Sounds like china has kept mum at the g-20, resulting in some weakening of the rmb.  Interestingly, many world leaders think that getting deficits under control is important.  Hmm. Except the US. Who has been minding the store the past few years. There was a ton of talk about a strong US dollar being important to the US as it's official policy while te US was happy to keep the dollar weak. The European were happy with a strong euro.  And china was happy with a weak rmb.  Notwithstanding all the g-20 talk will this ever get straightened out.  Is a market driven approach the right one for currencies, and if it is the ought to be some rules to prevent things bubbling out of whack.

GD I think you're missing the point.  One of the big reasons China has so many dollars is BECAUSE they're exchanging yuan for dollars to keep the yuan at its designated peg.  Keeping the yuan low versus the dollar means a big trade surplus with the U.S., which of course causes dollar holdings to rise, but in order to then keep the yuan low (since it would naturally rise with a trade surplus) China has to direct its central banks to constantly buy dollars, further compounding their excess dollar holdings.

The other effect of this is that China has to print yuan to buy dollars, and all that renminbi in circulation causes domestic inflation in China.

No government can dictate the level of their currency forever.  They can for a few months or year, but eventually their ability to print money or their official reserves run out.

The US owes China a HUGE amount of trade dollars..

They are always looking for ways now to spend this money.. look at China's foreign ownership and joint ventures with international companies now.  Had the recession not hit, they would be in a better spot as they could have stayed status quo.

With US consumer confidence dropping and the unemployment picture in the US not improving, a stronger yuan will reduce US import of goods From china. China then has less money to buy US government bonds and then the US government has less money to spend.  So a stronger yuan will force in part the US to cut spending.  It is possible that  less demand from US to china creates more demand from the US manufacturers increasing US domestic jobs. But it is also possible with a weak euro the US dollars go to buy euro products not US ones.  So simply having a stronger yuan is not the US or chinas answer. There needs to be a global understanding of how currency trading and price fixing is distorting economics for all and then a coordinated plan

Going to be more expensive to have fun in HK and China soon. Sad.

It seems as if china allowing the yuan to appreciate a little is there part in trying to right the global economy. Letting it rise provides some cover for who is at fault for the global meltdown.

US avoids labeling China currency manipulator
P. PARAMESWARAN
July 9, 2010 - 12:24PM
               
The US Treasury avoided labeling China a currency manipulator in a much delayed report to Congress but maintained that the yuan was undervalued.
Three weeks after the Chinese central bank vowed to loosen its currency controls amid mounting international pressure, the US Treasury said the yuan "remains undervalued," stopping short of branding Beijing a manipulator.
"What matters is how far and how fast the renminbi (yuan) appreciates," Treasury Secretary Timothy Geithner said in the semiannual report to Congress.

"We will closely and regularly monitor the appreciation of the renminbi and will continue to work towards expanded US export opportunities in China that support employment in the United States, in close consultation with Congress," he said.
By law, the government is required to report whether any foreign economy manipulates its currency against the US dollar.
But the verdict earned the ire of US lawmakers bent on imposing trade sanctions on Beijing for allegedly manipulating the yuan for trade advantages.
"This report is as disappointing as it is unsurprising. It's clear it will take an act of Congress to do the obvious and call China out for its currency manipulation," said Senator Charles Schumer, a lawmaker from President Barack Obama's Democratic party spearheading the move to impose the sanctions.
Schumer's statement did not say when lawmakers would move on legislation introduced in Congress they said would treat "currency manipulation" as an illegal subsidy and enable US authorities to impose tariffs on Chinese goods.
"If we want China to play by the rules and stop manipulating the yuan, then this administration has to stop putting out weak-kneed reports," said Republican Senator Orrin Hatch, calling Geithner's report "laughable."
Democratic Representative Sander Levin, who chairs the powerful House Ways and Means Committee, wanted Congress and the Obama administration to "fully explore the option of challenging" China?s currency practices through a complaint at the World Trade Organization.
Some lawmakers sought caution.
Democratic Senator Max Baucus, who heads the key Senate finance committee, said he expected Beijing to take significant steps soon to appreciate its currency and urged Obama to be "vigilant in pushing China on this issue."
Geithner's report was scheduled to have been sent to Congress in April but he had postponed it in a bid to give China more time to make the yuan flexible.
Just ahead of a recent summit of the Group of 20 key nations, a de facto deadline set by Washington, Beijing announced on June 19 that it would make the yuan rate more flexible.
The yuan has gained 0.7 percent against the greenback since then.
For nearly two years, the yuan had been effectively pegged at about 6.8 to the dollar, which critics say undervalues the currency by as much as 40 percent and gives Chinese exporters an unfair trade advantage.
Geithner on Thursday cited various factors to back his claim that the yuan was undervalued, including the fact that China was persistently building up its foreign reserves' arsenal and chalking up current account surpluses.
"China's continued foreign reserve accumulation, the limited appreciation of China's real effective exchange rate relative to rapid productivity growth in the traded goods sector, and the persistence of current account surpluses even during a period when China's trading partners were in deep recession together suggest that the renminbi remains undervalued," he said.
Geithner also called on China to resume making public a key report by the International Monetary Fund on its exchange rate policy and other economic assessments.
US lawmakers have demanded that Beijing authorize the release of an IMF staff report, which forms part of China's annual "Article IV" consultations with the fund.
"IMF Article IV reports on China, when they have been published, have provided valuable information about assessments of macroeconomic and exchange rate policy. We encourage China to resume publication of its Article IV Reports," Geithner said.
© 2010 AFP
This story is sourced direct from an overseas news agency as an additional service to readers. Spelling follows North American usage, along with foreign currency and measurement units.
Link here:
http://news.smh.com.au/breaking- ... 20100709-1036r.html

