A devaluation of the yuan is there change nothing

The last round of the US-China strategic economic dialogue announced peaceful. Organized today and tomorrow in Beijing, to allow Henry Paulson, US Treasury Secretary, his goodbyes to his Chinese interlocutors and plead for a renewed system of biannual meetings by the next administration Obama. The two countries were politely discuss energy cooperation, fight against climate change and opening of Chinese financial markets. But the "informal" agenda could eventually change to focus once again on the thorny issue of the yuan.

For three days, the brokers of the exchange markets believe, indeed, have seen a revolution in the Chinese exchange rate policy. After seeing the yuan to appreciate more than 20 against the dollar since the summer 2005, they find that the Chinese currency has slightly lost its value since the end of last week. Yesterday evening, a dollar was worth 6,8830 Yuan against 6,8254 Yuan last Friday. Very "excited" by this movement, brokers and analysts bet now on a sharp depreciation of the Chinese currency which would ensure, relieve the export-oriented firms. "This could be part of the stimulus package," felt so, yesterday, Feng Yuming, an Oriental securities analyst. By knowingly providing Monday and Tuesday, a decline of the central rate expressed in dollars which the yuan is a daily limit more or less 0.5 , China's Central Bank confirmed their speculation.

Offshore output of capital

Apparently alerted, Henry Paulson has called, Tuesday evening, even before his arrival in the Chinese capital, China to accelerate appreciation of its currency, which has very little progress between the end of July and the end of October. The Secretary of the Treasury has however not cited the recent decline of the yuan against the greenback, which many experts are trying to play down. "There is no rational evidence showing a change of policy", says Stephen Green of Standard Chartered Bank. "Markets and many observers are a little quickly packaged on this folder", confirmed Patrick Bennett, an analyst with the General society in Hong Kong. He said that China has for the moment no great interest to let its currency depreciate against the greenback. "If Chinese exports suffer now, this is unrelated to their cost but to a decline in demand for Western countries", insists the expert. "A devaluation of the yuan is there change nothing."

Worse, provide other economists, a depreciation could ultimately cause much harm to China's growth that the Government seeks precisely to revitalize. It might include feeding a large output of capital of the country, a slowdown in foreign investment and renchérirait the cost of imports, while Beijing is trying to boost its domestic demand. "It also probably feed the criticism against the policy of beggar and trigger protectionist responses in the countries where China exports" progressed, yesterday, in a note to clients, Tao Wang, an analyst for UBS. Little satisfied with the scenario of the devaluation, Patrick Bennett noted, yesterday evening, that central rate of evolution of the yuan had finally been identified Wednesday morning by the Chinese Central Bank. "This should doubt the theorists of depreciation", he insisted.