Global drums??
Thanks for the article..Experts all agree with that article including
IMF,Morganstanley,GM, Boeing ,Mundell and so on..But politicians have to
answer to their constituencies and that may be real reason for that beating
up drums in Washington..Those US politicians are not experts in economics
or in forex matters but they have nothing to lose but everything to gain by
making as much noise as possible..That goes for Sir Alan,Snow and other
politicians..And I believe Bush team knows very well China will take as long
as it needs to prepare for any change to its forex regime..
Direct confrontation on trade issues is a loser for both sides..Some 10
million jobs in the US are China trade related and some 15% of all S&P
profits are related to China trade profits..Not a small amount by any
standard..On China's side,some 25% of its international trade is with USA
while some 30% of its GDP depends on exports..So, it is not a small matter
for China either..Both are fairly and sqaurely in the same economic bed
now..If there is a real trade war,both are to suffer that much and I do not
believe any side is irrational enough to start it in the first place..
China needs forex and financial reform by 2007 ,with or without US
pressure, because it was China's committment when entering WTO..China's
financial brains are moving as fast they can to prepare for those required
reforms in time..Inter-bank forex trading in major currencies starting on may
18th in China is one of the steps..Letting foreign banks to start CNY
business is another..And Listing main commercial banks on stock exchange
is the next step..This process will take some months and China is still in its
time limit as far as WTO committment is concerned..And these moves
nothing to do with US politicians in the first place..China's long-term plan
has nothing to do with US politicians' wishes..China is already the centre of
Asian economies and it is aiming to create a financial market deep and wide
enough to attract all Asian capital into China in time..That needs a free
financial system and free forex regime too..
On whether China will bend over to the pressure from US politicians,the
answer is resounding no..In the first place,business leaders from US do not
want such a rash move to jeopardize their own business with China..In all
likelihood,China will take as long as it needs to prepare for eventual
financial and forex reforms and US politicians can still claim a victory when
China finally moves..For those politicians ,it is a nice slogan to shout at no
costs to them..At the end of the day when China finally moves, they can still
tell their constituencies that " the pressure worked and we have done it"..
vitaminic.com
..(more guardbands and no piano-arrays nor drums)...
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