And today it was reported china trade surplus is healthy versus US so that again currency is undervalued. And as te stock market goes up people declare the economy healthy. How can things change in one day.

The market is on pins and needles at this time. People are expecting the worst, and ready to run for the hills the moment bad news hits. China might be the big engine to keep things moving, but it will need help from the other economies before long. Most important economy is still the US at this time.

Is chinas engine roaring again so thAt thecupswing in the market last week was real. Or is this overblown talk to justify high stock prices.

Push to challenge China over currency 'manipulation'
September 16, 2010 - 7:06AM
               
A top US lawmaker says that taking China to the World Trade Organisation over its alleged currency manipulation was an overdue step to protect American jobs from unfair competition.
"The status quo is unacceptable and unsustainable," Democratic Representative Sander Levin, chairman of the powerful House Ways and Means Committee, said on Wednesday.
"We are fools if we look the other way."
Mr Levin said he would wait for US Treasury Secretary Timothy Geithner's testimony on Thursday to his committee and a key senate panel before deciding how to proceed with legislation to impose retaliatory duties on Chinese goods.
"After he testifies, I'm going to sit down and talk with this committee and the leadership, and the senate, as well as the administration, and decide the next step," Levin said.
Key Senate and House of Representatives committees are weighing bills to impose retaliatory measures against Chinese goods amid accusations that Beijing keeps its currency -- and thereby its exports -- artificially cheap.
Whatever the result of the legislative process, "going to the WTO remains a very viable alternative, it should have been done long ago," he said.
His comments came after policymakers on his committee denounced China's currency policy and blamed it for costing US jobs, a hot button issue a few weeks ahead of November elections shaped by the sour economy.
AFP
Link here:
http://www.smh.com.au/business/w ... 20100916-15cyz.html

China: Pressure on yuan 'may backfire'
By Wang Bo, Lan Lan and Chen Weihua (China Daily)
Updated: 2010-09-17 07:03

China rejects US demands over currency

BEIJING/New York - China warned on Thursday that obsessing over yuan appreciation would not solve trade problems in the United States and "might make things even worse", while economists view US demands as a political ploy ahead of midterm congressional elections.

"Adding pressure will not resolve trade issues between China and the US the country's exchange rate reform will only be pushed forward in accordance with economic conditions and balance of international payments," Foreign Ministry spokeswoman Jiang Yu said at a media briefing.

Jiang's remarks came in response to earlier comments by US Treasury Secretary Timothy Geithner, who expressed dissatisfaction with the pace of the yuan's appreciation in testimony prepared for congressional hearings on China's currency policy.

The yuan was traded at 6.7181 against the greenback on Thursday, its highest level since June 19, when the central bank announced that it would deepen reform of the mechanism governing the yuan exchange rate to improve its flexibility.

----cut------


To read more go to :

http://www.chinadaily.com.cn/chi ... ontent_11314565.htm

[ Last edited by  Weelock at 18-9-2010 00:25 ]

Didn't they have an agreement that the currency exchange rate between US$ and HK$ will stay within a range for a period of time?

