Friday morning at 6am, the White House released a letter to the leaders of the G20, with whom he will meet in Toronto June 26-27. Boy, 6 am is pretty early to send out a press release. Like, almost never happens. What was the rush?
Well, tucked into the missive, which mainly included gibberish about how everyone is going to start cutting their budgets and reform their banking sectors, were two lines that caught people’s attention.
I also wanted to underscore that market determined exchange rates are essential to global economic vitality. The signals that flexible exchange rates send are necessary to support a strong and balanced global economy.
The message was clearly aimed at China, which studiously avoids “market determined exchange rates” and keeps its currency artificially weak in order to screw U.S. exporters and help its own.
Asked about the letter at a briefing aboard Air Force One later in the morning, White House spokesman Bill Burton vowed, “this is obviously going to be an issue that we’ll continue to discuss.” The White House actually has been slammed of late for failing to press China on the matter.
And then, lo and behold, China early Saturday announces that it will allow more “exchange rate flexibility,” followed by an Obama statement welcoming the move.
Does it look to you like the Chinese pooped their pants at the sight of Obama’s letter and adjusted their policy? Well, that’s how it’s intended to look.
Or at the very least, the White House needed to look tough before China went ahead and just changed things on their own.
And now you know what the rush was to get Obama’s letter out the door.