Sunday, February 27, 2005

Non-Deceptive China Title

China will begin loosening capital controls, reports CNN.

This is probably a win-win-lose for the US. Chinese-made imports will become less competitive in US markets, US-made exports will be more competitve in China, but consumer prices are bound to increase.

One of the bigger mysteries for economists has been why the US's trade deficits haven't declined as the dollar's value has fallen. I'm no economist, but this doesn't sound like such a mystery to me - oil and Chinese imports are both effectively linked to the dollar, so a large portion of the US's imports are unaffected by currency fluctuation. Again, not an economist - I may be missing something.

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