Renminbi weakness tests US patience

It is interesting to note how much leverage the US has if the Treasury
were to find that the renminbi was 'misaligned' and that this was
damaging the US economy. First, there would be 180 days move toward a
resolution, then sanctions including US veto to block any increasing
in voting rights at the IMF, disapproval of international financing,
preventing the issue of trade insurance and guarantees for trade under
the Overseas Private Investment Corporation, and less favorable status
under the US anti-dumping laws.

This information was gathered from the FT article, Renminbi weakness
tests US patience and was found on page 4 of the print edition,
3/29/06.

Well, it is pretty obvious that the U.S. found the RMB to be quite mis-aligned. In fact, the purchasing power parity of the two currencies adapt to about 2:1. That means that the average value of the farm worker in construction is 4x the value of him getting paid. Hella concrete buildings going up. I wonder if more than the ignorance of Kim Jung Il is running that country. Single party! Not that two is much better . . .

MH 2007 06 01