china must keep the yuan/us$ peg at 8.2 yuan to us$
January 2, 2007 2:23pm CST
CHINA MUST KEEP THE YUAN/US$ PEG AT 8.2 YUAN TO US$ I request our Chinese leaders in Beijing to remember the Asian Currency Disaster of 1997, which bankrupt many nations and caused a lot of hardship. I am in the middle of a good book that discusses the misfortune of the 1997 currency implosion. The book is called ?LOWBACK?written by Chalmers Johnson.. Our Chinese leaders in Beijing must remember that even a slight manipulation in the trading band of the yuan/US$ peg will expose many people in Asia to the uncertainties of their loan position. We must remember that the currency disaster of the 1997 was brought on by the Japs conceding to the pressure put on them by the USA to ?everse the effects of the Plaza Accord? Thus reversing of the value of the USA$/Jap yen caused tremendous damage , I quote the author : ?owever, in the wake of the Plaza Accord, many newly developing South East Asian economies had by then pegged ?their currencies to the low US$, establishing official rates at which businesses and countries around the world could exchange S-E Asian currencies for US$. So long as the US$ remained cheap, this gave them a price advantage over competitors, including Japan, and made the region very attractive to foreign investors because of its rapidly expanding exports. It also encouraged reckless lending by domestic banks, since pegged exchange rates seemed to protect them from the unpredictability of currency fluctuations. During the early 1990?, all of the East Asian countries other than Japan grew at explosive rates. Then the ?everse plaza Accord?brought disaster. Suddenly, their exports became far more expensive than Japan? . Export growth in second tier countries like South Korea,Thailand,, Indonesia, Malaysia, and the Filipines went from 30% a year in early 1995 to zero by mid 1996. ?br / This therefore is an issue that our Chinese leaders in Beijing must take into consideration and I am certain that they have already acted on this issue. Our Chinese Communist leaders are very astute and very intelligent and they know what to do. My perspective is that our leaders ought to leave what has been good for China ?ell alone?China does not need to act at the instigation of the USA. China is an equal power as the USA and China will only do what is good for China. We Chinese must always remember that the USA is all set to weaken China because they see us as their compatitor. My suggestion is for our Chinese leaders not to revalue the yuan/us$ peg. Why upset what is in all ways the best setting for the yuan/US4 peg ? Why change anything that is already the best position for the Chinese traders ? Did the USA come to the rescue of the East Asian people when it was the USA and Japan that brought down on all people in South East Asia THE VERY DISASTER THAT BEFELL THE SOUTH EAST ASIAN PEOPLE ?