If it was ‘set’ or ‘pegged’ to the dollar, it would not move at all. There are small movements, but the small size is due to the counter trade.
You have to use counter trade to prevent the exchange rate from changing due to trade imbalance.
A readjustment is in order. U.S. has to import less and export more (we’ve started doing that),
Definitely.
China needs to consume more and export less. However, China is still spending to stimulate export growth against internal consumption.
Actually they are trying to get consumption up.. but much of the populace are fanatical savers, combined with the large labor pool helping hold wages down and that the state owns most companies. The other thing that China is spending money on is infrastructure (highway systems, water & sewer, and power generation). Their spending on power generation is worth watching. The Chinese seem to realize that they can’t import enough oil for power generation, though they may have enough coal. They are spending a surprising amount on solar electric generation.
By the way, you think our real estate bubble was bad. Wait until the Chinese one pops.
Biggest problem with Chinese investors is that they have been conditioned to think like a group.. so they move/invest as a herd (think ‘real estate never goes down’.. in overdrive without contradictory viewpoints).
