China Manipulates, Europe Wins - by Nate Taplin
Tim Geithner, the newly confirmed U.S. Treasury Secretary, ruffled feathers in Beijing and raised eyebrows across the Atlantic with a statement at his confirmation hearing that China has been "manipulating" its currency to gain an unfair advantage in export markets. Geithner's comments were received with predictable hostility in Beijing, but more interesting was the lukewarm response from across the Atlantic--given the European Union's own large current account deficit with China. A spokesperson for the EU's monetary and economic affairs commissioner simply commented that "exchange rates should reflect economic fundamentals. That's all we wish to say." In other words, despite tough talk on China last year, the EU prefers not to touch this one. Why such caution? The issue seems to represent an obvious convergence between U.S. and European interests. European exports to China now constitute a significant growth sector in several European economies. A stronger yuan would mean cheaper European goods for Chinese consumers. And Europe is pressing its case quite strongly in other arenas--cooperating with the U.S. to win a recent WTO ruling against Chinese auto parts tariffs, the first such legal setback the Chinese have suffered since joining the WTO in 2001.
No comments:
Post a Comment