Why should China revalue its RMB?

Why should China revalue its RMB?
Nov 9, 2007 02:35
JIMMYB Points: Join Date: Feb 7, 2007 Status: offline	In recent days, more and more people and countries have required China to appreciat its RMB as soon as possible. Since mid-2005, RMB has risen nearly 11 percent against US dollar. However, Washington is still dissatisfied with this and says China should quicken its RMB appreciation, which could help balance the Sino-US trade. Even some one claims that the RMB exchange rate issue has become a big menace for global economies balance. EU also shows their great concern on the appreciation of RMB. Peter Mandelson, the European Union's trade commissioner said yesterday that China should revalue the renminbi to boost domestic demand, remove obstacles to banking reform and cool an overheating heavy industry sector. He hops that China could stop its managed currency system because this has deeply hurt EU. It is estimated that the bilateral trade imbalance between China and EU might catch up with the US-China trade deficit imbalance in the next year or so. Perhaps, that is the reason why EU requires China to appreciate its RMB. I just wonder if there are any other reasons that they require China to appreciate RMB. What is your view on this matter? Why should China revalue RMB except the reasons listed above?

Nov 9, 2007 02:35

JIMMYB
Points:
Join Date: Feb 7, 2007
Status: offline

In recent days, more and more people and countries have required China to appreciat its RMB as soon as possible. Since mid-2005, RMB has risen nearly 11 percent against US dollar. However, Washington is still dissatisfied with this and says China should quicken its RMB appreciation, which could help balance the Sino-US trade. Even some one claims that the RMB exchange rate issue has become a big menace for global economies balance.

EU also shows their great concern on the appreciation of RMB. Peter Mandelson, the European Union's trade commissioner said yesterday that China should revalue the renminbi to boost domestic demand, remove obstacles to banking reform and cool an overheating heavy industry sector. He hops that China could stop its managed currency system because this has deeply hurt EU. It is estimated that the bilateral trade imbalance between China and EU might catch up with the US-China trade deficit imbalance in the next year or so.

Perhaps, that is the reason why EU requires China to appreciate its RMB. I just wonder if there are any other reasons that they require China to appreciate RMB.

What is your view on this matter? Why should China revalue RMB except the reasons listed above?

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