China's actions in global currency markets appear particularly cunning over the past year.
Under huge pressure from the United States, it has allowed its currency to appreciate about 9% against the U.S. dollar since July, 2005, when it allowed its currency to float more freely against the greenback.
But over the same period, the yuan has dropped about 9% against the euro, a handy development since Europe is now China's biggest trading market.
Indeed, European Union-bound exports are now larger than those to the United States, having grown 37% this year, versus 17% for the United States. Mr. Dumas said China's comments yesterday formalize its mercantilist interest in a rising euro.
"A rising euro enables China to move the yuan up against the dollar while it falls against the euro, improving China's competitiveness in its largest, fastest growing export market," he said.
By keeping its currency low on both fronts, China can continue to export its way to prosperity and provide employment for its army of workers, a classic strategy for developing economies from time immemorial.
The trouble is, other currencies such as the loonie and the euro shoulder an increasing burden of the greenback's decline.
canada.com. |
