Don’t believe me? Here is what President Jintao Hu said over the weekend at a party meeting:
“In this coming period, we will starkly confront the effects of the sustained deepening of the international financial crisis and pressure as global economic growth clearly slows. … Whether we can turn this pressure into momentum, turn challenges into opportunities, and maintain steady and relatively fast economic development is a test of our Party’s capacity to govern.”
This is why China has been hesitant to allow any dramatic appreciation by the yuan vs. the dollar. To the extent that a stronger currency slows the economy, the ruling Communist Party views a rapid yuan appreciation as an existential threat. This what journalist Will Hutton, author of The Writing on the Wall: Why We Must Embrace China as a Partner or Face It as an Enemy, told me early last year:
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