Thoughts on the Low Pricing of Rare Earths in China' Domestic Market

By Carlos X. Alexandre:cThe announcement that China will allow the yuan to trade in a wider daily band - 1% vs. 0.5% - was painted as a good faith effort by the People's Bank of China to relax its control on currency exchange, as reported by Bloomberg.

CHINA'S currency has long been undervalued, and this undervaluation has long been a sore spot for China's trading partners. American officials, in particular, have been upset by the impact of a cheap yuan on America's trade balance with China, and by the impact of that imbalance on employment. China allowed its currency to appreciate nearly 20% against the dollar from 2005 to 2008, but it halted the rise in 2008 out of concern for the impact of the global downturn on its export-oriented economy.

Jack Lifton submits:I'm in Beijing, China, where I spoke at the Asian Metal Pages "Rare Earth Metals 2010" conference. I sort of stumbled through my presentation, because I was absolutely distracted by the candor of the speakers from the Chinese rare earth mining, refining, and end-user industries.

Jack Lifton submits:If you’re reasonably well informed about global trade issues, then you know that the U.S. and China disagree politically on the relative value of the Chinese renminbi in U.S. dollars, and that the renminbi’s exchange rate with the U.S. dollar is set by the Chinese government.

China's central bank pledged on Thursday to increase the flexibility of its yuan exchange rate, ahead of President Hu Jintao's visit to the United States where the currency issue will be raised.We will "enhance the flexibility of the exchange rate, and maintain the basic stability of the RMB (yuan) exchange rate at a reasonable and balanced level," the People's Bank of China said in a statement.

China's central bank pledged on Thursday to increase the flexibility of its yuan exchange rate, ahead of President Hu Jintao's state visit to the United States.We will "enhance the flexibility of the exchange rate, and maintain the basic stability of the RMB (yuan) exchange rate at a reasonable and balanced level," the People's Bank of China said in a statement.

China's central bank on Wednesday pledged to increase flexibility of the yuan exchange rate as US lawmakers prepared to vote on legislation that could punish Beijing for alleged currency manipulation.The People's Bank of China promised to continue to implement an "appropriately loose monetary policy" and "increase currency flexibility", according to a statement on its website.The statement also vowed to "gradually improve the exchange rate setting mechanism".

Michael Johnston submits:The timing of perhaps the most significant policy shift in China’s recent history was interesting for a number of reasons. Beijing’s announcement that the Chinese currency would be afforded increased flexibility came in the middle of the weekend, just days ahead of a G-20 summit in Toronto at which China’s currency policy was expected to be a central issue.