There is more to add to the fact base, but against this background alone, the Western world needs to be careful what it wishes for. An RMB appreciation could well make China more export competitive and enhance its capacity to compete for commodities and assets globally. Wouldn't that be a great strategic outcome!
The tone of the global conversation regarding the RMB seems to be devoid of discussion of these facts and has few connections with reality – it's almost delusional and totally for domestic political consumption — and could be quite dangerous as a result. Is it any wonder that the pragmatic Chinese are beginning to a little snitchy about being constantly nagged about the RMB on the basis of either a lack of comprehension of the facts or a deliberate misrepresentation of them?
Either way, it must be hard for the Chinese leadership to have much respect for their Western counterparts in this debate, which is precisely the position of weakness we don’t want to be in if we aspire to have any hope of influencing the outcome.
Photo by Flickr user andreasnilsson1976, used under a Creative Commons license.
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