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U.S. and China talks have been taking place on several issues including trade, currency exchange, and the new "rational and mature manner" or conflict resolution between the two countries. Apparently, China has pledged to reform its exchange rate but hasn't given a timetable. Do you think they will actually go through with this? If so what do you think a reform would completely do away with a fixed currency?
http://online.wsj.com/article/SB10001424052748703341904575266291812173592.html?mod=wsj_india_main
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I honestly do expect that over time China will move towards a non-fixed currency. It has been there tendency to grow as fast as possible and then leap towards a new more western paradigm. Like one of the videos from Tuesday's class suggested "China is racing to the top, not the bottom." That is so true. They don't want to remain static and as such, they know, eventually they will need to a western styled floating currency. I have no idea how long that will take though.
ReplyDeleteI'm not sure if I see China moving towards a fixed currency, at least not any time soon. They do want to grow fast, but I feel like the recession has showed us all that extremely fast growth is not necessarily true growth, but bubbles that may collapse. I think that they want to avoid that.
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