- China has surged ahead of Germany for the first time
to become the world's top exporter, prompting ever louder demands from
the United States and Europe to revalue the yuan.
-
- Data from the World Trade Organization show that the
country vaulted past the US at the beginning of this year and has since
moved at lightning speed to eclipse Germany's once indomitable export machine.
It shipped $111bn (£54bn) worth of goods in August, up 55pc from
a year earlier.
-
- Now boasting 8pc of global exports three times
the Britain's dwindling share China has jumped up the technology
ladder. Machinery, equipment and cars now make up 46pc of total exports,
while textiles are fading from the picture.
-
- Beijing let the yuan break through the key barrier of
7.5 to the dollar yesterday, but seems determined to resist Western pressure
for faster appreciation.
-
- US Treasury Secretary Henry Paulson said it was in China's
own interest to let the yuan rise, given the clear signs of overheating.
-Beijing's policy of holding down the yuan through purchases of US and
other foreign bonds has caused reserves to mushroom to $1,430bn, driving
up inflation to 6.5pc.
-
- Jim Rogers, the veteran US investor, told The Daily Telegraph
he was pulling his money out of all dollar assets to buy yuan, yen and
Swiss francs. The latter two have been hit by "carry trade" speculation,
which must reverse at some point.
-
- "The US economy is undoubtedly in recession. Many
parts of industry are actually in a state worse than recession. If it were
not for [Fed governor] Bernanke injecting huge amounts of money, the stock
market would probably be down much more than it is," he said.
-
- Japan said yesterday its exports to the US plummeted
9.2pc in August, a sign that contagion from the US downturn may be spreading.
-
- In Washington, Congress has already drawn up plans for
sanctions against China, accusing the regime of stealing market share by
manipulating the yuan.
-
- But now Europe is buckling under China's export blitz.
The euro has risen 18pc against the yuan over two years. The EU's trade
deficit with China may top $220bn this year.
-
- Peter Mandelson, the EU trade commissioner, has warned
Beijing that it must curb the tidal wave of goods flooding EU markets,
or risk turning a friend into a foe. "It's a question of China...
being more conscientious in shouldering their fair share of the demands
of this trading relationship," he said.
-
- The yuan has appreciated 8pc against the dollar since
the creation of a crawling peg in July 2005, but the move has barely made
a dent on exports. Wu Xiaoling, the deputy governor of the central bank,
said China would move at its own pace. "Maybe we are not rushing things
as some people wish us to do, but we are moving in a correct direction
and in a smooth manner," she said.
-
- By delaying, China is importing inflation. This will
ultimately have the same effect on its competitiveness by pushing up labour
costs, but at a greater cost to political and economic stability. Food
price rises are now nearing levels that set off the Tiananmen Square protests
in 1989.
-
|