Skip to content
How Much is China Dictating the USD?

Here is a brief article from a few years back that provides some old and some newer information pertaining to China’s unwillingness to revaluate their currency and their foreign policy to continue purchasing American assets.

China, prior to the credit crunch, was/is on fire and they want everything American from oil to government bonds. The question, are they too hot? This article addresses some concepts we’ve explored in class, largely the Chinese governments unwillingness to slow down economic growth by either raising interest rates or revaluating the currency.

The articles comments on the continued growth of the economy at a rate many in China suggest is sustainable. 2004 GDP growth was the greatest in 8 years reaching 9.5%

There are suggestions these numbers are inflated and the government is in fact posting some what inflated figures when quoting GDP growth.

The National Bureau of Statistics declared the 9.5% number and have also posted quarter results of GDP growth greater than estimates.

The NBS cites stronger than expected performance in agriculture and services sector as key players in the GDP growth. This in turn suggests greater investment was occurring in the economy despite some pressure to revaluate.

Despite some Chinese government measures to slow spending, consumers have continued to spend, interest rate increases have not slowed them down.

GDP reporting methods are changing in China as well. Adjustments are made on previous growth rate figures if there is over or under performance.

New methods of calculating such as comprehensive census data, including industries previously unaccounted for, are an attempt by the government to legitimize the GDP numbers.

After the census data is collected many economist believe it will provide a better measure of the real state of the Chinese economy, and perhaps the ever growing GDP numbers are in fact false and overstated.

Leave a comment

Your email address will not be published..