"... do you have a two words translation, starting with the letter 'F' and ending with the same alphabet ?"
I was amused to then come across this article. <g>
U.S., China Agree on Steps to Reduce Trade Imbalances (Update4)
bloomberg.com
By Kevin Carmichael
Dec. 15 (Bloomberg) -- China will make its currency more flexible and the U.S. will boost its national savings rate to address global trade imbalances, Treasury Secretary Henry Paulson said during an inaugural cabinet-level meeting in Beijing.
``We agreed on many principles even though we have differences in the timing of reforms,'' Paulson, who led the U.S. delegation, told reporters today. He gave no timetable for changes. Chinese Vice Premier Wu Yi, Paulson's direct counterpart in meetings that featured 32 senior policy makers, said the next talks will be held in May.
Paulson is in China to keep the U.S.'s second-largest trade relationship from deteriorating as lawmakers at home seek sanctions against the nation for controlling its currency. Wu said China will move gradually on the yuan because it needs to protect farmers and poor people.
``The comments don't suggest any drastic change in the ongoing currency reform,'' said Kenichiro Ikezawa, who helps oversee the equivalent of about $1 billion at Daiwa SB Investments Ltd. in Tokyo. ``These things won't happen in a short period of time, say this year or next.''
The yuan has climbed 5.8 percent since the decade-old fixed exchange rate of 8.3 to the U.S. currency was abandoned in July 2005 and yesterday closed at its strongest level since then. The gains haven's stopped the swelling of China's trade surplus, which reached $157 billion this year through November.
Convincing Lawmakers
China allows the yuan to move as much as 0.3 percent either side of the dollar on a daily basis. The yuan weakened 0.03 percent against the dollar today.
Federal Reserve Chairman Ben S. Bernanke, in Beijing with Paulson, weighed in on the currency debate, calling on China to allow faster gains and widen the yuan band to end ``an effective subsidy'' for exporters.
Paulson's challenge in Washington will be convincing the lawmakers who blame China's managed exchange rate and other economic policies for lost jobs and a record trade deficit that the talks are yielding results.
China sold a record $24.4 billion more of goods to the U.S. than it imported from the country in October, even as the U.S.'s overall trade deficit narrowed by 8.4 percent to $58.9 billion, the biggest decline in almost five years.
Chinese government and central bank officials have said a negative U.S. savings rate and worker wage differentials, rather than an undervalued yuan, are the cause of lopsided trade flows.
`We Cannot Wait'
``We will each take measures to address global imbalances, notably through greater national savings in the United States and through increased domestic consumption and exchange rate flexibility in China, and maintaining open investment in both countries,'' Paulson.
After talks concluded yesterday, Paulson said it would be unreasonable to expect immediate results from the first session of the biannual summits he initiated in September. Still, he said the meetings must generate ``tangible'' results on issues such as China's currency policy and piracy over time.
``For far too long, China has manipulated their currency, which has resulted in China receiving a tremendous unfair advantage in trade,'' Christopher Dodd, the Democrat set to takeover the chair of the Senate Banking Committee, and Richard Shelby, the current Republican chairman, wrote in a letter to Paulson yesterday.
``We agree with the long-term goal of China floating their currency,'' they said. ``But we cannot continue to wait for this longer-term goal and suffer the consequences of insignificant short-term action.''
Misguided
China has resisted faster currency gains amid concern such a change would harm export jobs and its 750 million farmers. China has to create more than 20 million jobs a year just to absorb new workers entering the workforce. About 135 million Chinese still live on less than $1 a day, the Asian Development Bank estimates.
``Some American people have limited knowledge of this country and some harbor misunderstandings,'' Wu said today. She added that the meetings helped foster ``understanding and trust.''
Demand in the U.S. and Europe for cheap Chinese goods has allowed the country to grow its economy more than 10-fold since Deng Xiaoping started free-market reforms in 1978. China last year vaulted past the U.K. as the world's fourth-largest economy, with gross domestic product reaching $2.2 trillion.
Against that backdrop, U.S. attempts to lecture China on currency policy are misguided, said Donald Straszheim, vice chairman of Roth Capital Partners LLC.
``Secretary Paulson ought to be in China once a month, not twice a year,'' Straszheim said in a note to clients. ``His biggest problems are soon to be a short cab ride away (the Hill), not a long flight away (Beijing).'' |
