Forcing China to revalue currency may boomerang: analysts
Frank Newman
"But neither assumption is correct " said Frank Newman  a former deputy secretary of the US Treasury and now chairman and chief executive of Shenzhen Development Bank  a Chinese commercial bank.
 Making Chinese products more expensive in the United States will do nothing to shift production to US factories  he said in a commentary in the magazine Foreign Policy. It may instead nudge production to other developing countries.
 In addition  Newman said  a large proportion of goods imported from China are not end-state products  but components ready for assembly.
 A US auto manufacturer that uses Chinese car seats  for instance  pays more for the seats under a strengthened yuan and then either cuts into its profits or charges higher prices on the finished vehicle  he explained.
 That final step  he said  added just four dollars of value to the phone  whose components come from other countries.
 He said a revaluation of the yuan not only would make Chinese exports relatively more expensive but also would decrease foreign demand for Chinese-made goods  negatively impacting local production and creating "a feedback loop through to domestic employment and wages.
 "In the extreme  this threatens social stability  and China is certainly not the poster child for social stability  he warned.
 "Given the foreign interests and investments in China  it is not entirely clear to me that a yuan revaluation that catapults China into recession would not result in a global contagion effect " he said.
"But neither assumption is correct " said [TGT].
 Making Chinese products more expensive in the United States will do nothing to shift production to US factories  he said in a commentary in the magazine Foreign Policy. It may instead nudge production to other developing countries.
 In addition  [TGT] said  a large proportion of goods imported from China are not end-state products  but components ready for assembly.
 A US auto manufacturer that uses Chinese car seats  for instance  pays more for the seats under a strengthened yuan and then either cuts into its profits or charges higher prices on the finished vehicle  he explained.
 That final step  he said  added just four dollars of value to the phone  whose components come from other countries.
 He said a revaluation of the yuan not only would make Chinese exports relatively more expensive but also would decrease foreign demand for Chinese-made goods  negatively impacting local production and creating "a feedback loop through to domestic employment and wages.
 "In the extreme  this threatens social stability  and China is certainly not the poster child for social stability  he warned.
 "Given the foreign interests and investments in China  it is not entirely clear to me that a yuan revaluation that catapults China into recession would not result in a global contagion effect " he said.