China, Currency and Inflation: What's Going On?
Posted by jeckert on 12/17/2010
In a NY Times blog post today, Paul Krugman outlines what seems to be great confusion on the part of the Chinese government regarding their economic policies.
While revaluing the yuan would help China's growing inflation problem, they are hesitant to do so because of how it would affect exports. So, they continue to cheat in the global market, but what they'll soon realize is that they are only hurting themselves.
Read Krugman's post here.
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But....
Isn't China's "cheating" propping up the profits of American corporations ? If the RMB gets significantly revalued it will lead to more layoffs at American companies that rely on the undervalued RMB as a "subsidy" of sorts. It is a complex situation indeed.