Like the presidents before him, when U.S President Barack Obama met China's President Hu Jintao this week, he asked that China stop controlling the price of its currency and allows the yuan to float on the open market.
To the surprise of no one, the Chinese ignored the calls. I can understand why because the reasons are simple; by fixing the value of its currency against the dollar, the Chinese ensure low prices for Chinese-made exports, and for an export economy like theirs, that is important. What I don’t understand is why America is the only one shouting about the yuan.
Personally, I feel that other countries should join America in protesting the level of the yuan. Yes, it’s a little bit like the pot calling the kettle black but when you considered the position of China in the world’s economy and the fact that China holds more than $800 billion of U.S. government debt, there is no question that the yuan is ridiculously undervalued.
I feel it strange that other export countries in the region do not question why the yuan is so low. The level of the yuan directly affects the exports of countries like Japan, South Korea, Taiwan, and our own Singapore. I mean even the Chinese no longer argued that their currency should be higher than it is now, so I fail to see why other countries shouldn’t put China to task on the yuan.
It’s in the interest of everyone expect the Chinese that the yuan goes higher, and if you look at it in a purely economic viewpoint, it should be higher! The Americans are right and frankly other countries should join America in calling for a higher yuan before another currency crisis hit all of us.