China is more competitive than the US. I know --cheap labor, imported technology,..... The fact is that they are amassing foreign exchange because the Chinese leadership is using local resources more efficiently.
China allowed the Yuan to rise by 23% against the Dollar in the 3 years to July 2008. Since then the Yuan was pegged to the dollar --- and it sagged with the Dollar.
Enter the other currencies. The Brazilian Real and the South Korean Won soared 42% and 36% respectively against the Yuan and the Dollar.
The outcome. It is true -- the weakness of the Yuan makes imports much more expensive for China. But they do not care because they have huge reserves to pay for imports.
The real strategic feat is that China is making uncompetitive the rest of the world. In other words, the world has to adjust to the Chinese standards, that Mr. Obama likes it or not.
To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can review The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific money management needs.
I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.
George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 by Timer Digest
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