G20: Exclusive: Chinese Self-Interest Contrives Phony Currency "Reform" - by William R.Hawkins

There is an old saying that goes, “Fool me once, shame on you. Fool me twice, shame on me.” So how much shame is associated from being fooled 50 times, or 100? With the G20 summit set for June 26-27 in Toronto, Canada, the People’s Republic of China has again talked of reforming its fiat exchange rate policy in an attempt to defuse what is likely to be a major issue of contention among the G20. Beijing is confident that, as in the past, appeasement-oriented academic, media and business interests will accept whatever the Chinese say in order to avoid a confrontation. The United States, in particular, will again accept words over actions so as to avoid taking any counter-measures itself---or so Beijing hopes.

Beijing will not “free up” its policy nor does it have any desire to make its trade partners “happy.” The Chinese Communist Party newspaper Global Times quoted a People’s Bank of China spokesman as stating, "With the BOP account moving closer to equilibrium, the basis for large-scale appreciation of the RMB exchange rate does not exist” and “The exchange rate floating bands will remain the same as previously announced.” Beijing is interested in protecting its own interests, which means maintaining favorable imbalances, not correcting them.

American pressure on China to abandon its currency manipulation, which comes mainly from Congress rather than the White House, is aimed at reducing the massive U.S. trade deficit and regenerating jobs in domestic manufacturing. Yet, this is exactly what Beijing’s policy will not allow.

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