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It's time for China to buy up undervalued overseas companies
By Zhang Junjie |
February 10, 2010, Wednesday
|
Print Edition
Print Edition
I was interested in the Shanghai Daily opinion page article about American debt last Friday ("American debt raises concerns among China's economists").
My analysis is as follows:
First, the US administration will try its best to urge China to appreciate the yuan in order to get a situation favorable to the relatively weak dollar, because it can increase the cost to China to export to America and help itself to export goods to China.
The appreciation of the yuan is a complicated problem. We should not change the exchange rate hurriedly under pressure from the United States.
Second, we should know how to invest in other countries' undervalued assets (certainly not in a speculative way) so as to reduce the risk of dollar depreciation to China's foreign exchange reserves largely denominated in the US dollar.
Third, we should learn more about accounting skills, derivative products and securities in America so that we can handle them more intelligently.
We should know that we may have to pay a lot to learn these games, but this shouldn't be the excuse to get rid of modern financial tools that may be risky.
(Zhang Junjie, a financial journalism student from the Shanghai University of Finance and Economics.)
My analysis is as follows:
First, the US administration will try its best to urge China to appreciate the yuan in order to get a situation favorable to the relatively weak dollar, because it can increase the cost to China to export to America and help itself to export goods to China.
The appreciation of the yuan is a complicated problem. We should not change the exchange rate hurriedly under pressure from the United States.
Second, we should know how to invest in other countries' undervalued assets (certainly not in a speculative way) so as to reduce the risk of dollar depreciation to China's foreign exchange reserves largely denominated in the US dollar.
Third, we should learn more about accounting skills, derivative products and securities in America so that we can handle them more intelligently.
We should know that we may have to pay a lot to learn these games, but this shouldn't be the excuse to get rid of modern financial tools that may be risky.
(Zhang Junjie, a financial journalism student from the Shanghai University of Finance and Economics.)
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