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Politics : PRESIDENT GEORGE W. BUSH
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To: Kenneth E. Phillipps who wrote (336275)1/2/2003 12:30:55 PM
From: Baldur Fjvlnisson  Read Replies (1) of 769670
 
China is tops in the world in foreign direct investment,

and they enjoy a huge trade surplus with the U.S.

China's exports to the U.S. account for 10% of all U.S. imports. They are low cost leaders in apparel, furniture, telecom and electronics.

Very importantly the Chinese Yuan is NOT a freely convertible currency and is fixed by the government at a ridiculously cheap rate. What this means is that as the U.S. dollar falls - the Yuan will fall in concert.

This will ensure that China's exports stay cheap and of course other currencies will be pulled down as other countries try to compete with China's prices. Deflation
is therefore a given for the next years.

Uncle Sam is totally at China's mercy. They could sell their dollars and the U.S. financial system would simply
collapse.
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