Sunday, August 21, 2005

Rationality of China's Currency Policy

Survived SARS has a great post examining the rationality of China's currency policies.
This is only one post in what is largely an ongoing theme here on this blog, but I think the central debate over China's currency policy, and China's economic policies in general, is a debate over the extent of rational planning in China's economic bureaucracies. This is a critical debate, because if China's economic bureaucracy is essentially non-rational, I'm not sure how much confidence we can place in any of China's policy-making organs.

I agree with Logan that this is a critical issue for discussion and I think he has done a great job disentangling the issue for the rest of us.

Here is one more excerpt to motivate you to head over to his blog and read the rest:
After this, China actually announced the content of its currency basket, which seemed to make sense to me but created problems for other people, because specifying the currency basket effectively makes speculation more precise and more profitable.