Till 2005, Renminbi was pegged against US dollar at 8.28 Renminbi/USD. To keep the Renminbi at pegged level, Chinese central bank had to supply Renminbi and demand dollars in foreign-exchange markets.

The reason is that China has 2nd largest Dollar reserves after JAPAN. With these reserves, China is continuously buying US treasury bonds.

Because of Chinese undervalued currency, RENMINBI against, US current deficit and Unemployment rate has increased.

-Why China its currency?

This makes the exports of China cheaper.

If China Appreciate Renminbi:

China can easily revalue its currency as it follows fixed currency system but:

If china appreciates Renminbi it will indirectly affect US economy as it will lead to inflation in US economy and decline in the real value of household income because US population will stop getting benefits of Cheap Chinese products as after appreciation,Chinese products will not be economical to the US or World economy.

After effects on Chinese Economy

If US Stop selling Bonds to China:

US should stop selling government bonds to china because large percentage of USG bonds are with China indicating China as the major creditor of US economy.

If China Sells USD in open market:

But in China it is totally opposite; savings rate in China is much more than the consumption rate. So to trim down the savings in Chinese economy, China needs to privatize and deregulate large state-owned enterprises. Chinese savings is 55% of their GDP.

Currency War – US and China

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Taiwan will hold its presidential election on March 22nd.

The relationship between China and Taiwan is best seen as a broken marriage. As the result, Taiwan’s economy languished exactly when China was making a great leap forward.

Best China Investment – Taiwan

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Economic Situation of China

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LED industry, the rapid expansion of “Industrial Development in 2009 than expected in March last year, business investment and capacity expansion to accelerate.” LED industry, in the Fifth China Forum on the theme, CREE, general manager of China, Tang Guoqing says. LED is changing China LED will give China what kind of change? The rapid expansion of production capacity LED business to start Gong Lue. The domestic LED industry, leading enterprises to expand production capacity three-an optical energy Hangzhou Silan Microelectronics and then to “second guess” the German-ho Yun, LED industry boom almost swept the entire industry, the rapid trend to make most of the industry have called the alert bubble.

The gap between Chinese and American military will also close as economies balance out between the two countries.

Americans have stopped buying and China must learn to consume it’s own products.

The effect of this, combined with the resultant loss in appetite for American debt (Chinese buying US government bonds) to keep American interest rates artificially low so they buy Chinese products, and you have a rapid shift in power emerging. If the Chinese stop lending to America, American interest rates soar and Americans stop buying products which are of course, predominantly Chinese made.

“European Commission officials have estimated that “impaired assets” may amount to 44pc of EU bank balance sheets. The Commission estimates that so-called financial instruments in the ‘trading book’ total £12.3 trillion (13.7 trillion euros), equivalent to about 33pc of EU bank balance sheets.

China needs no such consensus- they just announced a stimulus package. Stock markets like this kind of leadership and direction and Chinese stocks have responded accordingly.

God Bless China

Chinese foreign investment law does not permit a Representative Office to carry out direct business activities.

A Representative Office should take special care when performing the following activities:

Billing Procedures: A Representative Office may neither collect money for its parent company nor invoice clients directly – this must be handled by the parent company.

Signing Contracts: All contracts must be signed by the parent company, although a Representative Office can negotiate contracts that are later signed by its parent company.

100′s of low cost franchises.

Many Representative Offices get around some of the inevitable inconveniences by independently seeking employment candidates, having the HR agency ‘refer’ these candidates to them, negotiating salary, etc. directly with these candidates and then having the HR agency make the official hiring referral to the Representative Office.

Activities Outside the Normal Scope of the Parent Company: Even though corporations in Western countries are generally allowed to participate in “any lawful activity”, in China a Representative Office is conceived of as part of the overseas parent company and must act within the parent company’s usual scope of business rather than opening up an entirely new business for its parent company

Canton province is the biggest footwear export foundation. Until the first 6 months this year, Canton shoes export volume has decrease, but its export value has grown. In 2007, Canton shoes export volume reached 3.47 billion pairs for 9.2 billion USD, it is 42.5% of national total export volume.

Effected by many disadvantage element this year, Canton export trading enterprises sharply decreased from 5811 to 3924. Chairman of Canton Footwear manufacture Association Qiu xiaoguang said, this phenomenon displayed a enormous change in footwear industry strategy.

;Canton province is the biggest footwear export foundation. Until the first 6 months this year, Canton shoes export volume has decrease, but its export value has grown. In 2007, Canton shoes export volume reached 3.47 billion pairs for 9.2 billion USD, it is 42.5% of national total export volume. Chairman of Canton Footwear manufacture Association Qiu xiaoguang said, this phenomenon displayed a enormous change in footwear industry strategy.