NEVER HAPPEN (via Robert Duquette):

China agrees to move 'steadily' toward flexible currency (Associated Press, 10/01/04)

The Bush administration, struggling to show progress in attacking this country's soaring trade deficits, won a commitment today from China that it would move "firmly and steadily" to a flexible, market-based currency. However, the Chinese offered no firm timetable for how long the transition will take.

Changing China's currency system has been a key demand of the beleaguered manufacturing sector in the United States. Companies believe China's current policy of linking its currency at a fixed rate to the U.S. dollar has undervalued the Chinese yuan by as much as 40 percent, giving the country a tremendous competitive advantage over U.S. products.

China's commitment came in a joint economic statement issued early today following high-level meetings between Treasury Secretary John Snow and Federal Reserve Chairman Alan Greenspan and their counterparts from China, Finance Minister Jin Renqing and Zhou Xiachuan, head of China's central bank.

"The Chinese side reaffirmed China's commitment to further advance reform and to push ahead firmly and steadily to a market-based flexible exchange rate," the two sides said in the joint statement.

The statement said the U.S. side expressed support for continued efforts by China's government to "to bring about this goal as rapidly as possible."

The Bush administration has been pushing China for more than a year to allow the value of its currency to be set by financial markets. However, the Chinese insist this cannot be done until the country puts in place a number of economic reforms designed to bolster China's weak banking system and protect it from the volatility that would occur with a floating currency.

As soon as their prices start going up the jobs start going elsewhere.

Posted by Orrin Judd at October 2, 2004 8:57 PM