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China is to finally resume its currency appreciation compared to the US dollar. Big news indeed, it's been a while since we expected this to happen. The pressure from foreign governments was building up, but in the end it probably makes most sense for the Chinese economy.
Internal inflation is at an all time high, with wage increases being forced out of management by striking. Wage increases of 66% have been unheard of, but it is possible in China. This is going to put a huge pressure on prices. One of the (small) factors that can help contain the inflation pressure is the appreciation of the renminbi.
Let's hope it works for the Chinese government.
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