China 'Fully Prepared' for Currency War
Deputy Governor of China’s central bank Yi Gang said China is "fully prepared" for a currency war.
"In terms of both monetary policies and other mechanism arrangement, China will take into full account the quantitative easing policies implemented by central banks of foreign countries," said Yi Gang.
The comments come on the heels of last month’s G20 meeting of finance ministers in Moscow to allay the concerns of currency markets.
Despite China’s reputation as being a currency manipulator, the Obama Administration sparked bipartisan outrage late last year when the Treasury Department released a report denying that China manipulates its currency.
Critics say the Obama Administration’s refusal to apply rigorous pressure on Chinese currency manipulation has cost Americans jobs. The Peterson Institute for International Economics says a revaluation of less than half the yuan’s fair market rate would produce between 300,000 to 700,000 American jobs in two to three years.
By some estimates, the current trade deficit costs 1% of GDP growth every year. That works out to an annual loss of nearly 1 million American jobs.
From 2005 to 2008, President George W. Bush’s jawboning on the issue resulted in the value of the yuan rising 21% in three years. Under Mr. Obama, the yuan has risen 8.5% in value over four years.