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US economy hits the bottom


US economy hits the bottom

US economy hits the bottom

Beijing let the yuan rise 21 percent against the U.S. dollar between July 2005 and July 2008 before effectively repegging the currency, also called the renminbi, near 6.83 to the dollar to help the economy through the financial crisis.

The United States’ deficit in trade with China fell to $227 billion in 2009 from a record $268 billion in 2008,. but the Obama administration is keen to lift exports and employment.

Wu Xiaoling, a Chinese lawmaker and former central bank vice governor quoted by the People’s Daily international edition, said the root of the problem was not a cheap yuan, but the relatively low cost of labor and resources in China.

“That people feel the renminbi is undervalued is in fact because many price factors in China, including resources and labor, have not reached international levels,” she said.  (via China economist sees “room for talk” on currency row; Updated on Monday, April 05, 2010, 20:40)

You scratch … I scratch

An experienced US stalks China, waiting behind high walls of US$2500 billion foreign exchange reserves. There will be much too and fro. Much will said and retracted. Much will showbiz. In the end, it may be as,

Li Daokui, another new member of the advisory body, said China should scrap its peg to the dollar before September.

“One way of relieving pressures on the renminbi exchange rate is to make an adjustment on China’s own initiative,” Li, an economist at Tsinghua University, was quoted by Caijing magazine as saying.

Li singled out September as a deadline so that political debate over the yuan does not boil over in the run-up to U.S. mid-term elections in November.

In a cover story, Caijing cited unidentified sources as saying that Beijing was studying the option of dropping the yuan’s peg as soon as next month.

Curiouser and curiouser, said the Cat to Alice.

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