The good folks over at Bloomberg, probably noticing my insatiable appetite for all things relating to China's political economy, sent along a note concerning two podcasts of undoubted interest and importance. For your consideration are two segments from Tom Keene's Bloomberg on the Markets program. To start, Nobel Prize in Economics winner Robert Mundell should be known to everyone as the father of the Euro and current advisor to China on handling the renminbi. (I recently featured a Far Eastern Economic Review article on him as well.) In the podcast, Mundell makes four assertions about China that I do not necessarily agree with:
- Lots of capital is being held back in China by outward exchange controls that will likely ensure that the yuan will depreciate not appreciate if floated;
- The Chinese banking system is not strong enough to adjust to a slower pace of reserve accumulation;
- There is little reason to worry about China's sovereign wealth fund buying up foreign concerns for it doesn't have the management expertise to manage them and it is thus uninterested in taking controlling stakes;
- Don't worry either about the currently weak $ as the currency goes through strong /weak cycles.