For a long time now China has been in a trade deficit. The deficit has been with its trade with the United States and Europe. In an attempt create more balance in the trading, China is adjusting its exchange rate.
The move will raise the level of flexibility of the rate. President Barack Obama expressed that “China’s decision to increase the flexibility…is a constructive step that can help safeguard the recovery and contribute to a more balanced global economy.”
The president also said that he is looking forward to going over China’s adjustment over their national currency in addition to other global matters in Toronto next week. Toronto will be the site of the 2010 G-20 Summit.
The People’s Bank of China’s move to add flexibility to their exchange rate is expected to dramatically improve trade relations between the oriental state and the states of the Western world.
With the well-known economic turmoil visible throughout the world, Chinese officials saw it as a necessary reform to make, especially as the criticism against their exchange rates grew recently.
The new reform is also being touted by other members of the global community. Dominique Strauss-Kahn of the International Monetary Fund was pleased with the move and is looking forward to the benefits the actions will bring to the people of China and the new options that will be open to them as consumers in the world market.
By finally making it possible for their currency, the renminbi, China is creating new opportunities for the world economy that were not previously possible. As one of the biggest producers in the world, China’s economy is very important for the stability of the global economy.
In addition to President Obama, numerous nations in Europe as well as Brazil and India are excited about the move.
The reformation of the Chinese economy is a giant leap towards the world’s economy returning to its former solid form.