Coverage from Bloomberg here.
"At a symposium at the San Francisco Federal Reserve Bank last week, more than 30 economists, mostly from universities and international institutions, tackled the issue of China's currency peg. Most of them argued that the Chinese would be forced to adopt a more flexible exchange rate regime, and some said that would come no later than next year.
On the other hand, the symposium -- which was titled, "The Revived Bretton Woods System; A New Paradigm for Asian Development?'' -- was called to discuss a series of papers by economists who maintain that the Chinese have such an overriding interest in strong growth that the peg will last at least for another five years.
National Bureau of Economic Research Working Paper published last July, Direct Investment, Rising Real Wages and the Absorption of Excess Labor in the Periphery: "If the price to be paid for this (industrialization) strategy includes financing a large U.S. current account deficit, governments in the periphery will see it in their interest to provide financing even in circumstances where private international investors would not.
"The catastrophic losses and abrupt price breaks forecast by the conventional wisdom of international macroeconomics arise from a model of very naive government behavior. In that model, periphery governments stubbornly maintain a distorted exchange rate until it is overwhelmed by speculative capital flows. In our view a more sensible political economy guides governments in Asia. The objectives are the rapid mobilization of underemployed Asian labor and the accumulation of a capital stock that will remain efficient even after the system ends.''
I discussed a number of these issues in a previous post.
I agree with the second assessment. The price for China (for what they are getting in return) is small without question, in my opinion.
ReplyDeleteMFA
Notice that China and Japan are showing significant concern with North Korea. There is much at stake in our relations with each. There is reason for us to understand the development concerns in China, even as we push moderatly for currency adjustment. Japan, of course, is a firm ally.
ReplyDelete....
http://www.nytimes.com/2005/02/12/international/asia/12korea.html
Japan Urges North Korea to Rejoin Disarmament Talks
By JAMES BROOKE and DAVID E. SANGER
Prime Minister Junichiro Koizumi of Japan urged North Korea to re-engage in disarmament talks, a day after North Korea said it had nuclear arms.
Anne
http://www.nytimes.com/2005/02/12/business/worldbusiness/12outsource.html
ReplyDeleteGridlock on India's New Paths to Prosperity
By SARITHA RAI
MUMBAI, India - Anxieties over the United States economy have receded and worries about the political backlash have ebbed. But India's $17 billion outsourcing industry has a new dread: the poor infrastructure in the country's crowded cities is taking a big toll and may even curb the growth of the fast-expanding industry.
Inadequate roads, a shortage of hotel rooms, inadequate power, traffic jams, too few overseas flights and high telecommunication fees are all becoming major concerns. They were the main topic this week at the annual meeting of India's outsourcing industry trade group....
Anne
Japan and China:
ReplyDeletehttp://www.nytimes.com/2005/02/13/international/asia/13korea.html
Chinese News Media Critical of North Korea
By KEITH BRADSHER and JAMES BROOKE
BEIJING - China on Sunday publicly called for the Korean peninsula to be free of nuclear weapons and urged North Korea to return to regional talks regarding its nuclear program. State-run Chinese media and censored Internet chat rooms were uncommonly critical of Pyongyang for having announced Thursday that it had manufactured nuclear weapons.
The official New China News Agency reported Sunday morning that Foreign Minister Li Zhaoxing of China had spoken by phone on Saturday night with Secretary of State Condoleezza Rice. Mr. Li called for the regional negotiations to resume as soon as possible and for the "denuclearization" of the peninsula, the agency said.
The Chinese Foreign Ministry had made similar points late Thursday night but at a much more junior level, with the statement issued in the name of Kong Quan, the chief spokesman....
Anne
The development path China has chosen strikes me as much like that of America from 1865, like that of Australia as well, and possibly this will be the reason for development success after a century of failed development of poorer countries.
ReplyDeleteAnne
Notice again there is more to our relationship with China than trade. China and America will move gingerly with each other.
ReplyDeleteAnne