News / Asia

New Fears of A "Currency War"

China's Prime Minister Wen Jiabao (l) and European Union Council President Herman Van Rompuy are seen following the signing ceremony of two agreements between the European Union and China at the EU Council building in Brussels, Belgium, October 6, 2010
China's Prime Minister Wen Jiabao (l) and European Union Council President Herman Van Rompuy are seen following the signing ceremony of two agreements between the European Union and China at the EU Council building in Brussels, Belgium, October 6, 2010
Les Carpenter

After China met with European Union leaders Wednesday in a one-day summit in Brussels,one major disagreement remained.  

European leaders urged China to allow its currency, the yuan, to appreciate more rapidly, just as the United States has urged.  But Chinese Premier Wen Jiabao resisted, saying that instead, Europe and the United States should lessen their pressure for China to make such changes.

Mr. Wen said that while some U-S congressmen, among others, have called for a rapid increase in the appreciation of the yuan, there are reasons why it would not be such a good idea.

"If China is going to raise its exchange rates by 20 to 40 percent then many of our export companies will have to close down.  Then those enterprise employees will lose jobs and migrant workers will have to return to their villages.  That will give rise to social turmoil."

Mr. Wen added that that would not be a good thing for the world economy.  China says the problem with trade imbalances between China and Europe, and the U-S, for that matter, has more to do with the structure of their economies than with the yuan exchange rate.  

Such words and disagreements along with recent efforts by Japan, South Korea, Taiwan and Thailand, as well as others to weaken their currencies in an attempt to boost exports have led some to suggest there could be what's being termed a global "currency war" brewing.  

However, Marc Chandler, chief currency strategist at Brown Brothers Harriman & Company told Bloomberg News there is really no reason for a "currency war."

"I think there's a fundamental difference between China's slowdown, or the currency's rise and trying to knock it down, that is devalue it."  "To me," Chandler added, " I'd say there'll be no currency war because these countries that are trying to take action all have rising currencies.  All those countries are really talking about is modifying the pace of acceleration."

Mr. Wen's meeting in Brussels is seen as an important precursor to next month's gathering in Seoul, South Korea of the group of 20 wealthy developing nations who will be trying to resolve the major regulatory issues in the aftermath of the 2008 financial crisis.  The questions about currency valuations will most likely be high on the G-20 agenda.

You May Like

Could Nemtsov Threaten Putin in Death as in Life?

Dynamic and debonair opposition leader had supported liberal economic reforms, criticized Russian president's aggression in Ukraine More

Oil Smuggling Highlights Challenges in Shutting Down IS Finances

Pentagon spokesman says Islamic State 'certainly continues to get revenue from the oil industry black market' but that airstrikes have made a dent More

India Focuses on Infrastructure, Investment to Propel Economy

Government expects economy to grow at 8 to 8.5 percent in next fiscal year More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
US Supreme Court Hears Hijab Discrimination Casei
X
Katherine Gypson
February 25, 2015 11:30 PM
The U.S. Supreme Court has heard opening arguments in a workplace religious discrimination case that examines whether a clothing store can refuse to hire a young woman for wearing the headscarf she says is a symbol of her Muslim faith. Katherine Gypson reports from the Supreme Court.
Video

Video US Supreme Court Hears Hijab Discrimination Case

The U.S. Supreme Court has heard opening arguments in a workplace religious discrimination case that examines whether a clothing store can refuse to hire a young woman for wearing the headscarf she says is a symbol of her Muslim faith. Katherine Gypson reports from the Supreme Court.
Video

Video Falling Gas Prices Hurt Nascent Illinois Hydraulic Fracturing Industry

Falling oil prices are helping consumers purchase cheaper petroleum at the pump. But that’s made hydraulic fracturing or “fracking” less economically viable for the companies in the United States invested in the process. VOA’s Kane Farabaugh reports on one Midwestern town that was hoping to change its fortunes by cashing in on the next big U.S. oil boom.
Video

Video Fighting in Sudan's South Kordofan Fuels Mass Displacement

Heavy fighting in Sudan's South Kordofan state is causing hundreds of thousands to flee into uncertain conditions. Local aid organizations estimate as many as 400,000 civilians have been internally displaced since the conflict began more than three years ago, while another 250,000 have fled across the border to refugee camps in South Sudan. VOA's Adam Bailes reports.
Video

Video Lao Dam Project Runs Into Opposition

A Lao dam project on a section of the Mekong River is drawing opposition from local fishermen, international environmental groups and neighboring countries. VOA's Say Mony visited the region to investigate the concerns. Colin Lovett narrates.
Video

Video A Filmmaker Discovers Her Biracial Identity in "Little White Lie

Lacey Schwartz grew up in an upper middle-class Jewish family, in a town in upstate New York where almost everyone she knew was white. She assumed that she was, as well. Her recent documentary, Little White Lie, tells the story of how she uncovered the secret of her true racial background. VOA’s Carolyn Weaver has more on the film.
Video

Video Deep Under Antarctic Ice Sheet, Life!

With the end of summer in the Southern hemisphere, the Antarctic research season is over. Scientists from Northern Illinois University are back in their laboratory after a 3-month expedition on the Ross Ice Shelf, the world’s largest floating ice sheet. As VOA’s Rosanne Skirble reports, they hope to find clues to explain the dynamics of the rapidly melting ice and its impact on sea level rise.
Video

Video US-Cuba Normalization Talks Resume Friday

Negotiations aimed at normalizing diplomatic relations between the U.S. and Cuba resume Friday. On the table: lifting a half-century trade embargo and easing banking and travel restrictions. There's opposition in Congress, but some analysts say there may be sufficient political and economic incentives in both nations for a potential breakthrough this year. VOA's Mil Arcega reports.
Video

Video Pakistan's Deadline For SIM Registration Has Cellphone Users Scrambling

Pakistani cell phone users have until midnight Thursday to register their SIM cards, or their service will be cut off. While some privacy experts worry about government intrusion, many Pakistanis are just worried about keeping their phone lines open. VOA Deewa reporter Arshad Muhmand has more from Peshawar.
Video

Video Myanmar Warns Factory Workers to End Strikes

Outside Myanmar's main city Yangon, thousands of workers walked off their jobs earlier this month demanding a doubling of their wages, pay raises after a year and input from labor unions on industrial regulations. Since Friday, the standoff has grown more tense as police moved in to disrupt the sit-ins, resulting in clashes that injured people from both sides. VOA correspondent Steve Herman visited industrial zones which have become a focus of Myanmar's fledgling workers rights movement.
Video

Video Oscar Winners Do More Than Thank the Academy

The Academy Awards presentation is Hollywood’s night to reward the best movies from the previous year. It’s typically a lot of glitter, a lot of thank you’s, a lot of speeches. But many of this year’s speeches carried messages beyond the thank you's. VOA’s Carolyn Presutti takes a look.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More