Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Undervalued Renminbi Is The Greatest Threat To Economic Recovery

Economics / China Currency Yuan Jan 26, 2010 - 04:49 PM GMT

By: Peter_Navarro

Economics

Sir, Michael Spence is dead wrong in arguing that “the west is wrong to obsess about the renminbi” (January 22). An undervalued renminbi represents the single greatest threat to global economic recovery and a dangerous inflationary trigger within China.


The undervalued renminbi has helped to overheat the Chinese economy by attracting far more foreign direct investment into China than would otherwise exist – too much of a good thing. Currency speculators are also flooding into China in anticipation of an inevitable appreciation of the renminbi; this hot money is further fuelling the stock market and real estate bubbles. A floating renminbi would solve both of these problems.

Globally, because the renminbi is pegged to the dollar and the dollar has fallen significantly since March 2009, Europe as well as other countries around the world – from Brazil, Peru and Colombia to Japan, South Korea and Thailand – have lost competitive advantage to both the US and China. This has stalled recovery in many of these countries.

Prof Spence is right that the ultimate solution is a strong Chinese consumer. However, he wrongly portrays China as having a “high savings rate”. Much of China’s alleged “savings” is simply an artefact of China’s currency manipulation process that requires sterilisation of dollars and their re-export to America. This is Stalinist forced savings, not virtuous thrift.

Professor Navarro’s articles have appeared in a wide range of publications, from Business Week, the Los Angeles Times, New York Times and Wall Street Journal to the Harvard Business Review, the MIT Sloan Management Review, and the Journal of Business. His free weekly newsletter is published at www.PeterNavarro.com.

© 2010 Copyright Peter Navarro - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Zhuubaajie
26 Jan 10, 18:44
Thief Yelling Stop Thief

How can the RMB be anything that approaches a threat to anybody? It is NOT EVEN USED IN TRADE other than with the few nations that have swap agreements with China (you can count them in one hand), and even those are limited in amount. So Dr. N's own nation printing TRILLIONS (each with 12 zeros) out of fiat thin air does not have detrimental effects on the world, and it is only Chicoms refusing to float their own currency (in order to prevent highway robbery by economic hitmen) that can do damage.


Len
27 Jan 10, 22:17
China currency

We have to remind ourselves Why China is keeping its currency undervalued-job creation.

China’s goal is to have the largest number of its people working, this involves manufacturing and export. The Chinese government is far more interested in keeping its citizens working, not increasing the value of its currency.

The idea that has been mentioned is that the US is exporting its inflation to China. The US consumer buys cheap goods from Chinese factories, the Chinese take the US Dollars received in payment and use them to buy US Treasury Securities, the cost of living in the US appears as low inflation via cheap goods from Chinese exports And US Treasuries are bought to finance the US.

Now China is saying ‘no mas’ to any more US Treasuries(with the exception of the shortest term Treasuries and TIPS) and has decided to invest the US Dollars it does have in commodities, other currencies or government bonds issued by other nations.

Anyone remember the weekly trips the last US Secretary of the Treasury, Hank Paulson, made TO China?

The goals of those meetings was to keep China buying US Debt, NOT to strengthen the Renminbi.

Chinese exports to non US markets (Europe & South America), in dollar value and quantity amounts, surpass the exports to the US. In other words, the Chinese don’t need the US as much as before but the US needs China more than ever to buy its debt.

The time for action to force the Renminbi to float was back in 2001 When China joined the WTO, now it is far too late.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in