China Has Upper Hand over U.S in Currency Dispute

U.S was to label China as currency manipulator but this decision was delayed until congressional election and a Group of 20 leaders’ conference in South Korea on 11th November later this year.

Obama administration, want to solve this crisis by diplomacy rather than a confrontation which can evoke a longer term trade-war.

The treasury thinks that it’s not only China and U.S who are responsible for balancing world’s economy and hence will wait for G20 gathering in Seoul to look the matters closely by the members.

U.S and Europe charge China to increase its exports and cutting the jobs and competitions by lowering down Yuan, the Chinese currency, artificially. China, expected to become second largest economy after the United States, is threatening to the Western economy, according to Europe and U.S.

Now a global “currency war” is feared to start as the economy giants eye to lower their currency values while emerging economic powers like Brazil raise controls to limit capital flows.

U.S treasury looks happy on China’s current allowance to let its currency raise by 3 percent as treasury issues the statement in which they admits that China’s pace of appreciation grew over the last 3 months, covering 1 percent each month’s increment in discussion with IMF as well.

However China is very careful on its currency’s growth rate as it may have scrubbing effect on it export based economy. In turn, China blames U.S. by flooding market with more dollars which is weakening U.S currency and emerging powers feel the pressure to keep their currencies low as well.