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Once again, the Western backers of the PBOC's erroneous and deleterious Yuan revaluation policy are out in force to provide counter-weight to the comments arising from websites like this, questioning the PBOC's attempt to hoist China up by overvaluing the Yuan, in order to effect the "structural reforms" of letting foreign banks and brokerages dominate the market-making mechanism of the Chinese financial markets, to allow them arbitrary capital inflows and outflows all in the name of being a "market force", no different from the pirates of yore who forced open China's sea ports in the name of Free Trade, in order to trade, what in effect was simply Opium, as vigorously defended by no less than Adam Smith himself.|
Now, we are reading articles attacking the PBOC for not implementing "structural reforms" with greater vigor and speed, faulting the PBOC for allowing the Chinese economy to collapse because of it. Wish only what they said were true, and the Chinese economy would not be collapsing so fast under the weight of an overvalued Yuan. To speed this up merely hastens TAMII, which is what they really intend to achieve as they had done with their previous henchman, who was subsequently removed, but only after his true colors came out when the talked with Gorbachev about political succession.
It all means, Good News, there is still time to prevent the collapse of the Chinese economy.
This requires true political leadership, as Deng showed in 1989, and appointed Zhu Rongji to straighten out the inflationary mess left behind by his predecessor. China will be headed to inflation if the PBOC continues to lower the interest rate and the reserve ratio, which is not the solution, because it does not address the cause of the deflation. The cause of the deflation, according to several economists, is the overvaluation of the Yuan by some 30%, and it is time the Yuan is rolled back to a truly market-clearing value starting with 6.30, and down to 6.50, 6.60, 6.70, 6.80, and 6.90 if needed to grow the export and import trade to a balanced equilibrium, not the present trend of shrinking the export and import trade to a balanced nullity.
This does not require an act of PBOC. It only requires an act of political leadership, because in the last analysis, as Deng realized, the buck stops in Zhongnanhai, on his desk, and he rolled back the Yuan exchange rate to 6.37 with the stroke of a pocket pen.