China Set To Reduce Exposure To Dollar (Now it begins)

[Ernesto]

SHANGHAI, Jan. 9 -- China has resolved to shift some of its foreign exchange reserves -- now in excess of $800 billion -- away from the U.S. dollar and into other world currencies in a move likely to push down the value of the greenback, a high-level state economist who advises the nation's economic policymakers said in an interview Monday.
Warnings about an impending Chinese sell-off in dollars emerged in July, as China slightly altered the way it sets the value of its currency, the yuan, bumping it up against the dollar by about 2 percent. At the time, China announced that it would gradually allow greater movement in the exchange rate -- something that has yet to materialize -- while also shifting from a system in which the yuan moves with changes in the dollar to one where it tracks a basket of currencies including the yen, the euro, the Hong Kong dollar and the South Korean won.
http://www.washingtonpost.com/wp-dyn/content/article/2006/01/09/AR2006010901042_pf.html

[davidwparker]

1. A good outcome to this is that maybe, we renew the 'Buy American'

program and give China the finger they so deserve. I'm abstaining from this economy unless my money goes to a local business. I'll do without.

[gorbal]

2. I do local or fair trade as much as possible

I did my on-line christmas shopping through fair trade sites like "Equal Exchange"

[davidwparker]

3. the site below is also suppose to be good if you haven't heard of it.

http://nosweatapparel.com/

[Dhalgren]

8. "Buy American" won't mean much now that China will own most

of the country. Or, as is more likely, our economy will tank so badly that it will take a wheelbarrow full of greenbacks to buy a loaf of bread...

[Teaser]

4. BOOM!

That sound you hear is the sound of the dollar beginning to evaporate.

[louis-t]

5. Was only a matter of time.

They've been warning us for 3 years. Soon we will be totally under their thumb. Thank your president, kids. "Thanks, dumbass".

[VegasWolf]

6. The US will be the Mexico of the 21st Century. nt

[anotherdrew]

7. but, but... the stock market's doing sooo great! :sarcasm

:sarcasm

[Zhade]

9. K/R

NT!

[AlecBGreen]

10. hmm

Im sorry to see average Americans buying power get screwed over, but Its good news for me. Im working in China and Im sitting on a fat pile of Chinese RMB. The conversion rate was 8.2:1 (RMB : USD) now its around 8:1. Im hoping it will get to about 7:1 before I convert. Thats like a 15% raise for doing nothing. WOOHOO!

[lovuian]

11. Its time to begin the Chineese squeeze on the US corporations

and government... they want to economically destroy us... and Bush helped them...

[AngryAmish]

12. So far, the replies on this thread are nuts

There is going to be a correction in the yuan-dollar exchange rate -- as every legitimate economist has benn calling for in the last three years (including Paul Krugman). If anyone thinks China wants to kill the US economically -- well that is plain silly.

Believe it or not China is in worse shape than the US. The Chinese banks are a joke - completely crooked. The Chinese govt just bought a lot of the bad debt from the Chinese banks but somebody has to eat that Sh--burger and it will be the Chinese taxpayers.

Bottom line -- the dollar is not crashing and while this will pull down US real estate in the short term, it is good for US exports.

Look lively.

[cosmicone]

13. China doesn't want to kill it but .... here is the danger

China will let the dollar drop against the Yuan and start buying US companies at an advantageous exchange rate. China can still increase its domestic prices while keeping export prices low despite the weaker dollar.

China is economically so strong that the US cannot do anything against such moves.

I am already learning Mandarin.

[cliss]

14. You got that right, Amish.

I'm in the exporting business. I'm one of the few who EXPORTS American-made stuff, rather than importing junk from China.

It's time to pull out the Champagne bottle!!! Just imagine how much more stuff I can export, with the dollar going down.

This is really good news. Our balance of trade is so off-kilter that it's unbelievable. This will help. And it will help American companies who want to export.

[Toots]

15. We will never get this reversed now even with a Democratic President

Bush* has done irrepairable damage to the USA and once these countries realize they don't need to bow down to the USA they never will again.