The Yuan vs. the Dollar

[Don Corleone]

I'm not fuming, my breathing rate is fine.

No, the average worker saw their purchasing power and their standard of living increase. The only place this is being retarded is in China. I don't think you understand economics enough for us to continue this discussion. Or maybe I don't, who knows.

[doc_bean]

It's a ten year old system, China has evolved a whole lot in that time, it's not unusual for developing countries to link their currency to the dollar as a sort of guarantee for investors.

A few countries have gone through serious crisisses when they failed to maintain the standard. Now what is happening in China is exactly the opposite, which puts everyone in a difficult position.

If China just lets the standard go, the Yuan would rapidly increase in value and it would be a catastrophe for their export, and hence, their economy. When the Euro started rising against the dollar the European policy makers and industrials were all pretty worried, and this rise is often blamed for the slow economic growth in Europe over the last few years (let's not get into that). If China would let its currency float, the effects would probably be much worse.

I don't think the People's Party is deliberately trying to screw the people, they are looking out for their country's best interest, and a floating currency is not a good idea imho.

Maybe a slow 'adjustment' of the dollar/yuan rate to a more realistic level would provide an answer. The main problem remains, China is primarily an export country (afaik, statistics that prove me wrong are welcome), they benefit from a 'weak' currency. Only through proper use of trade sanctions can we 'persuade' them to alter the level, which is what we (US and EU) should do.

[BDC]

Well apparently the Chinese economy is relying on the country's foreign currency reserves anyway, and when they give out it's all going to go pear shaped. Hence India being a better investment. Certainly whilst I was there it looked as if China was going to have to change drastically if the growth was to continue, it's getting to the point where the professional is rich enough to want more rights etc, things could get nasty if they don't get them. You probably don't want to piss off a couple of hundred million people who each have a pretty significant buying power.