“China: Get Ready for Turbulence” (from The Diplomat)

Interesting analysis; here is a sample: ‘At comparable purchasing power, China’s GDP moved from 21 percent of the United States in 1993 to 75 percent in 2011. The dollar zone created by Beijing’s exchange rate policy is no longer a tiny Chinese “moon” attached to a huge U.S. “earth”, but a near-equal pair of seriously mismatched economies. The global market values the combined entity at roughly the “right rate,” but the result has been sustained overvaluation of the U.S. arising from the deliberate continuation of Chinese undervaluation. In such a zone, the undervalued part (China) will tend to inflation, the overvalued part (America) to deflation.’

Sounds like a weird echo of problems in the Euro-zone caused by mismatched economies locked together by currency…

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Filed under China, Economy, Political Risk

One response to ““China: Get Ready for Turbulence” (from The Diplomat)

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