Home » Opinion » Chinese Views
US greenbacks no longer 'beautiful gold'
By Wang Pan, Chen Siwu and Lin Jianyang |
November 17, 2009, Tuesday
|
Print Edition
Print Edition
WHEN Zhu Bin showed his handcrafted ceramics at the 2004 China Import and Export Fair in Guangzhou, Guangdong Province, he signed export contracts worth more than US$200,000 - at that time in excess of 1.6 million yuan.
His success resulted in his becoming general manager of a pottery company based in Kunming, capital of southwest China's Yunnan Province. But his initial profits now seem like a hard act to follow. Those 2004 contracts would be worth less than 1.4 million yuan with the present yuan-dollar exchange rate.
Before the Chinese government switched the renminbi or yuan currency from the US dollar peg to a basket of currencies in July 2005, the greenback had the Chinese nickname, meijin, or "beautiful gold," as acquiring dollars was like prospecting for gold.
Zhu says he is still in the "gold-digging army," but the pressure to remain competitive is mounting as exporters find their goods more expensive due to yuan appreciation and the impact of the economic crisis on global monetary systems, the US dollar in particular.
According to the People's Bank of China, the central bank, China's foreign currency reserve exceeded US$2.2 trillion by the end of September.
In July 2005, China started building a more resiliently managed yuan exchange rate mechanism based on market supply and demand and adjusted in relation to a basket of major foreign currencies.The yuan has since gained more than 21 percent against the greenback. In April 2008, the yuan fell below seven to the dollar. Some economists argue that a stable yuan is good for China and many other economies, at least for now.
Lian Ping, chief economist of the Bank of Communications, China's fifth largest lender, says a basically stable exchange rate is extremely important since China's export industry and the entire economy is recovering on a "fragile foundation."
"Only a stable exchange rate can make it easier for companies to assess manufacturing costs, accept orders and map out production plans," he says.
Lian points out that China, the world's third largest economy and one of the fastest growing, is important to a global recovery. Chinese economic resilience will lead to more Chinese imports from the United States, Europe and Japan, which would help those economies. Blaming the yuan rate for the huge US trade deficit is unjustified because the Chinese currency has gained more than 21 percent against the US dollar, but US trade deficit is still "unsolved," Lian says.
Stephen Roach, chairman of the Asia branch of US banking giant Morgan Stanley, agreed in an interview on the US Council on Foreign Relations' Website, saying the yuan exchange rate issue was "a red-herring."
"If we were to close down trade with China through some ill-begotten trade legislation or currency adjustment, we don't save the deficit. It just goes somewhere else. And they usually go to a higher-cost producer, which taxes the American public," Roach said.
(The authors are Xinhua writers.)
His success resulted in his becoming general manager of a pottery company based in Kunming, capital of southwest China's Yunnan Province. But his initial profits now seem like a hard act to follow. Those 2004 contracts would be worth less than 1.4 million yuan with the present yuan-dollar exchange rate.
Before the Chinese government switched the renminbi or yuan currency from the US dollar peg to a basket of currencies in July 2005, the greenback had the Chinese nickname, meijin, or "beautiful gold," as acquiring dollars was like prospecting for gold.
Zhu says he is still in the "gold-digging army," but the pressure to remain competitive is mounting as exporters find their goods more expensive due to yuan appreciation and the impact of the economic crisis on global monetary systems, the US dollar in particular.
According to the People's Bank of China, the central bank, China's foreign currency reserve exceeded US$2.2 trillion by the end of September.
In July 2005, China started building a more resiliently managed yuan exchange rate mechanism based on market supply and demand and adjusted in relation to a basket of major foreign currencies.The yuan has since gained more than 21 percent against the greenback. In April 2008, the yuan fell below seven to the dollar. Some economists argue that a stable yuan is good for China and many other economies, at least for now.
Lian Ping, chief economist of the Bank of Communications, China's fifth largest lender, says a basically stable exchange rate is extremely important since China's export industry and the entire economy is recovering on a "fragile foundation."
"Only a stable exchange rate can make it easier for companies to assess manufacturing costs, accept orders and map out production plans," he says.
Lian points out that China, the world's third largest economy and one of the fastest growing, is important to a global recovery. Chinese economic resilience will lead to more Chinese imports from the United States, Europe and Japan, which would help those economies. Blaming the yuan rate for the huge US trade deficit is unjustified because the Chinese currency has gained more than 21 percent against the US dollar, but US trade deficit is still "unsolved," Lian says.
Stephen Roach, chairman of the Asia branch of US banking giant Morgan Stanley, agreed in an interview on the US Council on Foreign Relations' Website, saying the yuan exchange rate issue was "a red-herring."
"If we were to close down trade with China through some ill-begotten trade legislation or currency adjustment, we don't save the deficit. It just goes somewhere else. And they usually go to a higher-cost producer, which taxes the American public," Roach said.
(The authors are Xinhua writers.)
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
