1. Europe must look east on the euro
The article ‘Europe must look east on the euro’ mainly states that the dollar will decline on average by around 15 to 20 % whereas this drop should be against the oil exporting countries and East Asian countries such as China. The decline of the dollar will mainly take place against the Euro as China intervenes to hinder the appreciation of its currency renminbi against the Dollar and in addition some other Asian countries such as Singapore or Taiwan do not want to to lose their competitiveness against China and so they intervene on their own.
Hence, even if the Chinese currency renminbi appreciates against the dollar for some per cent, the depreciation of the dollar would outweigh this effect and the renminbi declines against the euro. That would eventually limit the competitive situation of the Eurozone members.
While I understand - as citizen of an European country - the popular opinion that Europe should direct its concerns against China and should try to convince China to implement a more flexible exchange rate policy, my (quite liberal) opinion is that each country should be allowed to implement each monetary policy which it expects to support its economical goals in the best way - whereby of course the country will take also expected actions/sanctions of other countries into account.
When China’s authorities believe that pegging the Renminbi to the US dollar will help China’s economy to grow, they should be allowed to do so, especially as China had 2004 still more than 400 million people living with less than 2$ a day.
By subsidising the export sector with an undervalued currency , China boosts the income generation through export. This increased income may help China to grow also domestically, as it will lead to a certain degree also to an increased domestic demand for goods.
Therefore, if the subvention of the export sector will help the country to grow faster but still in a sustainable way , China’s approach to...