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Originally posted by Mdv2
reply to post by sadchild01
Have you ever considered what happens to these millions of Chinese losing their jobs as a result of this crisis? They aint gonna be happy I can tell you. Particularly when the fuel is fired with food and oil shortages.
They aint gonna be happy I can tell you. Particularly when the fuel is fired with food and oil shortages.
Originally posted by sadchild01
most export oriented industries are closing down. many workers have left the urban areas back to rural .
in case of dollar collapse ,yuan will become international currency(chinese govt will have to do it to save itself ), and chinese real income rise sharply , as yuan will be free floating and no longer be undervalued .....
China is now the biggest holder of foreign exchange reserves in the world, accumulating 2 trillions- a first in world history. A decision by China to make its currency free floating and international it will make other nations central bank follow suit by accepting yuan as part of their reserves or to shift a major portion of its reserve to the euro or the yen or gold could trigger other central banks to follow suit.
TextThey undervalue the Yuan for one good reason: to remain a competitive exporter (to quickly explain: with a low valued Yuan in comparison to the Dollar/Euro, Chinese exports will remain relatively cheap in contrast to when they would let it freely appreciate). Your claim that the Chinese government should make the Yuan an international currency, it is and will anything but an international currency. At least an international currency that will be able to compete with the Yen and Euro. If you disagree, please provide some reasoning why you think so.
But Asia now understands that the increase of money supply decreases the intrinsic value of a currency. That is why China is seeking a possible and rational attempt to decouple Asian currencies from the dollar, as recent news stories report . In practice, China is trying to make its currency convertible and give it a role as a reserve currency. The first experiment is limited to transactions between Hong Kong and the neighboring provinces. It is also proposed that the yuan renminbi be used in 8 neighboring countries, including Russia. With these countries, agreements have already been signed for the settlement of contracts in the Chinese currency. Perhaps it is no coincidence that the news was released on Christmas Day, when Western markets are closed, reducing the impact on the dollar. In addition, the first weeks of January are usually fairly quiet. This means that although for now the trial is limited, China is preparing to establish full convertibility of its currency to all other currencies. Many in China have spoken out directly or indirectly in this regard: for example, Wu Xiaoling, former vice governor of the central bank, and Zhao Xijun, a professor of finance at Renmin University of China. The current governor of China's central bank, Zhou Xiaochuan, in early December in Hong Kong had indicated that if the value of the dollar fluctuated drastically, its use as a settlement currency (for commercial transactions) would cause problems. It is clear that Chinese exporters, behind the scenes, are asking the government for permission to charge in yuan instead of dollars, which are losing value. Other warnings came in the middle of last December: the increase in purchases of U.S. Treasury bonds should not lead to the supposition that the U.S. can borrow its way out of the financial crisis . Finally, on January 1, a well-known Chinese economist, Wu Jinglian, wrote that China must change its development model , with reference to the paradigm of economic growth driven by exports. We note, incidentally, that even the pope, who obviously has mainly pastoral responsibilities, has said the world must change its model of development  ("Are we are prepared to conduct together an in-depth review of the dominant development model, to correct it in a comprehensive and forward-looking way?" Benedict XVI asked).
The cost of President Obama’s stimulus package could cross the $1 trillion mark when interest costs are figured in, the Congressional Budget Office said Tuesday.
The administration points out that the stimulus would produce a greater gross domestic product, meaning higher tax revenues, partially offsetting the cost.