Qiushi, a journal of the Central Committee of the Chinese Communist Party, published an article on August 8, 2011, titled “Be Alert to Possible U.S. Pressure to Depreciate the Chinese Yuan.” The article is based on the words of Hong Kong’s famous economist, Prof. Lang Xianping. “According to Lang’s friend who is in a U.S. economic decision-making group, the U.S. is developing a major strategy to suppress and devalue the Chinese yuan.”

Recalling how the U.S. forced Japan and the “Four Little Dragons” (Taiwan, South Korea, Hong Kong, and Singapore) to appreciate their currencies first and then devalue their currencies by selling their real estate and stock, the author accused the U.S. of “looting the fruits of economic development” of these countries. The article states, “China’s local governments have over 10 trillion (yuan) in debt. China’s real estate market bubble and high inflation result in the yuan appreciating outside of China and the yuan depreciating inside China, which is obviously contrary to the laws of the market. The laws of the market are irresistible. This is precisely the reason why the United States may devalue the Chinese yuan.” At the end of the article, the writer expressed the belief that China will have the wisdom to deal with the possible pressure from the U.S. and Western countries to depreciate the yuan.

Sorce: Qiushi Journal, August 9, 2011
http://www.qstheory.cn/lg/rpzm/jj/201108/t20110808_100458.htm

Huanqiu published an article on August 9, 2011, about Standard & Poor’s downgrade of the US credit rating, titled “China Cannot Be As Incompetent As the United States.” The article states that the downgrade is due not only to the serious U.S. deficits and debt, but also to its “political crisis.” "The protracted quarrel between the two parties could do nothing to help reach an agreement on the debt ceiling. This system of checks and balances, combined with political self-interest, actually led to the partial dysfunction of the U.S. government." The article pointed out, “The United States does not have any authority who can make a final decision while ignoring all other opinions.”

The article admits that China will certainly suffer losses due to the depreciation of the U.S. dollar and suggests China develop a domestic market in order to reduce China’s holdings of U.S. debt.  “For a long time, China has wanted to reduce its holdings of U.S. debt. However, an important reason why the reduction has not occurred is that China’s export-based economy tenaciously resists any reduction.”

Source: Huanqiu, August 9, 2011
http://world.huanqiu.com/roll/2011-08/1887738.html