I'm no economist but I find this story from Reuters fascinating...
"The Bush administration warned China on Tuesday it must swiftly overhaul its currency system or face the likelihood of being accused of manipulations to gain an unfair trade advantage -- with economic sanctions possibly following that."
So let's get this straight - we're going to sanction the biggest holder of credit to the U.S.?
http://www.msnbc.msn.com/id/7886722/
Newsweek ran a cover story recently, by Fareed Zakaria which contained this nugget:
"The US has run irresponsible fiscal policies, knowing that foreign governments and people would provide it with unlimited credit. But that credit comes at a price. When China holds huge reserves of dollars, it also holds the power to damage the American economy. To do so would certainly hurt China as much or more than it would America, but surely it would be better if U.S. policy were less vulnerable to such possibilities. Fiscal responsibility at home means greater freedom of action abroad."
http://www.msnbc.msn.com/id/7693580/site/newsweek/
Last year, the Chinese central bank's deputy governor, Li Ruogu was quoted in the BBC news: "We have already said time and again we are moving toward a more market-based, supply-and-demand based, flexible exchange rate,"
"How long it takes, I don't know," he told a group of global bankers gathered for the annual meetings of the International Monetary Fund and World Bank.
"Because China has an 8,000 year history, a decade is truly a short period," he joked. "I've been asked numerous times, 'What is the time frame?' - I tell them, 'No time frame'."
http://news.bbc.co.uk/1/hi/business/3712458.stm