Tá bom eu errei…..
Em
vez de um trilhão eram só 854 bilhoes
Falha
nossa
Como
tem gente entendida em economia aqui na lista.....
Eu li mas vou ter que reler.
Mas realmente, mesmo como
reserva é muita grana pra manter em caixa.
O Paulo contaminou o Cardoso? Ihhhhhhhhhh...isso vai
render....
Economics
By David Cohen
China's Huge Currency Reserves Pique U.S. Interest
Senators are taking the Middle Kingdom at its word that
it intends to move gradually toward a more flexible exchange rate regime
Just how big can China get? For one thing, it looks
as if the Middle Kingdom may now have greater foreign-currency reserves than
any other country. On Mar. 28, the state-run China
Business News reported that the mainland's reserves hit $854 billion
in February, outstripping Japan's
reported stockpile of $850 billion.
Although China's
central bank declined to comment on the report, it's sure to push the
mainland's currency policies even further into the spotlight. After all, China's swelling foreign reserves are a direct
by-product of all those sneakers, DVD players, and bedroom sets that consumers
worldwide -- and especially in the U.S. -- can't resist buying. One
reason they look so attractive is their low price, something many in the U.S. blame on
an undervalued yuan.
That served as the focus of the visit to Beijing
last week by U.S.
Senators Charles Schumer and Lindsey Graham. The pair is proposing a 27.5%
tariff on all Chinese exports to the U.S.,
and has threatened to force a vote on the issue in the Senate by Mar. 31 unless
Beijing starts
to allow the yuan to move toward its real market
value. Currently, the yuan trades at around 8.0275
bid vs. dollar.
PROMISED FLEXIBILITY. Against the backdrop of a
record U.S. trade deficit -- the U.S. bought $202 billion more from China than
it sold to the mainland last year -- the dollar-yuan
exchange rate will be much discussed during the lead-up to Chinese President Hu Jintao's April visit to
Washington. The release, also in April, of the semiannual report from the U.S. Treasury
on the currency policies of trading partners will also occupy people's minds.
It could potentially label China
a "currency manipulator," which would lead to tariffs on Chinese
goods.
China
moved to a managed float last July, revaluing the dollar-yuan
rate by 2.1% on abandoning a decade-long peg to the
greenback. Beijing has promised to move gradually toward greater flexibility,
but has allowed the yuan to appreciate only about
1.1% vs. the dollar since then, and has ruled out another one-off revaluation.
Officials insist they need more time to establish the foreign-exchange market
infrastructure after they launched, in January, over-the-counter trading by 13
foreign and domestic banks designated as market makers. The central bank, the
People's Bank of China
(PBoC), has also begun to conductforeign-exchange
swaps with major commercial banks.
GOOD COP, BAD COP. The U.S. is demanding that Beijing speed the process. Washington argues that the appreciation
since last July remains insufficient. The senators were reasonably diplomatic
-- Schumer emphasized that they were not looking for a timetable or specific
goal, but wanted to be convinced that China is moving toward letting the
currency float. And Graham indicated that they came away with a better
sensitivity to China's
problems, such as unemployment. Though still noncommittal, they hinted that any
vote on the bill would be delayed for at least a month, until after Hu's visit.
No doubt, a good deal of posturing continues to go on. Although opposed to the
protectionist tariff, President Bush presumably does not mind playing the good
cop, bad cop game in an effort to wrangle some concessions from Beijing -- a
stance that ironically takes on added credibility after the Dubai fiasco (you
see, President Hu, I would veto the bill, but
Congress would override it). Furthermore, this is just one part of a
multidimensional trade negotiation with a host of other prominent issues on the
agenda, including intellectual property protection.
Along with many economists who oppose protectionism, numerous business leaders
have expressed concerns about the proposed tariff, emphasizing the importance
of world trade to the U.S.
economy. Congress must be aware of the structural problems in the savings-short
U.S.
economy -- and how a tariff might derail what has been a fairly healthy
economic expansion financed with foreign capital.
MORE MOVEMENT. Though it is difficult to foresee
how the politics will play out in this election year, we at Action Economics remain
hopeful that cooler heads will prevail, taking the Chinese at their word that
they fully intend to move gradually toward a more flexible exchange-rate
regime, including efforts to phase out convertibility restrictions on the
capital account over the next five years.
China
is proceeding at its own pace in permitting more movement in response to market
forces. The PBoC has pursued foreign-exchange intervention
to limit yuan appreciation in the face of a widening
current account surplus and continued strong capital inflows, reflected in the
buildup in international reserves. The increase by $34.8 billion during the
first two months of 2006 was in line with the annual increases of $209 billion
for 2005 and $207 billion in 2004 (exceeding the accumulation by Japan, which
hasn't intervened in currency markets for the past two years).
Upon abandoning the formal peg to the dollar last year, Beijing indicated that it would reference
movement in the yuan against an unspecified basket of
currencies. When measured against these currencies weighted by their share of
total Chinese trade, the yuan has trended sideways
for much of this year, hardly the sort of appreciation that would put a dent in
its balance-of-payments surplus. This compares with the appreciation by
approximately 8.5% during 2005, over half of which came on the back of the
strong performance by the dollar, which also appreciated vs. the Chinese basket
of currencies.
RECENT VOLATILITY. Throughout the period, the yuan index is seen moving in tandem with the dollar index
(the green curve, which roughly parallels the dollar index compiled by the Atlanta Fed). This
reflects how, except for the revaluation last July, the dollar-yuan exchange rate has been fairly steady day-to-day. This
includes the constraint of the daily limit set by Beijing of plus or minus 0.3% in fluctuations
in dollar-yuan, compared to the previous closing
exchange rate announced daily by the PBoC.
The dollar-yuan has exhibited a bit more volatility
during the past four weeks, a period when the dollar has been on a roller
coaster vs. major currencies. Although some of the bigger daily gains in the yuan had market watchers wondering whether Beijing was
relaxing its grip a bit to appease the U.S. Senators, on closer inspection it
appeared that some of these bigger moves had come on days of big swings in the
dollar in worldwide markets -- when Beijing might have tolerated more movement
in dollar-yuan to limit the swing vs. the overall
basket.
Our projection would be for Chinese officials to tolerate continued gradual
appreciation of approximately 5% over the course of 2006, after finishing with
2.6% appreciation vs. the dollar during 2005. This is hardly as dramatic as the
50%-plus appreciation of the Japanese yen after the 1985 Plaza Accord. There is
no need to widen the daily trading band -- by simply allowing the full 0.3% per
trading day, the yuan could appreciate by around 20% during
a single quarter. Beijing
appears content to continue the current policy of gradual currency
appreciation.
POSSIBLE COMPROMISE. U.S.
policymakers must recognize that China does not respond well to
threats. At the end of the day, Beijing's speed of currency adjustment will
depend upon what risks officials see from continuation of the current
trajectory, and perceived benefits from stepping out of the way a bit more.
For example, would it be prudent to reduce exposure to international reserves
so concentrated in dollar assets? Can potential difficulties in sterilization
of foreign-exchange intervention compromise the PBoC's
ability to conduct independent monetary policy? There are also benefits from
currency appreciation in lowering import prices.
Conditions are favorable for pursuing greater flexibility given that the
Chinese economy remains quite strong. The consensus outlook is for annual GDP
growth to continue near 9% in 2006 after 9.9% in 2005, presumably able to
withstand the disruptive impact of a strengthening currency. Maybe Beijing will proceed at a pace sufficient to satisfy the U.S. Congress.
---
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