Chinese Economy Not Immune To European Debt Woes

May 18, 2010 - PRLog -- The euro has also lost substantial ground against the renminbi and in fact reached a level in the last few weeks that has not seen since the end of 2002.

David Scott an analyst and broker at Bristol Offshore says "Although Chinese policy makers have agreed to break the dollar peg, officials have not yet put the policy into place. Considering the steep fall of the Euro, if they allow the renminbi to rise against the dollar this would increase the renminbis value against the euro and this will create problems for Chinese export to Europe".

The Shanghai stock market lost major ground on Monday, the composite index fell over 5% on the back of concern about global demand and worry that possible worries about further moves in China to limit a steep rise in real estate prices this spring.
Some companies in China are already having difficulty as a result of the euro’s fall against the renminbi.

The euro’s woes have inflicted tens of billions of dollars in losses on the value of China’s holdings in foreign exchange reserves which total almost $2.4 trillion, Following concern that the US might suffer from budget issues and large levels of inflation China had expanded it's holdings in European Government Bonds in an attempt to limit its dependency on the US Treasury Instruments.

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