EU to dangle IMF votes for China
European leaders will dangle a "genuine willingness" to give up votes in the IMF and other global powerbases if China shows "responsibility" on currency moves, a senior EU diplomat said Tuesday.
An October 6 summit between the European Union and China, following broader meetings of leaders from 46 European and Asian nations including Russia and Australia for the first time, will see EU leaders pressed on re-balancing controls over the global economy.
But while ruling out any "wholesale" transfer of voting power in the International Monetary Fund, Europe will "commit to move in that direction" with the diplomat insisting: "Do not underestimate the readiness of the European side to be constructive."
The eighth Asia-Europe meeting (ASEM) on October 4-5 comes just before the IMF annual meeting addresses the issue and one month before G20 leaders attempt to settle a rift over lop-sided representation at a summit in South Korea.
The IMF board, which has a statutory 20 seats, currently holds 24 members, but the extra four would have to be cut back if no diplomatic deal on representation is agreed before its new, two-year board is selected by November 1.
Europe currently corners nine seats, and recognises even US pressure to share out more clout among fast-growing developing economies.
As the pressure mounts, European nations will argue that "with increased representation, comes increased responsibilities," amid pressure on Beijing to let its exchange rate appreciate.
China said Tuesday that US pressure on Beijing to boost the value of the yuan was "unwise and short sighted", after US President Barack Obama criticised the country's exchange rate policy.
The Obama administration maintains that Beijing is keeping its currency artificially low against the dollar to make its exports more competitive, and is showing increasing signs of frustration over the long-running row.
Jiang however reiterated that yuan appreciation alone would not help reduce the huge US trade deficit with China.
Beijing pledged in June to loosen its grip on the yuan, which had been effectively pegged at about 6.8 to the dollar since mid-2008. Since then, the currency has gained about 1.9 per cent against the greenback.
"All those issues are tied together... on the European side, there is a genuine willingness to move towards re-balancing," said the European diplomat, who requested anonymity.
Currency markets were relatively quiet before a much-anticipated meeting of the US Federal Reserve later Tuesday.
Link here:
http://news.smh.com.au/breaking- ... 20100922-15lsa.html

US to punish China for weak yuan
September 30, 2010 - 9:21AM
               
US lawmakers overwhelmingly approved a bill Wednesday to punish China for what they branded its unfairly undervalued currency, blaming the weak yuan for killing US jobs weeks before key elections.
The House of Representatives passed the legislation by a 348-79 margin, one of its strongest showings against China in years, fueled by deep voter anger at the sour economy and joblessness near 10 per cent ahead of the November ballot.
The US Senate has signalled it will take up a companion bill after the elections, but legislation's fate is unclear and President Barack Obama has not formally taken a position on whether he supports it.
The measure would essentially consider Beijing's actions as a trade subsidy, and expand the powers of the US Commerce Department by allowing it to slap retaliatory tariffs on Chinese goods.
"We do this because one million American jobs could be created if the Chinese government took its thumb off the scales," said Democratic House Speaker Nancy Pelosi.
"We understand the US-China relationships is an important one in every way - culturally, politically, diplomatically, economically, commercially - but we need to have them play by the rules," she said shortly before the vote.
Link here:
http://www.smh.com.au/business/m ... 20100930-15xwf.html

US backs off in currency stoush with China
October 16, 2010 - 9:03AM
               
The Obama administration backed away on Friday from a showdown with Beijing over the value of China's currency that would have caused new frictions between the world's only superpower and its largest creditor.

The Treasury Department delayed a much-anticipated decision on whether to label China as a currency manipulator until after the US congressional elections on November 2 and a Group of 20 leaders summit in South Korea on November 11.

Washington and the European Union accuse China - set to become the world's second-largest economy after the United States this year - of keeping the yuan artificially low to boost exports, undermining jobs and competitiveness in Western economies.

Fears are growing of a global "currency war" as major trading powers, such as the United States and Japan, seek to weaken their currencies while emerging economies such as Brazil and South Korea raise or threaten tougher controls to limit capital flows.

The decision to delay the Treasury's semi-annual currency report reflects a desire by the Obama administration to pursue diplomacy to resolve the dispute with China rather than provoke a confrontation that could potentially lead to a trade war and affect long-term interest rates.

In July, China held $US847 billion in US government debt.

In its statement, the Treasury seemed to be encouraged by China's recent action to allow its currency to rise by roughly 3 per cent against the dollar since June 19.

"Since September 2, 2010, the pace of appreciation has accelerated to a rate of more than 1 percent per month," it said. "If sustained over time, this would help correct what the IMF (International Monetary Fund) has concluded is a significantly undervalued currency."

China argues that moving too quickly with currency reforms could devastate its export-driven economy.

It blames the United States for sluggish growth, high debts and an easy monetary policy that has flooded the market with newly printed dollars, weakening the US currency and putting pressure on emerging countries to keep their currencies low.

But Washington argues that Beijing could relieve that pressure by letting the yuan strengthen.

'Not a scapegoat'

The Treasury said the G20 gathering in Seoul would give world leaders an opportunity to look at how best to rebalance the global economy. This was not just the responsibility of China and the United States, it stressed.

In another important summit, leaders of the Asia Pacific Economic Cooperation forum will meet on November 13-14.

