Investment icon Jim Rogers says China must devalue its currency if its economy is to become world class.
“No economy can become world class with a blocked currency,” Rogers told The International Business Times.
“Throughout history people with blocked currencies have eventually declined. China knows that; I'm not the only person who's read some history.”
Rogers acknowledges many say that if China’s currency goes up, the country will suffer. However, he says, "I would point out though that the Japanese yen has gone up 400 percent over the past few decades and Japan still has a balance of trade surplus."
“I would also point out that if the currency goes up in China, many people would benefit. They import all their cotton. They import oil. Everything they import would go down in price, so a lot of people would be better off!”
China has, in fact, been opening its currency for the past five years, Rogers notes.
“Every quarter, every year, they open a little more,” he says. “I thought they would have made it freely convertible by now.”
“In my view, it's good for China, good for the Chinese [people], and good for the world. The sooner they make it convertible, the better.”
China is on a collision course with Washington after steering its currency sharply lower to protect its export industries, according to financial journalist Ambrose Evans-Pritchard.
“Western economists had seen yuan liberalization as a sign that China is abandoning its mercantilist policy in a step-by-step move towards a floating currency, which was expected to rise.” Evans-Pritchard writes in the U.K. Telegraph.
“They misjudged China's motives badly.”
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