People must think I must be daft with my comments about the yuan "fix". Is it broken?
Chinese Currency Strengthens Amid Talks
Wednesday December 13, 9:59 pm ET
By Elaine Kurtenbach, AP Business Writer
Chinese Currency Exceeds 7.82 to $1, Highest Level Since Current Trading System Set Up
SHANGHAI, China (AP) -- China's currency surged to a new record high on Thursday as U.S. and Chinese officials tackled thorny trade issues in Beijing, hitting 7.8180 per U.S. dollar in early trading.
The yuan's appreciation against the U.S. dollar has gained momentum in weeks leading up to an inaugural round of "strategic economic talks" involving top members of U.S. President George W. Bush's administration.
How can the yuan appreciate if it's fixed?
The official, or parity rate for the yuan was set at a record high 7.8197. The yuan gained further in early trading, dealers said.
Parity rate isn't fix rate.
In opening remarks to the trade talks, U.S. Treasury Secretary Henry Paulson said China's currency policies would be among topics tackled in the two days of discussions.
Critics of China's controls on its currency say they keep the yuan undervalued against the dollar, giving Chinese exporters an artificial price advantage in overseas markets and contributing to the huge Chinese trade surplus.
If Chinese labor works at a lower rate, China will have a seller's advantage, independent of currency conversion rates. How does one properly measure "working at a lower rate"? Unit output per man hour. If 10 Chinese produce 10 widgets in 10 hours and 10 Americans produce 10 widgets in 20 hours, then the Chinese are twice as productive, and they can sell their widgets at half the American price. No currency, dollars, yuan, or gold intermediaries needed.
What the 'crats want the Chinese to do is double their prices or make equivalent changes to output factors so as to be less competitive against American output. In my view that's total bullshit, and no amount of purchase price parity word games can change that fact. What does that Hag, Pelosi, think she's going to do? Put up American handicapped parking only signs in Tiananmen Square?
China has pledged to gradually loosen foreign exchange controls and let market forces determine the yuan's value.
Note "controls" is used here instead of "parity" "fix" or "pegged". A country can have all kinds of controls none of which has anything directly to do with currency conversion rate.
However, Chinese officials contend that such changes must be gradual to avoid shocks to the country's developing financial institutions.
In comments at Thursday's meeting, Chinese Vice Premier Wu Yi echoed pledges to reform the currency system.
Who is he trying to kid? Reform the currency system? China has NO control over how the world values the yuan. Wu better get that straight or he won't be working there for long. However, I'm sure he knows, but he also knows he has to try to seem like he's willing to raise prices to keep the Americans in rags. I mean, that's what that damn Hag wants.
Wu, a former trade minister, said Beijing would move toward making the country's interest rates and the yuan's exchange rate "genuinely based on market supply and demand."
???. Wu is saying China will deliver interest rates to appease slobs? I don't think so. In any event that would go against the Teitmeyer Doctrine, and trying to do that would last about 1 day, because that's how long China's $1 trillion reserve pile would last in the world scheme of things.
China revalued the yuan by 2.1 percent, to 8.11 yuan per dollar, in July 2005. Since then, the yuan has gained about 3.6 percent against the dollar.
Following the Democratic Party's advance in midterm elections, Bush's administration faces renewed pressure to make progress in trimming the U.S. trade deficit with China, which surged to a record $202 billion last year and is expected to run even higher this year.
The yuan's gain early Thursday ran counter to the dollar's overnight recovery against major currencies elsewhere.
The 'crat party is determined to make things more expensive for Americans. The lower class voted the asshole 'crats in so that the 'crats can make their lives worse. No wonder they're lower class. They want to be that way.
The People's Bank of China, the central bank, announces the parity rate -- a weighted average of prices given by market makers, excluding the highest and lowest offers, early each trading morning.
The parity rate? That isn't the parity rate. It's the conversion rate. This AP writer hasn't got a clue. According to a lot of economists the parity rate for the yuan is 1.8 rather than 7.8. Sure is a lot of confusion going on here. So Kurtenbach, I suggest you go back and read my little blurb on unit labor output. |
