Let’s calm down people.
I’ve been keeping an eye out for signs of increased rhetoric and tension with regards to global trade. To quote:
While the Yuan has been appreciating at a roughly 5.5% annualized rate, which I argue is a needed and continuous step to proceed with the global economic restructuring, news of hard times for exporters is pressuring authorities to temper the gains, in line with what I expected. Furthermore, diplomatic relations between the U.S. and China have become a bit rocky with Congress recently approving currency legislation despite China’s objections that rebalancing has progressed markedly. This has put China in a very difficult position. While the outlook regarding a resurgence in protectionism remains clouded, political posturing for the 2012 presidential election may result in some dicey moments for global trade in the months ahead. Romney has said on the record that he would classify China as a currency manipulator, which would open a can of “tariff and quota” worms.
It’s not only the U.S. revving up the rhetoric, China’s starting to show decreasing mettle as well.
The key question is whether this is just talk, or the real deal. It seems pretty early to be stepping up the rhetoric in this fashion. Needless to say, 2012 may see some dicey moments for the global economy as protectionism makes a comeback