| China can't join the currency war because it doesn’t want to devalue the yuan. China faces a currency conundrum. Exports are slumping and competitiveness is waning after its currency's more than 10 percent rise in real trade-weighted terms in the past year. But unlike its rivals in Asia and Europe, China is refusing to join the currency war.
Here's why: The first problem is capital flow. Money is leaving China as investors cool on the nation's growth prospects and as they look for better returns elsewhere. Louis Kuijs, Royal Bank of Scotland’s chief China economist, reckons that China lost $300 billion in financial outflows in the six months through March. A weaker yuan would give more reason to head for the exit...............................................Full Article: Source
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