Last week a member of the Chinese cabinet spoke of using China's vast dollar reserves as a bargaining chip with the U.S. This week a member of the Chinese Academy of Social Sciences was more blunt, "China is unlikely to follow suit (i.e., reduce their dollar holdings) as long as the yuan's exchange rate is stable against the dollar. The Chinese central bank will be forced to sell dollars once the yuan appreciated dramatically, which might lead to a mass depreciation of the dollar."
Who will speak next week? How do we start getting out of this mess?
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