The looming curreny war - Andrew Leung

Image by Fantake via Flickr

A currency war is looming with the US threatening to impose punitive tariff mechanisms which may trigger a global trade war, writes Andrew Leung at his weblog. "However, China’s current resource-intensive manufactures are already trading at wafer-thin margins and any drastic RMB appreciation is likely to cause catastrophic job losses and social instability. "

For China, much more is at stake than economics. She preciously guards her independent exchange and monetary tools to grapple with the multi-faced challenges of social dynamics and geopolitics concomitant with the unchartered course of a rapidly developing, yet transitional economy, now the world’s second largest.  With rising social tensions, China is expected to change course during her coming 12 Five Year Plan (2011-15), ushering in a more moderate, higher-quality, more balanced and sustainable development model geared to much higher domestic consumption.

More at Andrew Leung's weblog.

Professor Andrew Leung is a speaker at the China Speakers Bureau. When you need him at your meeting or conference, do get in touch.

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American fear and anger towards China - Shaun Rein

Shaun Rein by Fantake via Flickr

Shaun Rein is shocked by the American fear and anger towards China, including the misplaced rethoric against China's currency, he reports in CNBC. "Many attribute China’s boom as a result of stealing American jobs and intellectual property, rather than efficient economic policies and hard work ethic."
Shaun Rein:

America needs to get more competitive at manufacturing to reduce our overall surplus, not blame China’s currency policies. Trade patterns are far more inelastic than many economists believe.
In fact, more than 70 percent of big American multinationals operating in China told my firm they did not want the renminbi to appreciate too much because it will cut into their profits. The majority also said they would increase costs to the American consumer or move to cheaper production areas if it rose.

More in CNBC, including Shaun Rein debate with American Secretary of Commerce Gary Locke.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch. 

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US companies oppose rise of the Renminbi - Shaun Rein

Shaun Rein by Fantake via Flickr

US congress and other political bigwigs might be pushing China to appreciate its currency, but Shaun Rein asked US companies, and they see their interests hurt by a rise of the Renminbi, he writes in Forbes:

The next time you hear someone in Congress push to appreciate the renminbi, ask them why they would want to make prices higher for everyday Americans at Wal-Mart and take away profits for American workers when they need it most. That endangers America's economy as well as China's.

Yes, you are reading this correctly: a rise of the Renminbi hurts US interests. Shaun Rein recalls a recent meeting with the president of one of his clients:

I asked him what he thought about Congress pushing for appreciation of China's currency, the renminbi, or yuan. His immediate answer: "It would be the worst thing for my company." (His company is 100% owned by Americans, by the way.) First, he said, an appreciating renminbi cuts into his company's profits, which lowers bonuses, salaries and dividends for employees in the U.S. Why would anyone want to lower the profits of American companies during a financial crisis?

Second, an appreciating renminbi also would not save American jobs, he argued: "That saving American jobs argument is ridiculous." Companies would "transfer production to lower-cost places like Vietnam or Indonesia.

More in Forbes, including observations on the threat of a trade war.

Commercial
Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.

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