“There are several ways to rebalance, each with different implications for social policy, making it an issue that must be determined not by economists but by political leaders.”
Is there factual data out there that can prove politicians always screw things up? Feel free to send it in if you have it.
They are going to time it with a pullback and possibly an election.
China’s problems are not what they are here in the US, but it could be if they make the wrong choices in the near future. The revaluation of the Chinese currency will impact the import/export trade dramatically, causing the import market to explode and the exporters to close up shop due to the increased cost of doing business. With the amount of exports coming from the giant Asian country, any disruption of this magnitude will greatly affect the overall economy, bringing down average incomes to a point that offsets the benefits of a revaluation.
“The rebalancing process will cause short-term pain and perhaps a rise in unemployment. Postponing it will make both of those problems worse when the adjustment finally takes place. China has to choose when is the best time to begin that process, and this depends on a lot of social and political factors. Most obviously, the 2012 succession process is a key variable. “
This is a must read article if you are involved in currencies, metals, commodities, or anything of value on a global scale.
Michael Pettis wrote the two quotes I have in this article, and his full viewpoint on the above matter can be found by clicking the link below. Mr. Pettis is a professor at Peking University’s Guanghua School of Management, where he specializes in Chinese financial markets.