More official assault on China

Tomorrow Ben Bernanke, Chairman of the U.S. Federal Reserve, is going to be delivering remarks in Frankfurt about China.  Specifically, the Chairman is going to emphasize that by keeping its currency artificially low China is causing its economy to grow too fast (read: growing through inflation, rather than real economic growth).  He also complains that by manipulating the value of the yuan that the Chinese are preventing trade imbalances from adjusting to actual supply and demand conditions.  Bernanke also claims that the Chinese are slowing the global economic recovery.  While the Federal Reserve Chairman also mentions other emerging markets such as Taiwan, Singapore and Thailand, these countries only appear in a chart prepared for the presentation.  The actual remarks mention China alone.

Isn’t it interesting that the presentation was made available to the press prior to its actual delivery in Bernanke’s speech tomorrow?  Clearly this has been done to ensure that there is maximum press coverage of his remarks.  The Federal Reserve is clearly trying to catch the attention of the Chinese government.

And so the beat that I have been sounding for the last two weeks goes on.  As I keep saying, expect there to be more and more bashing of the Chinese in the lead up to the 2012 U.S. elections.  Disconcertingly, the Federal Reserve is supposed to be an independent body, free from political influence.  However, in the past two weeks it appears that the Fed is in cahoots with the White House.  I will continue to track the trajectory of this story as I am certain that the flames are going to be rising.

Jason