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Friday, May 27, 2005

Show Your Strength, Not Your Weakness

Well I think this coming climb down was always obvious:

"Even as it publicly pressures China to let its currency rise in value, the Bush administration has quietly softened one of its key demands.

In a calculated shift in tactics, administration officials have stopped demanding that China let it currency, the yuan, float freely against other major currencies. Instead, American officials are telling Chinese leaders that they can keep their policy of a fixed exchange rate if they increase the value of the yuan by 10 to 15 percent.

The policy switch reflects a growing realization that Chinese leaders were simply not going to let their currency soar, which would make their exports more expensive and could disrupt China's troubled banking system.

But the switch also highlights the administration's limited leverage over China

Maybe they should learn a trick or two from Blair, and try actually getting 'inside the tent'. So if they are demanding 10 - 15%, that means they may get, what, 5 - 10%?

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