Wednesday, June 23, 2010

Making Amends for Higher Gains

President Hu Jintao is on his way to Canada for a state visit before the G20 summit in Toronto.

Canadian Prime Minister Stephen Harper got a scolding from Premier Wen Jiabao in December for not coming to China earlier.

It was like a principal lecturing his student in front of the entire class and while the dressing down was completely embarrassing, Harper took it like a classy politician.

However, since then ties between the two countries finally got warmer. That's because the Conservatives had been criticizing China for human rights issues so the latter gave Canada the cold shoulder.

But as most countries cannot ignore or be shut out from China too long, Harper finally gave in and now things are smoothing over.

And it is appropriate now (or is it coincidence?) that this year is the 40th anniversary of China and Canada establishing diplomatic ties.

Hopefully on this trip Harper and Hu will sign the deal where China will grant Canada Approved Destination Status to make it easier for Chinese to visit Canada on tourist visas instead of business ones.

Hu's visit comes just before the recent announcement of China finally raising the value of the renminbi, but by how much and when are still up in the air. The Chinese currency rose to its highest level in five years by 0.4 percent on Monday, but then dropped its gains by about half at 0.23 percent the next day.

Some analysts see it as China still carefully monitoring the renminbi and keeping everyone guessing as to when and how much it will rise.

One thing is for sure -- China will not let its currency jump dramatically, not as high as other countries may want to see it go. It doesn't want its own exports to be too expensive or for its import/export firms to have even smaller margins. The recent strikes have also resulted in higher pay for workers, which also cuts into company profits, and making them less competitive.

The rise of the renminbi is just going to be a slow-going process, one that requires patience. Lots of it.

1 comment:

ks said...

the french presidnt sarcozy was the first one to attend shanghai expo. a good lesson for harper who also missed the beijing olympics.