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November 16, 2007
Demands for Currency Revaluation Ad Infinitum
Once again the helpless cry in the Western wilderness. Won't China allow the Yuan to "strengthen at a faster rate?" No, indeed. How is doing so in China's interest?
The movers and shakers of the so-called great economic powers, who have, it is said, the power over the purses that pay for imported product -- are powerless to affect any change either at home or abroad, despite ostensible regulatory control and direct market influence. This should not surprise anyone.
The rate of exchange has been the subject of heated discussion for over a decade. It can be considered a scientific principle that the amount of hot air expended upon it is inversely proportional to the movement engendered.
Traders, journalists, commerce department officials, Fortune 500 executives, Taiwanese investors -- all have averred to me over the past decade their strong belief that a policy change is imminent. And none has come along. I have contradicted my colleagues for years their sanguine approach to little avail. Hope springs eternal. One should, instead, bite into the proverbial Apple for a look outside the dreamy Eden-world to the hard analysis of interests （利害關係）. How does devaluation figure into China's economic interest? Stay away from the theoretical and answer with supreme practicality. It does not.
For now, China is signaling little willingness to bow to pressure. Central bank Deputy Governor Wu Xiaoling said Oct. 19 China won't hurry to alter its exchange-rate system, saying the country is already ``moving in a correct direction and in a smooth manner.''
"For now" is about as pregnant as one can get without knowing you've just given birth.
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