“”The change was too small and too gradual even to begin the process of reversing Chinas current account surplus with the world,” said Lloyd Wood of the Fair Currency Coalition, a group that is pushing to penalize China with tariffs on Chinese exports unless it moves quickly to drastically realign its currency.
But other analysts caution that moving too fast could hurt the United States as well as China, since the U.S. is highly dependent on China to finance its huge budget deficits, which surpass $1 trillion for years to come.
Geoff Dyer, a Beijing correspondent for the Financial Times, notes that a sudden 40 percent jump in China’s currency value would make China look like the economic juggernaut many Americans fear by ballooning the size of its economy and military in dollar terms.
“It would catapult China way beyond Japan and leave it half the size of the U.S.” as the world’s second largest economy, he said, while China’s banks and oil companies would suddenly become the world’s largest. “The phrase ‘be careful what you ask for’ works as well in Chinese as English.””
This is utter gibberish.
It’s not true, contrary to WaTimes and some pseudoanalysts claimed, that America is “highly dependent on China to finance its huge budget deficits”. China owns only a small part (6.9%) of the US federal debt, and finances only a small part of the American annual budget deficit. The only solution to America’s huge budget deficits is to permanently balance the US federal budget, NOT to appease China. China mustn’t be appeased.
The US federal budget must be permanently balanced (by reducing civilian spending) so that America will not need to borrow money from China or any other foreign country.
As of 2010, China is already an economic juggernaut.
An appreciation of the Chinese currency would only improve China’s paper statistics. It would not make China any bigger nor any mightier than it is. It wouldn’t make China any more influential than it is. It would not make China an economic juggernaut nor a military juggernaut. It wouldn’t help China anyhow.
As of 2010, China already has the second-biggest economy in the world.
As of 2010, China already has the strongest military in the world.
The federal debt pie chart was compiled by Steve Conover.