The Chinese/Mexican connection

摘要

A major and frequent fundamental theme in currency markets is the role of China. With the global economy in a fragile state, all eyes are on what happens to Chinese growth and to the Chinese yuan, also known as the renminbi.rnThere is great controversy regarding Chinese economic projections. Continuous Chinese growth is not inevitable, and inflation pressure on its economy is causing currency sentiment to sway between fear and hope. The fear of a property market bubble bursting or of unrest in labor markets is real. On the other hand, the ability of China to provide macro control is a countervailing bullish sentiment. Current projections reported by the Chinese State Information Center envision a slowdown to an 8.2% annual GDP growth rate compared to an 11.9% rate of growth in the beginning of 2010. Even at 8.2%, the slowdown still keeps China in a very strong growth mode.