From the Readers

Don't bow to US

(China Daily)
Updated: 2010-04-23 07:44

Comment on "Is China repeating Japan's mistake?" (April 20, China Daily)

Japan's mistake was that it bowed to the demands of the US in the 1980s and allowed its currency to appreciate. It is the appreciation of the Japanese yen in the 1980s that led to the bursting of the bubble and the stagnation of the Japanese economy for the last two decades.

China should not allow its currency to appreciate as the US is demanding. The appreciation of the Chinese yuan is against the interests of China, both in the short and the long run. There is no reason to follow the dictates of the US.

Furthermore, China, because of its weight in international trade, has to consider the impact of the appreciation of the yuan on the world's economy.

If the yuan were to appreciate by 25 percent, for example, the prices of China's export products would increase by 25 percent. In other words, the countries that are importing from China (and all countries import from China) will have to pay 25 percent more for Chinese products.

This might not be a problem for the US, because the US simply prints more currency to buy these products, but it will be a big problem for all other countries. Prices in all countries will increase as a result of the appreciation of the yuan. This will increase the rate of inflation in these countries and will be detrimental to their economic growth.

Countries in South America, Africa, and Asia will feel the adverse effects. The world's economy suffers whenever the yuan appreciates against the US dollar.

My recommendation is therefore not to allow the yuan to appreciate.

Presently, billions of people all over the world are purchasing all kinds of Chinese products. If the prices of these products were to increase by 25 percent, a large proportion of these billions of consumers will not be able to buy them. This is a very big price to pay in order to please the Americans.

Jean Michel Wong, on China Daily website

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(China Daily 04/23/2010 page9)