Renminbi strong enough to withstand currency war
Updated: 2016-01-29 08:13
By Mei Xinyu(China Daily)
|
|||||||||
From a long-term perspective, the US dollar may maintain a strong momentum against emerging countries' currencies for quite a longtime, but it will be difficult to do the same against the renminbi. China now maintains a continuous trade surplus and it continues to expand. The US economy is deeply mired in a disease of the apparent causal relation ship between the increase in the economic development of a specific sector and a decline in other sectors, and its "re-industrialization" campaign as part of its plan to reconsolidate its real economic foundation will be difficult to maintain.
Instead, the balance of its trade in goods is worsening despite its economic recovery. From 2011 to 2013, the growth of US' exports was faster than that of its imports, which to some extent improved its trade in goods balance. But starting from 2014, the trend reversed, as its exports growth again exceeded its imports growth, and the gap has continued to widen. Experiences from several dollar crises since the 1960s indicate that an ever-worsening trade balance and current account and fiscal deficit will cripple market confidence in the dollar. The latest round of a strong dollar against the renminbi will be interrupted by the Triffin Dilemma (where by the US needs to run balance of payments deficits that undermine confidence in the dollar as are serve as set) and this is expected to occur sooner rather than later.
From another perspective, the war declared by Soros on Asian currencies will offer an opportunity for China to deepen financial and fiscal cooperation with other East Asian countries, and cooperation on the China-led Belt and Road Initiative. Currently, East Asian currency cooperation basically stays at currency swaps or other forms of low-level cooperation.
In the context of drastic currency market fluctuations in emerging markets and Soros' open hint of a speculative attack against them, it is expected that China an do the remerging Asian economies will strengthen their financial cooperation, such as coordination and cooperation on monetary, financial and fiscal policies.
The author is are searcher at the Ministry of Commerce's International Trade and Economic Cooperation Institute.
- Global health entering new era: WHO chief
- Brazil's planning minister steps aside after recordings revelation
- Vietnam, US adopt joint statement on advancing comprehensive partnership
- European border closures 'inhumane': UN refugee agency
- Japan's foreign minister calls A-bombings extremely regrettable
- Fukushima impact unprecedented for oceans: US expert
- Stars of Lijiang River: Elderly brothers with white beards
- Wealthy Chinese children paying money to learn British manners
- Military-style wedding: Fighter jets, grooms in dashing uniforms
- Striking photos around the world: May 16 - May 22
- Robots help elderly in nursing home in east China
- Hanging in the air: Chongqing holds rescue drill
- 2.1-ton tofu finishes in two hours in central China
- Six things you may not know about Grain Buds
Most Viewed
Editor's Picks
Anti-graft campaign targets poverty relief |
Cherry blossom signal arrival of spring |
In pictures: Destroying fake and shoddy products |
China's southernmost city to plant 500,000 trees |
Cavers make rare finds in Guangxi expedition |
Cutting hair for Longtaitou Festival |
Today's Top News
Liang avoids jail in shooting death
China's finance minister addresses ratings downgrade
Duke alumni visit Chinese Embassy
Marriott unlikely to top Anbang offer for Starwood: Observers
Chinese biopharma debuts on Nasdaq
What ends Jeb Bush's White House hopes
Investigation for Nicolas's campaign
Will US-ASEAN meeting be good for region?
US Weekly
Geared to go |
The place to be |