pantom
June 18, 2003, 11:17pm
41
Resurrecting this to post an interesting story from the Washington Post speculating on the possibility of floating the yuan:http://www.washingtonpost.com/wp-dyn/articles/A6932-2003Jun17.html
The most interesting part came at the end:
Nicholas Lardy, a specialist on the Chinese economy at the Institute for International Economics, said that China’s current account surplus – the broadest measure of the trade balance – has “deteriorated dramatically this year.” The surplus was a healthy 3 percent of gross domestic product last year, but in the first five months of this year it has tipped into a small deficit, Lardy reckoned.
“Maybe for the sake of good relations with the U.S., they might make some modest appreciation,” Lardy said. “But my guess is, there won’t be any in the short run.”
China Guy , if you’re around, why has China’s surplus with the rest of the world shrunk? Being here in the U.S., all I see is the ballooning deficit we have with China. What gives?
My guess is that they’re using those US dollars to drive down their surplus elsewhere. We’re financing China’s spending spree.