Saturday, January 24, 2009

Will China be Obama's Scapegoat?

Timothy Geithner, President Barack Obama's nominee for Treasury Secretary, that Obama believe's China is manipulating its currency" is causing a stirr in political circles, not just economic ones. The issue is one of the value of the yuan, and trade protectionsm, and trade wars. Li YanPing reported on this on Bloomberg today.

China's commerce ministry called Geithner's allegations "Untrue ans misleading." These comments are a change from the Bush administration, therefore a cause of concern for good relations between China and the US. Obama many times when campaigning, mentioned that China is our banker. Chine overtook Japan as the biggest overseas owner of US debt last year.

That should mean that China has a serious interest in seeing the US economy recover. However, damaging the Chinese economy will not help the US, as right now, China, India and Brazil are reported to be the groth engines of the world's economy. I am not sure if this is "just" more of the same old China Bashing, or if the Obama administration is setting up China as his economic policy's scape goat. We will have to watch how this develops.

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