dashgalaxy86 asked:
As we all know, China’s currency is tied somewhat illegally to the USD which greatly skews America’s trade deficits and many professionals say has caused a lot of global economic problems… But how bad would it be for China if they actually suddenly let up on this policy?
As we all know, China’s currency is tied somewhat illegally to the USD which greatly skews America’s trade deficits and many professionals say has caused a lot of global economic problems… But how bad would it be for China if they actually suddenly let up on this policy?
Sources would be appreciated.
It isn’t just the “others” that’ll suffer, though… Obviously, China has its own interests in mind. The main reason I’ve heard is that if they allowed their yuan to be what it should be in terms of value, people would start going to other countries for goods. Basically, China is cheating.
This is also running up huge artificial deficits with the US, its biggest trade partner, and putting them into the position to loan money back. If they untied the yuan, suddenly the deficit would shrink noticeably, at least the portion of it that is to China. This is common sense, tying your currency to another currency even by a fraction of a decimal can create millions of dollars in differences.
