[AnotherAmerican]

Interesting. Though it appears that in the short time since (from yesterday), it has already started going down. But I guess that is to be expected when such a change is made 'out of the blue.'

[KnowItAll]

From Friday, when the change comes into place, a dollar will buy 8.11 yuan compared with 8.28 yuan now. As with the dollar peg, the yuan will be allowed to move within a 0.3% band. Neither the currencies in the basket nor their weighting has been made public, but the U.S. dollar is still likely to be prominent as the U.S. accounts for one-third of China's trade.

Slight change .. it is still a managed float.

Two events likely triggered the timing of China's announcement of its managed float: President Hu Jintao's planned visit to the U.S. in September; and the U.S. Treasury's ruling, also due in the Fall, on whether China is a "currency manipulator."

[Zion]

This move is great strategy on both sides U.S. and China. If you notice US and China are not in a great shape for example (trading restriction on China to US). However, if you know Federal Reserve Chairman Alan Greenspan had always urged the Yuan to increase. He’s a great person in the position not just for US, but a mutual benefit that business would increase profit margin as well as investors are confident in China growth. This is a first step and if you want to make some money RMB is great to invest for now. You can relate this story to Malaysia government and if China continues to do well in economic, you can bet that Yuan will increase. So my suggestion purchase some Yuan keep in the bank for a year than you will make about 6% in return.

[AnotherAmerican]

Surely this will make importing things from China more expensive for us Americans, right?

[kombuchakid]

the 'basket' is a state secret so should we even be discussing it?

the 2% of a supposed 40% is like tossing the dog a bone. to keep him quiet.

the 2% comes in time for Sept 12th, when the hordes desending on DisneyPort will go beserk at the thought of the extra savings they will enjoy on every extra dollar spent.

http://www.google.com.hk/search?num=...G=Search&meta=

[nivantj]

Originally Posted by AnotherAmerican

Surely this will make importing things from China more expensive for us Americans, right?

Theoretically.. In plain terms, Yes. However considering China's general stragegy (i.e. Cheap... Cheap... Cheap), eventually the reality may turn out different.. It might be small exporters and hence those underemployed workers who would be squeezed and suffer the most..

[emperorau]

I don't why Americans thinking by getting China to change their Currency strategy of fixing to the US dollar will hep them.

Look at this. It is American companies that are producing in China and the selling the final product outside. What will stop these American companies to leave and set somewhere where it is cheaper for them.

Why American companies do not produce in their home country just because of economics. It is much more expensive to produce goods so these companies leave for cheaper places to produce. If the American companies think their profit marigins is shrinking very fast, they will leave China for other countries too.

So why didn't the Americans say that 10 or 20 years ago?


Consumers will still decide though. Even if the Chinese made products still cost a bit more, they are still cheaper than home made products in America though.

Although HK is still fixed to the US dollar, do you think these companies will go back to HK to open factories again? Not really, it is because the man power and land is more expensive to operate. No matter if the tax rate is flat, but the man power to pay the employees will still be cheaper though.
Saying be fixed to US Dollars helps China is wrong.

China is trading more just because they have more cheap labour and a favourable tax rate given to them by the government.

Once China lifts the favorable tax rates, you will see less foreign investment since China I think is number 3 in corporate tax rate.