When China’s government wants to make a statement without actually making a statement, it does through the state-run “news” agency, Xinhua. This weekend they are sending a message that they are not happy with talk about a US Bill concerning the Chinese exchange rate.
Here’s Xinhua via Reuters:
“This has become a common practice — whenever the (U.S.) economy is slow, whenever an election is nearing, voices in the United States pressing for the rise of the renminbi are all over…The race for the U.S. presidential election has heightened, and the yuan exchange rate is now a target again,” the Xinhua commentary asserted, concluding that “the opinions of advocates of the yuan bill are expedient and shallow.”
China is manipulating its currency, preserving its natural manufacturing advantage and even enhancing it with a peg to the dollar that undervalues the yuan by anywhere from 25 to 40% according to the architects of the new bill. I expect this issue to figure prominently in the political battles over 2012.