"The Treasury will delay the publication of the report on international economic and exchange rate policies in order to take advantage of the opportunity provided by these important meetings," it said.

China left little doubt about the rancor that would ensue if it is branded as a currency manipulator - a largely symbolic move by the United States that would mandate more consultations with Beijing but no immediate penalties.

"The Chinese yuan should not be a scapegoat for the United States' domestic economic problems," Commerce Ministry spokesman Yao Jian said on Friday.

The decision to delay the Treasury report appears to have been taken at the last minute. Industry sources had been primed to expect it earlier on Friday.

The Obama administration, seeming to anticipate criticism from US lawmakers who are pushing for stronger action against China, brought forward an announcement of an investigation into whether Chinese support for its clean energy sector violates international trade rules.

But that was not enough to appease Democratic Senator Charles Schumer, who has sponsored legislation to get tough with China over its currency practices.

"The Obama administration is treating the symptom but not the disease," he said. "An investigation into China's illegal subsidies for its clean energy industry is overdue but it's no substitute for dealing with China's currency manipulation."

Congress eyes duties

The Treasury's decision may raise pressure on the Senate to approve a bill passed by the House of Representatives that would allow the United States to slap duties on imports from countries with fundamentally undervalued currencies.

"Democrats and Republicans alike in Congress are prepared to move legislation confronting China's currency manipulation this year," Schumer said. "We hope to have the administration's support but will go forward without it if necessary."

There had been speculation Obama might be tempted to label China as a currency manipulator for the first time in 16 years to look tough before the elections in which his Democrats risk big losses over discontent with his handling of the economy.

But there are concerns about angering China, whose support is needed on issues such as rebalancing the global economy, climate change and the nuclear programs of Iran and North Korea.

In an article published on Friday, Chinese central bank governor Zhou Xiaochuan pledged a continuation of yuan reform but only on Beijing's gradual terms.

"The yuan exchange rate will be basically stable at a reasonable and balanced level," he wrote in China Finance, a magazine published by the central bank.

The Treasury Department is mandated by law to issue a report every six months on whether any country is manipulating its currency for an unfair trade advantage.

But the last time any administration - Republican or Democrat - has cited a country under the 1988 currency law was in July 1994, when China was put in the spotlight.
Link here:
http://www.smh.com.au/business/u ... 20101016-16ny4.html

interesting this topic brings up again. i think RMB should appreciate slowly and gradually rather than like what US said to do a one step big appreciation. US should take more responsibility to not let USD falling so rapidly like recently - it has already created a lot of turmoil in the currency market and many countries' economy.

China is playing a very strong hand of cards right now, and they are trying to stay ahead of the curve.

What is likely to happen is this:  China will allow the RMB to go up slightly over time, not a true easing but a gentle movement, not more than a few percentage points at a time, just giving enough action for the US not to complain so much, yet not enough to hurt their own economy.

As soon as the US dollar starts to pick back up strength, they will either freeze it out again, or start moving it back the other direction because of the "increased strength in the dollar".   Basically, by moving very slowly in very small amounts, they are doing just enough to avoid any more serious arguments.

You won't see it hit 7.0 at one end, and unlikely to make it under 6.5 any time soon either.

I think that it is the USA that is devaluing the US dollar. The US dollars is losing its value month after month, and i heard the Fed is still going to print more US dollars.

China minister says dollar printing "out of control"

BEIJING (Reuters) - Dollar issuance by the United States is "out of control," leading to an inflation assault on China, the Chinese commerce minister said in comments reported on Tuesday.

Chen Deming, speaking at a trade fair in southern China, said that exporters had done a good job of preparing themselves for exchange rate changes as well as rising labor costs, but were suddenly confronted with new challenges.

"Because the United States' issuance of dollars is out of control and international commodity prices are continuing to rise, China is being attacked by imported inflation. The uncertainties of this are causing firms big problems," Chen was quoted as saying by the official Xinhua news agency.

Chinese officials have criticized U.S. monetary policy as being too loose before, but rarely in such explicit language.

At the G20 meeting in South Korea which ended on Saturday, Chinese Finance Minister Xie Xuren said that issuers of major reserve currencies -- code for the United States -- must follow responsible economic policies.

Along with posing an inflationary risk, a weak dollar also places appreciation pressure on China's yuan since its value is so closely tied to the U.S. currency.

China's consumer price inflation rose to 3.6 percent in the year to September, a 23-month high. It has been led mainly by food costs and many economists expect it to crest before the end of the year.

Despite his concern about the impact of U.S. monetary policy, Chen gave a positive outlook for Chinese trade next year. He said export growth would be stable, while imports would increase strongly.

http://www.reuters.com/article/idUSTRE69P3QW20101026