Saturday, October 23, 2010
Protectionism by China Is Biggest Since World War II
This article found in the New York Times discusses China currency manipulation. It calls the manipulation the largest protectionism measure since World War II, by any major economy. We discussed protectionism in class and we are now seeing it by China in real life. It is said that China has intervened in the foreign exchange market by $1 billion dollars a day for the last five years. Over this time, they have built a reserve of $2.5 trillion dollars by buying dollars to keep them expensive and selling renminbi to keep them cheap.
Subscribe to:
Post Comments (Atom)
This strategy does help with China's net export, but it would raise the price of goods within China, as importing is limited. But it seems that they set their own trap though. With the huge loan they gave to the US, the moment they let the renminbi's price raise they will lose a lot. I'm interested in seeing how long China can keep it's currency's value low.
ReplyDelete