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June 13, 2007

US pressures China to increase Yuan value faster

The USA is threatening 27% tariffs against China to force China to more quickly raise the value of the Yuan by 15 to 40%

This supports my thesis that China's economy will the pass the USA by 2020

15% appreciation in the yuan would move it from 7.6 to 1 US dollar to 6.6 to 1 US dollar.

40% appreciation in the yuan would move it to 5.4 to 1 US dollar.

China had an economy of 20.94 trillion yuan at the end of 2006.
They have a projected 10.5% growth in 2007.
Therefore, if we were to adjust the currency by 40% appreciation.
China's economy at the end of 2007 would be US$4.25 trillion.
This would not include Hong Kong or Macau, which would add another 210 billion.
China's combined economy would be US$4.46 trillion.
Japan at the end 2006 is at US$4.367 Trillion
The projection of the IMF is for Japan to shrink to US$4.3 trillion in 2007

China's economy would be in the range of 32-34% of the size of the US economy.

The politics and money situation within the USA is an attempt by manufacturers within the USA to get more business and profit instead of lower costs for consumers or more profits for Walmart and other importers of goods from China.

China is experimenting with looser controls on the Yuan

2 comments:

Jonathan said...

So China will become the world economic power... does this mean that the smart foreign language to learn would be mandarin then? Will Mandarin become the most dominant language in the world eventually?

bw said...

Mandarin will be important as a major language of commerce. How important will it be if we have good real time machine translation ? How good will the translation systems be? So some of the disadvantages of not knowing a language are reduced.

Even with good translators and translation systems there will be that extra business and cultural advantage of knowing the language. Culture and nuance is communicated in language.