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It has to occur sometime. They cannot fake the world markets out forever.
It is beginning to seem as though worries about the Chinese currency being "undervalued" will be a temporary phenomena.
Given Chinese internal inflation and the fact that the raw materials they are consuming are becoming more and more expensive, including oil, I think it quite likely that they will not be needing to support their currency peg very hard in the coming years, and may be faced with problems that their currency is too strong, relative to the dollar.
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BEIJING (Reuters) - China swung to a surprise trade deficit in February of $7.3 billion, its largest in seven years, as the Lunar New Year holiday dealt an unexpectedly sharp blow to exports.
It was China's first trade deficit since March last year and its biggest since February 2004. Economists, who had forecast a small surplus of $4.95 billion, said the sudden drop was likely to prove temporary.
"We did expect exports to slow last month, but I think nobody had expected such a weak outcome," said Nie Wen, an analyst at Hwabao Trust in Shanghai.
"There is little chance that China will have a trade deficit again, and the monthly trade surplus may pick up in the second half of this year," he added.
Still, the extent of the slowdown in both exports and imports caught markets by surprise. Asian stocks tumbled on worries that monetary tightening in China and other emerging markets was taking a real chunk out of economic growth.
The deficit will at least be welcome news on two fronts for the Chinese government, helping it dampen inflationary pressure and deflect calls for faster yuan appreciation.
Cash inflows from the country's vast trade surplus over the past few years have been a root cause of China's recent run-up in prices.
Inflation reached a 28-month high of 5.1 percent in the year to November. Data due on Friday is expected to show it pulled back to 4.7 percent in February.
With tightening policies beginning to have an impact, China is confident that it can achieve its 2011 goal of holding inflation to an average of 4 percent this year, Ma Jiantang, the government's statistics chief, said on Thursday.
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http://www.reuters.com/article/2011/...7290T520110310
It has to occur sometime. They cannot fake the world markets out forever.
via Reuters
http://au.news.yahoo.com/thewest/a/-...lobal-economy/The United States reprimanded Germany on Wednesday, saying its exporting prowess was hampering economic stability in Europe and hurting the global economy.
The Obama administration has long called for countries with trade surpluses, such as Germany and China, to do more to spur domestic demand.
But in a semiannual report to Congress on international economic policies, the criticism of Germany stood out for its stark language and prominent placement.
"Germany's anemic pace of domestic demand growth and dependence on exports have hampered" efforts to make the euro zone economy more stable, the Treasury said in the report.
"The net result has been a deflationary bias for the euro area, as well as for the world economy."
If the US were in Germany's status of a trade surplus, they'd tell such advice to go to .
The blind squirrel finds a nut!
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