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2010-03-31

McKinnon proposal has merits

Comments on Ronald I. McKinnon “The appreciation of the yuan: A compromise solution”, 30/03/2010, http://www.eastasiaforum.org/2010/03/30/the-appreciation-of-the-yuan-a-compromise-solution/

Not a bad idea.

There is an issue that the two sides also need to come to some sort of accommodation, that is, the Chinese official $US reserves and holding of US government bonds.

I think for the Chinese government to be able to face its increasingly demanding and restless domestic audience, it has to have some way to say o them it has not sold out their interests in those assets.

That is not an easy job, given that many Chinese are now aware that issue related to the exchange rate and the implications of currency appreciation.

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