IMF - "Essential" China Allow Currency to Appreciate

Currencies of a number of emerging Asian economies remain undervalued, substantially in the case of the renminbi,” the IMF said in the report. Renminbi is a name for China’s currency, a denomination of which is the yuan. It’s essential for China to address excess demand pressures by reining in credit growth and allowing exchange-rate appreciation - IMF

The above is quoted by Bloomberg in the IMF press conference on their World Economic Outlook report.

Additionally the IMF said debt laden countries should let their currencies depreciate:

In advanced economies, fiscal consolidation is needed but is likely to have an adverse effect on demand and growth. To offset these adverse effects and maintain growth, advanced economies as a whole may need to depreciate their currencies so as to increase their net exports - IMF

i.e. the world is out of balance and the China Yuan currency peg is a major reason why.

Subject Meta: 

Forum Categories: 

China: numbers and graphs - please

According to the CIA Factbook ( the combined GDP (Purchasing Power Parity) of the US, European Union, Japan, India and Russia is $38.4 trillion dollars. The world GDP is $70 trillion. Thus, these five GDP’s constitute 54% of the world GDP.

China’s GDP (PPP) is $8.7 trillion, 12% of the world GDP.

How can it be that “the world is out of balance and the China Yuan currency peg is a major reason why”? Where are the numbers and graphs said to be are an essential part of this blog’s presentations? When it comes to China articles there is a curious lack of them accompanied by valid logical statistical inferences.

Keep in mind quoting the IMF on China is like quoting the UN on Iran, one has to take into consideration the enormous disproportionate influence that the US has in both organizations. That’s why numbers, graphs and statistical logic must accompany the rhetoric of political economy discourse

You must have Javascript enabled to use this form.

numbers and graphs

I didn't do them. All I'm doing here is letting EP readers know the IMF is one step away from declaring China a currency manipulator. But this is new, they are including other Asia countries with a dollar currency peg AND, they are saying to the U.S. we should devalue our currency.
There are some links in this post, but the big one is probably here and here.

It's not GDP they are looking at, it's the trade deficit. I'd have to check those numbers but it's at the rate of increase, China is slated to become the #1 economy by GDP growth rates of 9%+.

The people who do not want China to re-evaluate it's currency are defenders of offshore outsourcing. They are claiming it will "hurt US companies" because it will put a cog in the wheel on their manipulation of global exchange rates as they offshore outsource U.S. jobs. I kid you not.

When I get around to it, I'll try to put up a "graphs and numbers" post on this issue but to me, defending MNCs and offshore outsourcing has little to do with the American people, jobs and the overall national economy.

But first realize, this is about trade, not how big China's GDP is relative.

You must have Javascript enabled to use this form.

China export numbers

O.K. you seem to imply that there is not a positive correlation between GDP and trade so again using CIA numbers for 2009 Exports:

Total World Exports equal $12 Trillion
European Union 2 trillion or 16%
Germany 1.1 trillion or 9 %
US .9 trillion or 8%
Japan .5 trillion or 4%
Total for just four economies $4.5 trillion or 38% of world exports

China exports 2 trillion or 16% of world exports
So while four economies account for 38% of world exports and China equal to EU at 16% how can one justify saying:
“the world is out of balance and the China Yuan currency peg is a major reason why”

And, again you quote the IMF as though it is ‘gospel truth” and ignore the influence of Western countries in determining its positions. If we stick to FACTS (numbers) and statistical LOGIC we will not be mislead by ideologically determined policies.

Again, I am not arguing or advocating any position on China exchange rate or trade. I’m just saying "…he said, she said, they said… " is not a scientific logical way to made decisions.

You must have Javascript enabled to use this form.

you need to look at just the U.S.

and there China is over 80% of the non-oil U.S. trade deficit. I promise to try to pull in some stats as I can get to it, but you're looking at spurious data instead of the damning stuff. Of course you can say pegging the Yuan at an artificially low rate to the U.S. dollar gives an unfair trade advantage. I posted previously a host of economists estimates that literally, unpeg the Yuan and the entire China-US trade deficit can disappear. That was a huge surprise to me frankly.

You must have Javascript enabled to use this form.

