United States and China was again the issue of RMB into a quarrel. Many American politicians and economists believe that Beijing is manipulating its currency, the yuan artificially devalued, so that Chinese exports have price advantage in the international market, it is not fair, thereby preventing the U.S. economic recovery. U.S. House of Representatives a bill demanding that the U.S. Government to play down the currency artificially impose punitive tariffs on the country. The bill is clearly aimed at China. The drafting of the bill, Rep. Tim Ryan, recently warned that, although monetary policy in China, slowly but continuously weaken the U.S. manufacturing sector, the U.S. government can not stand.

Beijing ended in June this year, the RMB peg with the U.S.. Since then, the RMB against the U.S. dollar increased by less than 2%, and most floating around in yuan policy U.S. Treasury secretary testified before Congress that took place a few days.

Nevertheless, appreciation of the renminbi is not a cure panacea for U.S. economic disease. Of course, if Beijing allows the renminbi appreciation, China’s large trade surplus with the United States will reduce China’s imports of goods get cheaper, so as to stimulate U.S. exports to China and bring much needed employment opportunities for the United States. However, the RMB does not automatically balance the strong US-China trade. In the period 2005 to 2008, the RMB against the U.S. dollar increased by 2l%, the U.S. trade deficit with China is increasing. China produced too many Americans the basic consumer needs, ranging from toys to personal computers. This is why to solve the trade imbalance between the two countries exchange rate more difficult than solving the causes. This requires both major structural reforms. Americans need to increase savings and reduce spending, the Chinese people need to increase consumption and reduce savings.

RMB appreciation will make the Americans suffer. This means that Wal-Mart supermarket in China soaring commodity prices, making Americans unemployed and shrinking wallets withstand greater pressure. RMB appreciation will not make factories and jobs back to the United States from the Pacific Ocean. Indeed, the RMB appreciation will make Chinese exports had a hard time processing. However, these plants may be more willing to move to other developing countries such as India and Indonesia and other countries, where production costs are much lower than the United States.

However, due to China’s strict control on the exchange rate, it gives the impression that the world is: we export to you to let yourself rather than your economy to recover. This selfish approach to promote in other countries pursuing the same policy. September 15 this year, the first time in six years in Japan to intervene in currency markets, curb the yen appreciation, hoping to help exporters with competitive products in China and other countries. This could lead to a competitive devaluation of the competition, resulting in a fragile economic recovery that nightmare once again derailed. Beijing is to maintain currency as other more low-cost and damage the interests of poor countries. Cheap yuan that Chinese exports compared with other emerging countries more competitive, so that China’s export sector more powerful.

More importantly, China should carry out their own interest yuan policy reform. Policy makers are concerned that a big revaluation could undermine China’s export sector and bring the loss of employment opportunities. However, past experience shows that the Chinese yuan appreciation, exports will not close down even more prosperous, particularly the cost of imported parts and raw materials will be so reduced. Beijing dream of the yuan to become the leading international trade and finance one of the forces, but unless the government relaxed controls on the yuan, otherwise difficult to achieve this dream. RMB appreciation will force Chinese companies to improve efficiency and the introduction of high-tech means of production, which is one of the goals Beijing. This will help the Chinese economy from exports to domestic demand transformation, will also reduce the Chinese economy to international demand, dependence on government spending and investment.

Almost appreciation to everyone’s benefit. Unless the Beijing recognition of this fact, otherwise the Chinese monetary policy will remain controversial is the relationship with the rest of the world a focus, but also hinder the global economy.

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