News - Japan / far east
Categories: Japan / Far East | US | Economics / Markets
China has warned of a possible trade war as the US Senate voted in favour of debating laws which could pressure it to let the renminbi rise.
The propsed bill would give the US government the power to add tariffs to goods imported from countries deemed to be undervaluing their currencies to boost exports, the BBC reports.
Politicians and trade groups have accused China of manipulating its currency in this way, and have called for legislation to create a level playing field.
The Chinese government said it "firmly opposed" the bill, warning of a potential trade war if Washington gives the proposals the green light.
It accused the US of using the "so-called currency imbalance as an excuse to upgrade the exchange rate further, to take protectionist measures, a serious breach of World Trade Organisation rules, and seriously interfere with economic and trade relations.”
The statement added the bill “may seriously affect the entire progress of China’s reform of its yuan exchange rate regime and also lead to a trade war, which we would not like to see.”
The renminbi is undervalued by as much as 20% - 40% compared to the US dollar, according to some estimates.
Categories: Japan / Far East | US | Economics / Markets
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Chinese currency has appreciated 30%
In 2005, the exchange rate was 8.27 Chinese Yuans for one U.S. Dollar. (Source: http://en.wikipedia.org/wiki/Renminbi )
In 2011, the exchange rate is 6.36 Chinese Yuans for one U.S. Dollar. (Source: http://www.x-rates.com/d/USD/table.html )
The Chinese currency has appreciated 30% against the U.S. Dollar in the last 6 years. What are the U.S. Senators complaining about?
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Math:
In 2005, one Yuan was worth 12.09 cents. [1 dollar / 8.27 yuans = 12.09 cents per Yuan]
In 2011, one Yuan is worth 15.72 cents. [1 dollar / 6.36 yuans = 15.72 cents per Yuan]
Yuan appreciation = (15.72 cents – 12.09 cents) / 12.09 cents * 100 = 30.02% appreciation vs. U.S. dollar
Posted by: China Lee
05 Oct 2011 | 14:06
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