rayloke2009blogspot: China's currency becomes election issue - Oct. 21, 2012

Monday, October 22, 2012

China's currency becomes election issue - Oct. 21, 2012

China's currency becomes election issue - Oct. 21, 2012

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RAYLOKEOctober 22, 2012 at 9:11 AM
China is far from the only state manipulator. Switzerland and Japan, for example, recently intervened in currency markets. Both currencies had been bid up in speculative "safe haven" trades last year due to the deteriorating outlook for the dollar and euro.
Related: Meet China's middle class
While the United States has promised not to deliberately weaken the dollar, some critics say that by printing money and flooding the U.S. economy, the Fed's quantitative easing plan is essentially doing just that.
It's not clear whether Romney would follow through on his plan to designate China a currency manipulator. Talking tough on China has become a campaign ritual for politicians of both parties -- even if, as experts predict, the rhetoric moderates after Nov. 6 regardless of who wins.
Labeling China a currency manipulator is largely a symbolic gesture. The move could trigger talks with China, but no immediate, punitive actions are attached to the designation.
Economists are more worried about the second part of Romney's plan, which is to direct the Department of Commerce to institute countervailing duties if China "does not quickly move to float its currency".
That could spark a trade war, which would be damaging for the world's top two economies.
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