Taming China's runaway economy
...What’s the strategy for the future?
Yet, the hot topic among economists is how China should proceed with the next stage of economic development.
And the United States — the world's largest economy — has a big stake in the outcome.
Already, Washington has urged Beijing to loosen controls on its currency. ‘The problems of over-spending and excessive bank lending are issues of special privileges, and there is the greater problem of income distribution with the peasants as the neglected segment.’
During his recent visit to Beijing, U.S. Treasury Undersecretary John Taylor pressed China to adopt a "more flexible exchange rate,” arguing that it would "allow for smooth adjustments and prevent the kinds of 'hard landings' or 'boom-bust' cycles that...are so costly to any country.”
There is a pending move in the U.S. Senate to hold a hearing on China's exchange rate unless China acts "in 60 to 90 days.”
The United States incurred its biggest trade deficit with China last year, to the tune of $124 billion.
Some U.S. manufacturing and labor groups argue that the trade and job losses are due to the cheap Chinese currency that may well be undervalued by as much as 40 percent. ...Link
And a related story: India and China
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