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bushier Post time: 2015-1-11 23:27
It is better to peg 5.5 yuan to a US dollar, as long as this can keep one bowl of noodle in China a ...
One yuan for a bowl of noodle is very expensive when the average disposable income per person in China was 343 yuans, at the start of the economic reforms in 1978, that is 1.05% of your daily disposable income. In contrast 10 yuans for a bowl of noodle in 2014, after the economic reforms of Deng, when the per capita disposable income is 27,000 yuans, is 0.13% of your daily disposable income.
In short, speaking of the price of a bowl of noodle, the average Chinese can consume 8 bowls of noodle instead of 1 bowl of noodle.
In 1992, the Renminbi's exchange rate was 5.5 yuan/dollar and its annual GDP growth rate was 9.0%, but Japan has since massively devalued its currency, and therefore, China needs to find a new equilibrium point for growth of its GDP and its foreign currency reserves, and that can only be achieved empirically, as the gradual revaluation of the Yuan has proven in the past four and a half years, since June 2010. The new equilibrium of ZERO GROWTH of the GDP of China is 6.15 yuan/dollar, and the new equilibrium of SUSTAINABLE GROWTH of the GDP of China is at 6.50 yuan/dollar.
China should aim for SUSTAINABLE GROWTH rather than ZERO GROWTH.
AND THE PBOC SHOULD BE PROHIBITED FROM BUYING YUANS WITH HARD-EARNED DOLLARS UNTIL THE YUAN EXCHANGE RATE EXCEEDS 7.00 YUANS/DOLLAR.