Communist China has pegged their currency to US dollar and as a result China is remains very competitive even when the dollar goes down. Despite all the suggestions Chinese have refused to allow their currency to trade freely. For details see the link below:
http://www.nytimes.com/2009/10/23/opinion/23krugman.html?_r=1&ref=opinion
The problem is that the US and the Western Governments are wimps and can not stand up to Communist China. That is why China has been bullying the whole world and stealing other nation’s jobs. The solution is to close Free World’s markets to China until they fall in line and allow their currency to be freely traded.
It is time to stop worrying about what China will do with their US dollar hoardings. They also don’t have a lot of room to manipulate. If they don’t buy American bonds or sell their dollars in large amount, the dollar will go down hurting their dollar asset’s value and increasing US competitiveness.
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