China’s Change of Heart?

China policy past years - pure mercantilism - exports at all cost and to heck with their consumer. Yet today we hear from Reuters that an adviser to the Bk of China called for reforms in exchange policy, "to reduce the central bank's massive foreign currency buying, which has pumped excessive cash into the economy and exacerbated inflation risk." "The central bank's dollar buying on the domestic market to keep the yuan exchange rate stable has been costly as such intervention fuels price rises," said Zhou Qiren, who is also a professor at Peking University.

This echos our view exactly.

Such a change means China will finally favor more imports, becoming a stronger market for US goods.


Robert Craven