Quick Edit | Currency concerns

Quick Edit | Currency concerns

Rebalancing the global economy is?the?theme of the forthcoming G-20 summit in Seoul. The big question is over the mechanics of achieving that goal. Some (the US being a prime example) would like export-surplus countries such as China to revalue their currencies, a step they feel will lower the growth of China’s exports and boost local consumption.

At the moment, no one thinks that such a step can hurt China’s economy. But Beijing remembers the forced revaluations of the yen and the Deutschmark by the US in the mid-1980s that triggered recessions in those countries.

Addressing these fears is key to securing China’s cooperation. So far, not much has been done to assuage those fears.

In fact, key US policy actions, such as the next round of quantitative easing by the Fed, only exacerbate those fears. A better strategy to convince China is the need of the hour.