Eurozone/ China

from the ever excellent China Financial Markets,  found linked on my blog list below.
" In fact for many Europeans, the “silver lining” of the Greek crisis is that by pushing down the euro, it is making all of Europe, even countries like Germany that already have locked-in structural trade surpluses, more competitive in the international markets.  Europe’s trade surplus is likely to surge. So where is the countervailing trade impact?  Beijing argues that the depreciation of the euro has automatically forced an appreciation of the RMB, and with deteriorating international markets, there is no need for China to accelerate the process.  I would argue that with real interest rates declining in China, it is as if the RMB has been depreciating in real terms in order to protect China from the cost of the trade adjustment.  China (along with Japan) does not want to bear the brunt of the global adjustment."
"Tariffs in the US, Asia and probably in Latin America and Europe will rise.  These are big numbers and the risk is that the adjustments are likely to occur rapidly.  This means the rest of the world will also have to adjust just as rapidly."


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