China Currency Manipulation Gains More Steam
Source: MetalMiner, Lisa Reisman††(3/29/10)
"Beijing it appears, is manufacturing a trade deficit."
So what is new now in 2010? Two fascinating bits of information; first China ran an $8b trade deficit this month (this hasn't happened since April of 2004) according to Gordon Chang who wrote the affectionately titled book "The Coming Collapse of China." Second, Chang suggests a new movement in support of forcing China to revalue its currency appears to have taken hold (Chang quotes Paul Krugman who suggests a 25% surcharge on Chinese imports would make sense without a more freely floating currency). But MetalMiner readers know Krugman wasn't the first person to suggest such a solutionóWarren Buffett first proposed such a policy way back in 1999.
This time around, a bill in Congress just may see the light of day and move to a full floor vote by the end of May. The bill would place anti-dumping duties on products coming from countries that don't act to realign their currencies.
How likely will China continue running a deficit? Chang doesn't think too long because "Chinese officials think exports will recover this year." And, as he cleverly puts things, "Beijing it appears, is manufacturing a trade deficit."