Good news – China will revalue the yuan.
The huge imbalances in the world stem from supercompetitive China knocking the rest into a cocked hat. Gradual increaes in the value of yuan will help rebalance a bit, and will mean China is nearer to the end of her period of slowing her economy by restricting credit.
The Uk will be worse off again because Chinese goods will be dearer, but have better chances of making things to export or to substitute for imports.
June 20, 2010
It's good news we will be worse off? China has been subsidizing us at the expense of its own people. Bad for them but great for us.
Using a Tesco analogy: would you cheer if Tesco raised its prices ( "revalue yuan") so we have to work ("export") more to "help rebalance"?
June 20, 2010
Well, at least you recognise that we will be worse off. I am getting a little tired of economists telling us how good it is that the pound is being devalued.
In my view, this is not good news; it is confirmation that our economy is performing poorly.
June 20, 2010
There is Importance in being Earnest about these things:
" Cecily, you will read your Political Economy in my absence. The chapter on the Fall of the Rupee you may omit. It is somewhat too sensational. Even these metallic problems have their melodramatic side."
Let us not forget Miss Prism's view: we will need adjustment against India too, among others. We will also need sound money if the metallic problems are not going to become melodramatic (i.e. avoid hyperinflation with commodities as the only real stores of value).
June 20, 2010
They have agreed to do nothing, no numbers, no timetable……frankly they just played everyone (again). The G20 is next week, so we have this non-binding-lose-no numbers statment.
Don't get too excited John!
Mike
June 21, 2010
I thought they said "nothing will really change"?
June 20, 2010
Thank you for keeping all of us upto date with your news John it is really useful. You bring balance and context into things which helps for me make things real. Thanks again
June 20, 2010
I’ve always said China is a very unstable country. In the future with a billion only children selfishness will destabalise a communist regime.
June 20, 2010
Old Chinese proverb – be careful what you wish for.
June 20, 2010
Practise your sense of humour.
I keep telling people to read your blog 'cos I agree with everything it says.
When you say it on telly I don't hear a single bleedin' idea.
June 21, 2010
I am surprised that anybody in the British political class has noticed this, for they have been silent about China hollowing out our economy with its undervalued exchange rate until now. George Bush recognised the problem some years ago, but our idiot Prime Minister Gordon Brown went to China and said the Chinese could buy up any British asset they wanted, gave them Aid, and never mentioned the exchange rate, and there wasn't a whimper of protest from the Conservative opposition.
This neglect of our national interests highlights a wider problem we have with the decadent British establishment, who are loathed to fight our corner or for our interests. The Chinese currency rate is just one in a long line of their failures, BP is another, and almost everyday we see the British political establishment prostrate themselves to the EU