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

China Investigates Former Powerful Security Chief

Former security chief and member of Politburo Standing Committee, Zhou Yongkang, under investigation for suspected 'serious disciplinary violation' More

India, US Look to Reset Ties During Kerry Visit

This week's talks will be first high level interaction between two countries since Prime Minister Narendra Modi took charge More

Video Young African Leadership Program Renamed to Honor Mandela

YALI program, launched by President Obama in 2010, aims to build skills in business, entrepreneurship, public management and civic leadership 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.
Vietnamese Staging Chinese Product Boycott After Oil Rig Spati
X
Reasey Poch
July 28, 2014 7:18 PM
China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video Vietnamese Staging Chinese Product Boycott After Oil Rig Spat

China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video ESA Spacecraft to Land on a Comet

After a long flight through deep space, a European Space Agency probe is finally approaching its target -- a comet millions of kilometers away from earth. Scientists say the mission may lead to some startling discoveries about the origins of the water on earth. VOA’s George Putic has more.
Video

Video Young Africans Arrive in US for Leadership Program

President Barack Obama's Young African Leadership Initiative has brought hundreds of young Africans to the United States for a six-week program aimed at building their knowledge and skills in fields such as public administration and business. Out of the 50,000 young Africans who applied for the program, just one percent was accepted. VOA's Laurel Bowman caught up with some of those who made the cut and has this report.
Video

Video In Honduras, Amnesty Rumors Fuel US Migration Surges

False rumors in Central America are fueling the current surge of undocumented young people being apprehended at the U.S. border. The inaccurate claims suggest the U.S. will give amnesty to young migrants from the region. As VOA's Brian Padden reports from Honduras, these rumors trace back to President Obama's 2012 executive order to halt deportations for some young undocumented immigrants already living in the United States.
Video

Video Students in Business for Themselves

They're only high school students, but they are making accessories for shoes, fabricating backpacks and doing product photography - all through their own businesses. It's the result of a partnership between a non-profit organization that teaches entrepreneurship and their schools. VOA's Mike O'Sullivan and Deyane Moses met the budding entrepreneurs near Los Angeles.
Video

Video Astronauts Train in Underwater Lab

In the world’s only underwater laboratory, four U.S. astronauts train for a planned visit to an asteroid. The lab - called Aquarius- is located five kilometers off Key Largo, in southern Florida. Living in close quarters and making excursions only into the surrounding ocean, they try to simulate the daily routine of a crew that will someday travel to collect samples of a rock orbiting far away from earth. VOA’s George Putic has more.

AppleAndroid