With little regard for Chinese customs, US President George W. Bush criticized China in a speech at a community school in Ohio State on Jan. 21, the first day of the Lunar New Year holidays. Bush reiterated the US' pursuit of free trade and demanded that the country's trade partners follow the trade principles of fairness and freedom. He singled out China, which enjoys a massive trade surplus with the US, as an example of a country pursuing unfair trade policies. The main cause of the trade imbalance, he said, was China's policy of keeping the yuan weak against the US dollar.
Bush's accusation reminds many people of a series of measures Beijing took to suppress the yuan from strengthening in the latter half of last year. After some defensive and offensive moves, the official value of the yuan remained unchanged and pegged to the US dollar, but China has also lowered export rebate rates to curb exports and maintain the yuan's value.
However, the pressure on the yuan to appreciate also remains. Many international media forecast at the end of last year that the yuan would appreciate early this year. Will Bush's comments help realize this forecast?
I believe everyone is eager to know the answer to this hotly debated issue. The so-called experts and professionals naturally will not miss this great opportunity to boost their reputation. The problem is: Is there really a standard answer? Who exactly has the power to make this decision? Why does this issue concern people so much?
As China is called the "world's factory," it is easy to understand why the yuan's value is in the international spotlight. Investors from around the world flock to China. Speculators also cast a greedy eye on the prey. China's magnetic pull on global funds offers clear proof of this issue's importance.
From the import and export of products to the inflow and outflow of hot money in speculative trading, everything is affected by the yuan's value. Any slight change results in enormous gains and losses. The yuan's fluctuation will only become an ever hotter issue as the Chinese economy grows. The likelihood of it triggering a domino effect is more than theoretical. In light of this, maintaining the stability of the yuan is reasonable. How to maintain its stability thus becomes a global issue. But is it possible to reach this goal?
Setting aside basic theories, everyone is clear that the fluctuation of the yuan is not just an economic issue, but also a political one.
Beijing tries to control the market with its "black hand" behind the scenes. This appears to be effective on the surface and in the short term. But in the end market forces will react, as is happening already.
This should be a familiar scene to those who have studied Taiwan's economic development in the 1980s. In 1986 the New Taiwan dollar rose sharply and was liberalized. Could this happen in China this year?
Wu Hui-lin is a research fellow at the Chung Hua Institution for Economic Research.
Translated by Jackie Lin
The White House’s decision to take a 9.9 percent stake in Intel Corp is looking like very shrewd business indeed. Since the government bought in at US$20.47 a share last August, the US chipmaker’s surging stock price has delivered the US a US$43 billion return. One of the reasons the investment has so far proved so sound is that the White House has made sure of it. According to The Wall Street Journal, Howard personally pushed deals on Intel’s behalf with some of the most lucrative clients imaginable. They include Nvidia Corp, the company at the heart of the AI
A single photograph can cut through a lot of noise, but it can also be used to misrepresent the truth. At the very least, it can concentrate the mind on something that requires further investigation. On Monday last week, Ma Ying-jeou Foundation CEO Tai Hsia-ling (戴遐齡) and former National Security Council secretary-general King Pu-tsung (金溥聰) held a news conference in which they showed a photograph of former foundation CEO Hsiao Hsu-tsen (蕭旭岑), now Chinese Nationalist Party (KMT) deputy chairman. In the image Hsiao is seated next to Xiamen Taiwan Businessmen Association chairman Han Ying-huan (韓螢煥). The two men were holding
I first met Professor Ray Jiing (井迎瑞) as a film and documentary student at Shih Hsin University’s (SHU) Department of Radio Television and Film in 1988. The following year, he went on to become the director of the Chinese Taipei Film Archive — forerunner of the Taiwan Film and Audiovisual Institute (TFAI). Over his eight-year tenure, Jiing rescued and restored over 200 classic Taiwanese films. In 1997, he established the Graduate Institute of Studies in Documentary and Film Archiving at Tainan National University of the Arts (TNNUA), and I joined the program in his third cohort of students. Beyond a
A recent report concerning a student who is suing his teacher posed the question in its headline: Does failing a student in two subjects constitute bullying? The college student in Chiayi County apparently sought NT$2 million (US$63,603) in state compensation, but a court dismissed the case. The first reaction of many might have been to ask: What has happened to students nowadays? Some say that teachers have lost their authority, while others say students are overindulged. Some even start reminiscing over the days when “whatever the teacher says goes.” However, the real issue might be overlooked if emotional reactions like that are the
RSS