Wolf: China does what’s convenient

An excerpt from the full conversation is below:

Fearing runaway inflation and a much higher than expected trade surplus in March, China is changing its tune on currency appreciation. Chinese officials won’t make any official statement changes but “there was a marked change in the tenor of conversations over China’s yuan policy from previous negotiations” at this week’s high-level talks between China and the U.S., reports the Wall Street Journal.

China’s enormous trade surplus raised eyebrows on Tuesday after it grew dramatically in April to $11.4 billion from only $139 million in March, according to data from the General Administration of Customs. The wide spread is likely the result of China’s policies to curb “domestic overheating and what they saw as excessive credit growth,” says Martin Wolf, Financial Times economics commentator, in the accompanying video.

In the interview with the Daily Ticker’s Aaron Task, Wolf notes China will likely allow the yuan to appreciate at a much faster clip, but that’s not because of U.S. pressure. “In the end, the Chinese do what is convenient and appropriate for them and they don’t pay much attention to the rest of the world,” he says. So far, China has stuck to the plan it laid out last year to boost the value of the currency by about 0.5% a month. That may soon change as Beijing policymakers do what they can to battle inflation.