China's Surpasses the U.S. within 10 Years

Without a collapse (due to regime overthrow, Mercantile Meltdown, water, or finance), China's GDP will double within 7 years at a 10 percent growth rate. I try to visualize the Port of Long Beach with the diesel and coal (it drifts across the Pacific) pollution. With luck, U.S. GDP will take 15 to 26 years to double at a 3 to 4 percent growth rate (CBO HooHa).. The world has to want the power shift to happen and let this happen. The geopolitical consequences are enormous. There is no historical guarantee for republics or democracies over totalitarian states, no matter what the chauvinists tell you. Sparta won the War against Athens.A generation late, Alexander the Great ascended.

How will oligarchy break the sea change to America? Likely from offshore folks like Rogers, the CEO of Cyprus Semiconductor, moving production to Taiwan, then mainland China, made the shift quietly 20 years ago. Nobody stopped Rogers. When China wins, the living on U.S shores will not make a whimper, know or care.











You must have Javascript enabled to use this form.

Burton Leed

why is that guy in business?

He's like the face plate of a nasty CEO. There are a bunch of 'em. (Cypress, Rogers).

You must have Javascript enabled to use this form.

Business Friendly China vs. German Kurzarbeit

China is business friendly. You hear it from the likes of Rogers(Cypress Semi) and many others. What they mean is an unspoken rule of a 72 Hour Work Week. Production Quotas are regularly enforced by a rubber hose room in the back of the factory. Because so many smoke, when the factory is close to a river, you have to be careful where you toss the butts, because the rivers frequently catch on fire. Mao's Iron Rice bowl is long gone and official line is that China wants to use Chile (as remade by Chicago School boys), as the Chinese Model - officially.

The Germans now talk about Kurzarbeit, a work week shrunk to 28 or 32 hours. The U.S. Average Work Week is officially 32 hours. The difference is that the German Government pays the difference between 40 and 32 hours. The econometric question is what would the unemployment rate be over and above U6 if the lost hours were counted as unemployed workers?

The political point is that no society that wants to be free can compete with unfreedom.


You must have Javascript enabled to use this form.

Burton Leed


I often wonder if embedded into these "executives" brains is just a desire to poop on the U.S. worker in order to feel "superior". Rogers is a case in point. I can't count the number of horror stories coming from that guy towards his employees and workers in general. Stuff like brazen, blatant extreme sexual harassment, discrimination, screaming at people, doing a Schindler's list type of firing, regardless on how much they contributed, working people to the point of collapse, denigrating people, insulting people and so on.

I mean this is an unspoken attitude, esp. in Silicon valley to just treat STEM like shit. Some sort of attitude towards the techies.

The reason he's in China is the slave labor and he's out of his mind to claim China is "business friendly". They require you partner with the state, have all sorts of rule changes and it's about capturing that very once U.S. industry sector. They are targeting high tech, advanced manufacturing to capture it and these blood thirsty glorified sociopaths who somehow are "executives" seem to just love the entire motif of crucifying the U.S. worker.

Nobody talks about this, but there really is a serious attitude going on, a class thing, a power thing in tech. Not all tech corporations but some of them are just notorious and I'd say the stories on Rogers are at the top of the list.

You must have Javascript enabled to use this form.

China's Model as Schindler's List More than Metaphor

The Chinese model we know is based on Chile and the Chicago School of Friedman at a macro level as seen by the Party. At an enterprise level China is truly the Third Reich as depicted in Schindler's List. There are the compulsory beatings, shootings, harassment of the ordinary worker. Ex-pat Chinese are recruited as industrial spies trained and sent back to the U.S. During the WTO hearings in 1999, many of us blogged the Senate Commerce Committee - Fred Thompson - to expose the !2 Points. These were the pieces of critical U.S. tech the Chines state was working on stealing.

Thompson brought this out in the hearings, but he was attacked publicly by Donahue - Chamber of Commerce. Thompson did not back entirely down but created the watered down retaliation Obama used in the tit-for-tat.

As for tech, I can't see how the shreds of the private sector can fight back against China. At some point, the survivors will develop retaliatory Cyber War. If the U.S private sector cannot mount it's own Cyber defense and offense it will be destroyed. Obama policy is you are on your own fighting the Chinese cyber war


Next? The Martial Art of Cyber Warfare.

You must have Javascript enabled to use this form.

Burton Leed