The risk of China devaluating its currency does not exist at all !!! The products which China exports is quite different than those SE Asian countries. So, China is not competing with those S.E Asian countries . By devaluating the currency, it will only hurt China's economy, because :
1) China needs to import Capital equipments to continue develop its economy, by devaluating the currency, it will make those equipments more expensive, and it is not to China's advantage.
2) China needs investments from overseas, by devaluating its currency, it means the
profit generated in China's market will get thinner and thinner, then who will invest in China ?
3) The facts indicated that by devaluating the currency, the export of S.E Asian countries did not increase, but reduce, because the raw materials imported will be more and more expensive, as a result the price of end products is not reduced, the
save in labor cost is offset by more expensive imported raw materials.
4) The facts also indicated that China's export is continue to increase without devaluation its currency, because most China's exported products had more and more
technical contents, which is added values, and is quite different than the products from S.E Asian countries. |
