China stands up to currency criticism

Scott Tong Nov 16, 2009

China stands up to currency criticism

Scott Tong Nov 16, 2009


Kai Ryssdal: President Obama landed in China this morning. He kicked off three days there with a live town-hall meeting in Shanghai. The president spoke of promoting U.S. ideals around the world. And China’s ever-larger place in the global economy.

The pivot-point for that place is the Chinese currency — the yuan. About which there is very little agreement. Marketplace’s Scott Tong reports now from Shanghai.

SCOTT TONG: “Hello” in Shanghainese is how the president began today’s town hall. But then, the Chinese interpreter drowned him out on the local TV feed. China’s voice is getting louder.

Yesterday, at the APEC summit in Singapore, Chinese diplomats deleted a phrase from the communique: there had been a veiled criticism of China’s weak currency. Gone.

JAMES Magregor: They’re feeling like they’re in the catbird seat, and they don’t have to kowtow to anybody.

Consultant James Magregor is former head of the American Chamber of Commerce in Beijing. His book about China is called “One Billion Customers.”

Magregor: Where it is feeling a lot tougher and a lot more muscular these days. So when Obama comes in here and starts talking to them about currency or Iran or North Korea, China’s gonna have its own strong answers. And it’s not the way it used to be.

How times have changed. The U.S. is now economically soft, and China’s growing at 8.9 percent. In fact, Asian neighbors say China’s bullying the region with a currency held artificially cheap. So Chinese exports get a low price advantage.

Currency trader Sean Callow.

SEAN Callow: There is a considerable degree of concern about the lack of movement in the Chinese currency throughout the region.

But if China’s eating others’ lunch, that lunch is not free. A weak currency makes imports more expensive for Chinese consumers, say California wine or Saudi oil. Eventually, political scientist Dali Yang at the University of Chicago thinks China will allow the value of its currency to rise.

DALI Yang: That will help Chinese consumers have more purchasing power. And also help stimulate domestic consumption.

But China will act when it’s ready, not when the outsiders tell it to. In fact, the criticism flew the other way yesterday, when China’s top bank regulator blasted the weak dollar. Take that, Washington: pot calling the kettle undervalued?

In Shanghai, I’m Scott Tong for Marketplace.

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