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Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

9 Responses to “Economist Andy Xie Says Repricing Yuan Wont Matter”

  1. Simon says:

    It won’t solve the problem but it would be a big step in the right direction.

  2. rahuldeodhar says:

    I love Andy Xie’s analysis. But here he is confusing what is good for China v/s what is good for US and the world.

    Chinese consumption is not growing is problem for the world. But it is uncontrollable for us. Exchange rate, on the other hand, is controllable and has linkages across employment in developed world.

    So Andy, Yuan appreciation won’t solve China’s problem – it will actually amplify it. But it will solve world’s problems.

  3. CTB says:

    Due to misallocation of capital, floating the exchange rate will cause as many problems for China as they solve for the world. Mutually assured destruction.

  4. David Merkel says:

    I largely agree with Xie. So long as the Chinese Government takes such a large portion of GDP for its own purposes, it will continue to malinvest (T-bonds, useless capital projects, stockpiling commodities)… the exchange rate plays only a moderate role in the equation because of capital controls.

    I’m not sure I believe their statistics… they are feeling like Japan in the late 80s, or the Soviet Union at the same time: lots of investment but a declining marginal efficiency of capital.

  5. Spitzer says:

    Yes it does.

    Any keynesian type package has «leaks» to the multipliers. One of those leaks is the demand for imported goods that, because iot generates demand for imports, fails to generate demand for internal production. If all countries cooperate in global demand management there are no leaks: Hearth is a closed economy. I define a good deal as a deal in which everyone wins. This would be a good deal. It does require the honest participation of, at least, the largest economies.

    If China cooperates the world can enjoy another era of full-employment and economic growth. If China refuses to cooperate then the only way to end this era of high-unemployment-slow-growth-deindustrialization would be to take protective measures. The IS a difference and it ain’t no small difference.

    The strategic problem of the americans is that they trusted the chinese. China should have never been admited to the WTO

  6. Spitzer says:

    @Merkel.. A lot can be said about the chinese.. but if they were so inefficient at using capital they wouldn’t be a problem, would they?

  7. skier33 says:

    why should China revalue their currency. the Renminbi is the only Asian currency that has appreciated against the USD since the beginning of 2008. the Korean Won for example is more than 20% weaker today than it in early 2008. Also at current run rate of imports and exports China will run both a trade deficit and current account deficit later in 2010. so where is the undervaluation?

  8. “The strategic problem of the americans is that they trusted the chinese. China should have never been admited to the WTO.”

    did the U.S. “trust” the Chinese? or, were Americans “sold-out” to them?

    this: “China should have never been admited to the WTO.”, though, is, quite, True.

    past that, We should tell Beijing the Truth: Their ‘Dollar’-denominated “Assets” are FedRes Liabilities, if they want to get paid, they should take it up w/ BenBer..

  9. jzw says:

    A USD peg simply means that China doesn’t have its own currency but chooses to use the US’s. The US clearly benefits from the current arrangement, because the US gets cheap consumer goods and the Chinese get IOUs, redeemable only for other IOUs.

    What’s happening to G7 countries is no different to what happened to GM, just on a country scale. Knowledge and capital can be moved to any place in the globe and ultimately it work will be done in the lowest cost areas. G7 countries now have huge legacy costs and an entitlement mentality, I don’t see this changing unfortunately.