The Chinese aren’t manipulators after all

Or so says Geithner today. The Treasury released its International Economic And Exchange Rate Policies report to Congress today. Very exciting reading, I know. Interestingly, in the very first paragraph of the report, the Treasury says:

Between 1988 and 1994, Treasury cited three economies (China, Korea, and Taiwan) several times each for manipulating their exchange rates…Since July 1994, no economy has been found to have met the standards identified in Section 3004 of the Act.

The Chinese Connection To Competitive Devaluations

For at least several months now, Chinese officials have been lobbing sharp tongued critiques toward the U.S. and its policy makers. The Chinese, who mastered proverbs long before the West, should know that people who live in glass houses shouldn’t throw stones. Let’s back up and recap a bit. During Treasury Secretary Geithner’s confirmation hearings, he said that Obama ”backed by the conclusions of a broad range of economists – believes that China is manipulating its currency.”

China, Debt and Currencies- huh?

We received an interesting question via email. I will paraphrase:

1) Is it true that China owns a significant portion of America’s debt, and if so what are the implications of this? Is having China as one of our primary backers a necessarily bad thing, or are bonds bonds, regardless of the holder?

2) Is it true that China’s currency is artificially tied to the value of the dollar, and should they choose to remove this pin from the cork board, it could drastically devalue the dollar even more than it already has?