One heard very recently of Chinese confidence in the Euro, as opposed to the US dollar, and the not-so subtle threat to re-allocate China's foreign reserve holdings from more heavily US-weighted to somewhat less.
This rhetoric appears to have turned against its purveyors. Chinese exports to the EU have suffered.
This quote, reminding me of Chinese attempts to find holes in shipping and L/C documentation to avoid payment on goods when currency movements made orders suddenly unprofitable, sounds like the shoe is now on the other foot:
“We have been receiving calls from some European clients who signed contracts with us earlier this month, and they all want to cancel their orders, since the depreciation of the euro has eroded all their margins and then some,” said Elvin Xu, the sales manager of Guangdong Ouyi Electrical Appliance in Zhongshan, China, which makes gas stoves, heaters and water heaters. “They say they cannot increase the prices at their end to their customers, given intense competition in their marketplace.”
In addition, in March, Chinese purchases of US long-term securities "rose 2 percent to $895.2 billion, the first increase since last September."
Weakness is evident in the Chinese position. So, where is Secretary Geithner and what of the administration's reported push to free the reins upon the RMB?
