Friday, May 29, 2009

Differing Views on China

. Friday, May 29, 2009

Obama and Geithner want structural adjustment of the Chinese economy and some upwards movement on the value of the RMB relative to the dollar.

Scott Sumner wants to see the RMB devalue against the dollar. Not a typical viewpoint (at least among non-economists), but he has some very good reasons.

In the first scenario, China stops funding the U.S. debt by buying Treasury bills. In the second, they continue that practice. For a very good article discussing the choice Beijing must make, see this piece by David Leonhardt.

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Differing Views on China
 
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