Tag Archives: Yuan

Yuan Upmanship

A great international currency possesses three characteristics. It’s used to settle a substantial amount of international trade and commerce, it floats freely and is used as global reserve currency, meaning it’s held in large quantities by central banks and financial institutions. Thought of this way, the Chinese Yuan has largely accomplished the first, but because it is nowhere near accomplishing the second, it cannot accomplish the third. Give it time.

Chinese Trade Deficit!

Yesterday China reported that imports ($400bn) had exceeded exports ($399bn) in Q1 ‘11. This tiny deficit, China’s first in 7 years is an encouraging development for the world economy. It comes after 2 successive years of import growth outpacing exports. Hopefully this trend will continue. If so China will stop printing Yuan (to keep the exchange rate where it wants) and thus reduce domestic inflationary pressures.