Book Authored (ISBN-10: 0824821599)

Book Authored (ISBN-10: 0824821599)
Sovereign Rights and Territorial Space in Sino-Japanese Relations: Irredentism and the Diaoyu/Senkaku Islands (ISBN-10: 0824824938)

Friday, December 31, 2010

Currency Wars-I/Internationalization of Renminbi-XII

Kevin Rafferty published his article in the Japan Times, titled “Appreciating the Renminbi” to defend Beijing’s action. While the G20 summit gathered in Toronto, Canada on 27 June 2010 to discuss the global economy, the Western media focused on one of the hottest topics, the appreciation of the Renminbi. “Beijing is right to claim that it is impossible to plan for an economy if the currency is 6.83 against the dollar today, 6 tomorrow, maybe 5.5 the next day and 5.8 the day after that as traders play their games. Japan has enough experience of the damage of currency fluctuations,” states by Rafferty. Certainly, the appreciation of the Japanese yen in the 1980s has destroyed the growth of the Japanese economy since the Plaza Accord insisted upon by the Americans. Furthermore, current Chinese trade surpluses constituted about 0.6 to 0.7 percent of global GDP, the highest in more than 100 years (American economy in the 1920s at 0.4 percent of global GDP or Japan in the 1980s at 0.5 percent). However, China only accounted for 8 percent of global output and is a much smaller economy than either the US in the 1920 with 30 percent of global GDP or Japan in the 1980s with 15 percent (Japan Times 26 June 2010).

As Lindsey Grahams and Charles Schumers in the US congress have continued to scream about the appreciation of the Renminbi, they are still dreaming because they successfully pushed the Japanese in the corner to force the appreciation of yen in the 1980s. Yet, the American politicians do not understand that China is not Japan, which has become the “51 state” of the US. Today’s image of the Americans attacking China is exactly the same as the 1980s when American politicians were bashing the Japanese. Beijing did not put the U.S. where it is. As Bloomberg News Columnist William Pesek states, “It was the administration of U.S. President Bill Clinton that decided to remove Depression-era banking-system safeguards and fight efforts to regulate derivatives. It was U.S. President George W. Bush who removed every financial regulation in view, squandered a budget surplus through tax cuts for the ultra-rich and put a pointless war in Iraq on a credit card. China didn’t tell Americans to buy homes they couldn’t afford. …. China didn’t lobby against reforms that might protect the U.S. from another financial crisis. That will be on U.S. President Barack Obama (Japan Times 26 June 2010).” Right now, U.S. lawmakers are looking perfect scapegoat – China -- for their problems. As the Financial Times described it on 28 September 2010, G2's (China and the United States) "currency wars" are under way.

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