Archive for December 2009

The Chinese Shopping Spree will get stronger

December 18, 2009

The Chinese Ambassador to Helsinki in Finland has confirmed my predictions during his speech at the luncheon meeting hosted by Finland-China Trade Association in December: among other intereting comments he stated that chinese companies will increase their activity to acquire foreign assets. That will put pressure on the value of USD. The best way for China to change the external value of RMB against USD is putting Dollars into circulation – RMB would get stronger against the USD. The same will happen with other currencies, but the ratio of Euro against RMB, however, will remain untouched. That will help US to reduce imports and increase exports. Also the repatriation of foreign profits made by US corporations abroad will get more attractive. This all will benefit the US.  Certainly there is the risk of inflation looming behind the corner, but the weapon is also near – interest rates. When the FED starts to increase the interest rates, more investments will flow to the US again. The seed for growth in the USA  is nurtured by all these measures – intended or unintended.