Showing posts with label currency. Show all posts
Showing posts with label currency. Show all posts

Tuesday, October 19, 2010

Backtrackin' with Deng Xiaoping

A quick refresh on the precepts of Chinese State Capitalism for anyone really taken aback by China's interest rate move today:

Economic planning is not tantamount to socialism, because economic planning is also practiced in capitalist countries

The market economy is not tantamount to capitalism, because a socialist country can also have a market economy.

Both economic planning and the market economy are economic means.

The essence of socialism is to emancipate and develop the productive forces, destroy exploitation, eliminate polarization, and attain common prosperity in the end.

Deng Xiaoping, 1987

Monday, June 21, 2010

A few Thoughts on the RMB


China indeed came through with the promised revaluation of the RMB over the weekend, effectively reverting to the "pre-crisis" pegging criteria for the currency established in 2005.


By the close of business in Asia on Monday, the Renminbi had advanced almost .5%, to 6.7976 per dollar.

This looks like a blip on the radar, but represents the only real move in the RMB over the past two years, as the PRC government prevented appreciation of the currency in an effort to drive exports.

Check out John Hudson's post on the Atlantic Wire blog for a round up of punditry following China's big move. Lots of comments about posturing ahead of the G-20 summit and a few prognostications of the evolution of China's economy that address a gumbo of currency, labor and social issues.

As someone no longer bound to rationalize PRC economic policy as part of my job, I am more interested in the larger issues of State Capitalism in play for China. Ian Bremmer addressed the threats for China's government last year in Foreign Affairs:

I think that state capitalism is ultimately unsustainable in China. A government that micromanages economic life can take enormous credit when it helps generate three decades of nine percent annual growth. But when things begin to slow and the pace of economic expansion can no longer match the pace of rising public expectations, the leadership will have to shoulder a lot of the blame. When the gap between rich and poor reaches a tipping point, when go-go growth produces a true ecological disaster, whatever the turning point, the party will have to take the lion's share of responsibility. But these chickens won't be coming home to roost in the next couple of years. This is probably a much longer-term management challenge for the leadership -- though one much larger than any it has yet faced.