The exchange rate policy established by the Chinese government is not the only challenge for the American economy. Commenting this week (Oct. 5th) in Santiago, Chile on U.S. pressure to allow the yuan to appreciate against the dollar, Dr David Li Daokui, member of the Monetary Policy Committee of the People's Bank of China, made clear that a quick appreciation of the Yuan would handicap the US economy, a view he has maintained since being appointed to the post in July 2010.  For Daokui, the exchange rate debate is merely "the tip of the iceberg," under which lies globalization itself. "Even if the currency exchange rate appreciates rapidly it will not help the U.S. economy," he stated. "It only means the U.S. will import from other countries more, and in a very short time the U.S. will not have the option from importing from other countries but from importing from China at higher prices, that will translate into inflation." 

Earlier this year, Dr. Daokui foreshadowed his statements in an exclusive interview to the Global Journal: "I  think there is a tremendous misunderstanding among the policy makers in the US and in other countries. They tend to believe that the exchange rate ought to be the most important tool to help an economy to strike an external balance (...) My point is that only looking at the exchange rate is misleading. It is important only to the extent that a gradual adjustment or realignment of exchange rates is helpful. Anything beyond that, like a drastic appreciation of the renminbi, would only cause prices and inflation to rise in the US and some Chinese exporting firms to close down. In today’s US economy, the last thing they want is a sudden surge of the price of goods imported from China, since most Chinese goods are daily consumption products for middle income families. I think that a gradual appreciation of the renminbi, combined with domestic policies in China pushing for economic restructuring, is the best policy combination we can expect for both China and the US.'' 

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