RMB dispute put aside but will never be non-political
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Tsinghua University Professor Li Daokui delivered high expectation on Hu's visit. He said the success of this visit would be the key to the adjustment of RMB exchange rate policy in the future.
But we cannot be too optimistic about the problem. The US Congress will never stop making a fuss about the exchange rate, although the Obama administration is being practical.
Chinese financial officers always try to boost the idea that the exchange rate problem should not be politicized. Economists also believe that as the price of a certain currency, the exchange rate should be decided by the market. But all of these are simply assumptions.
The RMB cannot be freely converted right now. Even if it can, the dispute on it will never end. The reason why US dollars, Japanese yen or euros are reserve currencies is more political than economic.
Only giving up the illusion of a non-politicized RMB exchange rate can the Chinese government better understand the political implications and manipulations behind the rate. One urgent problem that we have to understand is that: What makes so many American congressmen who didn't learn anything about international trade and finance so firmly believe the RMB exchange rate is much undervalued?
Chen Jibin is an editor of the Shanghai Business Daily.
(The article was translated by Chen Chen.)
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