a rising yuan (relative to the US$) would eventually cut China's trade surplus with the US. By lowering the US trade deficit, it would reduce the US demand for funds (supply of US bonds) at the same time it lowered China's supply of funds (demand for US bonds). It's hard to say which would win and which way US interest rates would have to go. However, it would definitely stimulate US net exports and hurt China's net exports.
------------------------ Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine > -----Original Message----- > From: John Gulick [mailto:[EMAIL PROTECTED] > Sent: Monday, September 08, 2003 10:47 AM > To: [EMAIL PROTECTED] > Subject: Re: [PEN-L] debt, again > > > Eublides posted: > > "Asian debt withdrawal threat to US deficit" > > An important passage contained within: "...if China and other Asian > countries were to allow their currencies to strengthen against the US > dollar, they would have less need to own US assets." > > Exactly. All points bulletin to foolish "progressive" > protectionists who > inveigh against the "artificially low" yuan as the source of U.S. > manufacturing job loss. OK, we'll give you what you want -- a 20-to-40 > percent appreciation of the yuan against the dollar. Whoa, > guess what, the > People's Bank of China is > suddenly unwilling to underwrite U.S. seignorage privileges. > Whoa, guess > what, the U.S., including especially the U.S. working class, > is suddenly > subject to the kind of austerity and restructuring the Washington > Consensus-types routinely prescribe for everyone but the U.S. > has been able > to elude due > the de facto dollar standard. I have nothing but contempt for the > "progressive" China-bashers who fail to see all the pieces of > the puzzle. > > OK, I should vow not to get up on my soapbox concerning this topic any > longer, but it really it gets me hot under the collar. > > John Gulick > > _________________________________________________________________ > Need more e-mail storage? Get 10MB with Hotmail Extra Storage. > http://join.msn.com/?PAGE=features/es >
