Reuters: China And The US Exchange Rate War &Nbsp; Each Step Back Or The Best Policy.

China and the US are fighting for the RMB exchange rate, and Japan's recent intervention in the foreign exchange market to suppress the yen is also a glimpse.

Ironically, there are claims that the United States is actually pursuing a weaker dollar policy.

The war around the exchange rate is spreading because of the sluggish growth of the global economy. The US economy has not yet recovered rapidly, and many American businesses and politicians have criticized China for causing us job losses. Trade disputes between the two countries may intensify and may even lead to retaliatory acts.

The United States seems to criticize China for no reason. July us to China trade deficit It reached 25 billion 900 million dollars, more than half of the US trade deficit in that month. 2008 global financial crisis After the outbreak, the RMB exchange rate was basically frozen, until only a few weeks later it began to appreciate slightly.

And China seems to have good reasons. Wen Jiabao, premier of the State Council of China, said that if some US Congressmen raised the value of RMB 20-40%, how many Chinese workers would lose their jobs, there would be new turbulence in Chinese society.

When China and the United States are wrestling, other countries are also affected. Federal Reserve The implication is that the money supply will be expanded, which will lower the US dollar exchange rate. The current weakening of the US dollar against the euro has affected the export competitiveness of the euro zone, and the euro zone and its peripheral economies are in urgent need of economic momentum.

Other Asian currencies, such as Malaysia's ringgit, are stronger against the US dollar and the renminbi.

Now countries need to compromise. China should allow further appreciation of the yuan, which will help China's economy grow more evenly. The United States should also be patient because the dollar exchange rate is also low. The huge trade deficit in the US can not be entirely attributed to the RMB exchange rate. The exchange rate between the euro and yen is not low, and Americans are not buying European and Japanese cars as well.

Background news:

Chinese Premier Wen Jiabao, speaking to American business people in New York in September 22nd, pointed out that the renminbi does not have the conditions for a substantial appreciation. He pointed out that the US's huge trade deficit with China is due to the structure of Sino US investment and trade.