U.S.-Brazil Tag Team Could Pique Beijing's Ire | STRATFOR - 0 views
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China is using unilateral pro-export policies to flood foreign markets with its goods, undermining competitors, and it is using its massive cash surpluses to lock down foreign resources.
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Even if Washington were not a military superpower on whose bad side Brazil would not want to be, the United States retains the world’s largest consumer market even with a relatively weak currency, and it imports a mix of Brazilian goods, rather than simply the raw materials.
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Geithner's comments in Sao Paulo gained extra attention because of the thinly veiled criticism of China's undervalued currency contained therein. Geithner said that the surge in capital flows into Brazil was not only the result of Brazil's rapid growth rates but has been intensified by "the policies of other emerging economies that are trying to sustain undervalued currencies, with tightly controlled exchange rate regimes." While Geithner has often pulled punches when speaking about China, and deliberately noted that China is not the only currency manipulator, nevertheless China remains the most conspicuous example of such exchange rate regimes and the obvious target of Geithner's comments. In short, he argued that because of nations like China with closed capital accounts and an exchange rate set by fiat, nations like Brazil are suffering excessive and rapid inflows that monetary policy is insufficient to control.