

Globally, because the renminbi is pegged to the dollar and the dollar has fallen significantly since March 2009, Europe as well as other countries around the world – from Brazil, Peru and Colombia to Japan, South Korea and Thailand – have lost competitive advantage to both the US and China. This has stalled recovery in many of these countries.

Prof Spence is right that the ultimate solution is a strong Chinese consumer. However, he wrongly portrays China as having a “high savings rate”. Much of China’s alleged “savings” is simply an artefact of China’s currency manipulation process that requires sterilisation of dollars and their re-export to America. This is Stalinist forced savings, not virtuous thrift.

Professor Navarro’s articles have appeared in a wide range of publications, from Business Week, the Los Angeles Times, New York Times and Wall Street Journal to the Harvard Business Review, the MIT Sloan Management Review, and the Journal of Business. His free weekly newsletter is published at www.PeterNavarro.com.

© 2010 Copyright Peter Navarro - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Zhuubaajie
26 Jan 10, 18:44
Thief Yelling Stop Thief

How can the RMB be anything that approaches a threat to anybody? It is NOT EVEN USED IN TRADE other than with the few nations that have swap agreements with China (you can count them in one hand), and even those are limited in amount. So Dr. N's own nation printing TRILLIONS (each with 12 zeros) out of fiat thin air does not have detrimental effects on the world, and it is only Chicoms refusing to float their own currency (in order to prevent highway robbery by economic hitmen) that can do damage.


Len
27 Jan 10, 22:17
China currency

We have to remind ourselves Why China is keeping its currency undervalued-job creation.

China’s goal is to have the largest number of its people working, this involves manufacturing and export. The Chinese government is far more interested in keeping its citizens working, not increasing the value of its currency.

The idea that has been mentioned is that the US is exporting its inflation to China. The US consumer buys cheap goods from Chinese factories, the Chinese take the US Dollars received in payment and use them to buy US Treasury Securities, the cost of living in the US appears as low inflation via cheap goods from Chinese exports And US Treasuries are bought to finance the US.

Now China is saying ‘no mas’ to any more US Treasuries(with the exception of the shortest term Treasuries and TIPS) and has decided to invest the US Dollars it does have in commodities, other currencies or government bonds issued by other nations.

Anyone remember the weekly trips the last US Secretary of the Treasury, Hank Paulson, made TO China?

The goals of those meetings was to keep China buying US Debt, NOT to strengthen the Renminbi.

Chinese exports to non US markets (Europe & South America), in dollar value and quantity amounts, surpass the exports to the US. In other words, the Chinese don’t need the US as much as before but the US needs China more than ever to buy its debt.

The time for action to force the Renminbi to float was back in 2001 When China joined the WTO, now it is far too late.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in