Comments on: China’s “silver bullet” – a strong RMB could solve her biggest economic woes… http://welkerswikinomics.com/blog/2008/05/19/chinas-silver-bullet-a-strong-rmb-could-solve-her-biggest-economic-woes/ for students and teachers of Economics Thu, 09 Feb 2012 09:13:55 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Nicholas s. http://welkerswikinomics.com/blog/2008/05/19/chinas-silver-bullet-a-strong-rmb-could-solve-her-biggest-economic-woes/comment-page-1/#comment-7174 Nicholas s. Tue, 16 Dec 2008 23:07:04 +0000 http://welkerswikinomics.com/blog/2008/05/19/chinas-silver-bullet-a-strong-rmb-could-solve-her-biggest-economic-woes/#comment-7174 A strong RMB is necessary to simultaneously increase consumption and reduce inflation. The strength of the RMB compared to the US will mean that more Chinese are buying both American imports and Domestically produced goods, as their RMB is worth more. The Chinese government is unwilling to allow its currency to float absolutely freely; this is most likely due to the benefits of a weak currency for Chinese exporters who gain a supposed ‘unfair’ advantage over American producers. The article states, “The Chinese currency was undervalued by 27%”, many politicians are calling for a across the board tariff on all Chinese imports to the United States, this is known as a retaliatory protectionist measure. A strong RMB is necessary to simultaneously increase consumption and reduce inflation. The strength of the RMB compared to the US will mean that more Chinese are buying both American imports and Domestically produced goods, as their RMB is worth more. The Chinese government is unwilling to allow its currency to float absolutely freely; this is most likely due to the benefits of a weak currency for Chinese exporters who gain a supposed ‘unfair’ advantage over American producers. The article states, “The Chinese currency was undervalued by 27%”, many politicians are calling for a across the board tariff on all Chinese imports to the United States, this is known as a retaliatory protectionist measure.

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