Illustration: Liu Rui
Some US politicians keep pressuring China for the appreciation of the yuan, which makes some Chinese scholars think that it is unavoidable for the exchange rate war between China and US. They even hold that it is the same trick played by the US in 1985, when the US forced Japan into the Plaza Accord, under which the Japanese yen was pushed up to reduce the growing US trade deficit with Japan. After that Japan lost its influence on international monetary systems.
I do not completely agree with them. I think Americans actually are more fearful of yuan appreciation.
At present, many US economists and market analysts point out that the exchange rate has limited influence on Chinese exports and US employment. The US House of Representatives and the President even have different opinions. Why is the US so confused on this issue?
On the one hand, yuan appreciation means the decline of the US dollar’s international role as a global currency. By printing dollars, US could easily handle various difficulties caused by the financial crisis. So now the US both wants the yuan to appreciate and also fears it. Quite a few Americans think that only the appreciation of yuan can restrain Chinese exports and perk up the US manufacturing industry.
But some Americans realize that it also means the depreciation of the dollar and the decline of the dollar’s status. With the relative slump of European and US economy, China has become the chief engine of the global economy and the yuan has gradually turned into a pillar of the international monetary system. Its status and influence are far above the yen of that time. In other words, yuan appreciation actually means the US dollar depreciation against the yuan instead of yuan appreciation against the US dollar.
Shaolin Temple claims rumors are groundless
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