China/US: now the upper hand is on the other foot

Score one for my prescience! Except my hypothetical involved OPEC, not China. Still. Close.

Beijing turned the tables on the US on Wednesday after years of criticism from Washington of its handling of the Chinese economy, warning of the serious global implications of the weak dollar, recent US interest rate cuts and the subprime crisis.

Beijing highlighted US economic problems at the opening of a twice-yearly meeting between ministers from both countries,

China has received stringent commentary about what many in the US say is its manipulation of its currency and the advantage it gives local exporters.

Chen Deming, the incoming commerce minister, said the falling dollar had pushed up the cost of imported resources and been a destabilising factor. “What I’m worrying about is the weakening dollar and its potential impact on global growth,” he said.

… Mr Zhou said the bank was closely watching the impact of US interest rate cuts and their impact on the world economy.

“For China, what we worry about more is that very accommodative US monetary policy could give rise to a new burst of excess liquidity in global markets,” he said.

“In China, we have already had an excess liquidity problem in the domestic market, which we know is somewhat connected to the global markets.”

Rather a slap in the face for their guest, Secretary Paulson. His reponse?

Mr Paulson did not respond directly to the criticism but said the fact the Chinese economy had grown strongly through the early stages of renminbi reform had made it “easier to make the argument” for a stronger Chinese currency.

“There is now confidence that the [revaluation] has not done anything to harm their economy in any way,” he added.

“Easier to make the argument”? Paulson has done nothing about the weak US dollar except travel the globe talking about a strong dollar and how great the US economy is (oh, with that stop-over back home to try freezing mortgage rates for a surgically-identified sub-set of victims of sup-prime mortgages). I don’t think people are going to listen to the man who does that. It’s like having Tony Snow as the bloody Treasury Secretary.


3 comments so far

  1. opit on

    Creative mixing metaphors ?

  2. zooeygoethe on
  3. opit on


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