Will Obama Increase Pressure on China Regarding the Yuan?

Chinese could see more pressure for yuan appreciation
Among the mumblings that circulate in Washington about foreign currency exchange is the regular lament that China is a currency manipulator. Although this is said quietly, and any real pressure on the Chinese to allow yuan appreciation is rarely brought to bear.

But will that change with the Barack Obama presidency?

Both Obama and his Treasury nominee, Timothy Geithner, say that they want to pressure China into allowing more natural yuan appreciation. But it may not get the support it needs in Congress. And, more importantly, even if Congress does legislate something, China is unlikely to comply.

China doesn’t really worry about the U.S.

The bottom line is that China doesn’t really worry about the U.S. China desn’t have to. Our government can threaten all it wants, but the bottom line is that China is our biggest debt holder. All China has to do is call in the debt — or threaten to — and an impasse holds.

Honestly, the U.S. really isn’t in a position to make demands on what China does, or doesn’t do, regarding yuan appreciation.

See Also

• You Can’t Trade the Chinese Yuan, But You Can Trade Other Asian Currencies
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