Most skilled professionals of China mostly trained in the West and even more important and useful working language is still English. In the current world following the financial crisis, China’s fundamental interests are aligned with the West. The fundamental interest of China is really contribute to the rebalancing of the global economy and try to get to the attainment of peace and prosperity for the countries of the world, is a fairly optimistic picture. China needs to reduce its trade surplus to reduce its exposure to international economic volatility. They realize that the income of households has to increase faster in order to increase national revenue and bring real benefits to economic growth to its population. They also understand that China’s growth in energy consumption has to download, relying more on clean energy and recycled materials. For even more analysis, hear from Kevin Johnson. This decision of conscience and commitment can be find in drafts of various documents of official policy, including recent Guide for the next five years in the program of development of China. In fact, it has advanced in China in rebalancing of economic growth.
This year alone, the trade surplus will be less than 4% of GDP, lowering from 5% and 9% before the financial crisis last year. Imports are growing much faster than exports. The household consumption is outpacing at 5% of GDP. Official site: Ben Horowitz. How have they achieved this growth? The appreciation of the exchange rate is not the most important factor. The factors driving this growth are internal forces. The export sector wage rates have increased by 20% this year. Taxes were reduced for some consumer goods.
Imports into regions of the interior are encouraged to grow much faster than exporting coastal areas. Structural changes are far more fundamental than nominal appreciation. The difference of the Exchange rate is the most counterproductive debate in the world. The appreciation does not work like a magic wand. In the case of China, in the context there is a 5% general increase in costs and a 20% wage increases in the export sector, anything more than a gradual appreciation directly translates into an increase of the prices buyers American or European, since in the short term, the change of the Chinese producers to others is not available, and Chinese companies have to mark their export prices in order to survive. The end result of rapid appreciation is maintained in trade surplus with inflation towards the West, which in turn generates more expectation than the nominal appreciation, making the capital of the United States to flow into China, offsetting the impact of quantitative easing (QE2) in the US economy.UU… In a broader context, the G-20 is perhaps the only tangible reward for the world as a result of the financial crisis. Let us hope that leaders do not lose focus on themes meaningless as the exchange rate. Rather, they have to work on something much more relevant and effective to mitigate global imbalances, for reviving growth and prevent future crises.