Yes, the renminbi (RMB) is closer to fair value. Chinese Foreign Ministry spokesman Ma Zhaoxu states:

"Our currency, the RMB, has appreciated more than 20 percent against the U.S. dollar since July 2005, when China moved to a floating exchange rate regime," Ma said. Before 2005, the RMB was pegged to the U.S. dollar at a fixed rate.

"The RMB exchange rate has drawn close to a reasonable and balanced level, given the international balance of payments and the market supply and demand for foreign exchange," Ma said.

Last week, the China Investment Corporation (CIC), China’s sovereign wealth fund, filed what seems to be its first ever 13-F disclosure with the U.S. Securities and Exchange Commission (SEC).  The move is significant both from a financial disclosure perspective, showing as it does the CIC’s continued commitment to disclose information about its portfolio in line with other institutional investors (13-F’s are required of investment managers managing over US$100 million in assets, and report their U.S. long positions, including options and shares), but also because it allows a glimpse into a part of the Chinese government’s foreign asset portfolio. As RGE has noted in the past, how China allocates the approximately US$2.8 trillion in government managed foreign assets, will be important for several asset classes.

Jim Chanos was on CNBC talking about, amongst other things, China.  And while he is bearish on China, the quote that jumped out at me was the one in the title.

The emerging market crises of the 1990s focused the attention of economists on issues of debt composition and particularly currency denomination. Since in bad times the real value of the domestic currency tends to weaken, servicing foreign currency debt becomes more difficult exactly when the capacity to pay is diminished. This makes for riskier debt, less room for counter-cyclical fiscal policies and a monetary policy geared towards currency not output stability.

I am traveling in DC, NY and Boston over the next few days, and between meetings and jet-lag it is hard for me to do much on my blog, but I did want to extend a short piece I wrote that was published yesterday in the South China Morning Post.  This is because it is about central bank reserves, a topic that to my dismay probably generates more confused and mistaken thinking than any other topic in economics.

Joe Stiglitz, Nobel Laureate and former World Bank Chief Economist, is out again making headlines. This time because of his new book Freefall - America, Free Markets and the Sinking of the World Economy (W.W. Norton & Company, New York, 2010).   I had the pleasure of hosting his presentation at the World Bank’s Infoshop a few days ago – see video conference here -, and there were several things that struck me from what he said. Freefall might be mainly about the US economy but we can draw some very important lessons relevant for our development work.

This will be an unusual entry in that rather than focus on economic analysis I want to address one of the too-widely-repeated myths common outside China which, I think, may distort some of our understanding of China’s growth trajectory.  One of the more absurd claims often made by foreign observers with little knowledge of China is that only “foreign pundits” (why must they always be “pundits”?) are worried by China’s debt levels, the undervaluation of the currency, the financial system, or the development model.  Chinese scholars, according to this line, are actually very bullish about everything happening in China and agree very broadly on the measures that have been taken, and so the opinions of foreign worriers should be heavily discounted because clearly they cannot know more than the locals.

At the beginning of a new year it makes sense to look both back and forward. Last year was characterised by an extraordinary recovery on the equity markets in Eastern Europe, most markets have recorded triple digit gains since their respective bottoms. The recovery should, however, be viewed with the dramatic correction in 2008 in mind.

Regular readers will suspect that once again I am going to suggest that the numbers gave grist for everyone’s mill – optimists will see their hopes confirmed and pessimists will see their worries confirmed.

There is nothing new here but the concerns are real and mirror my own. Things are not always what they seem in China.

China’s Exports More to do with Manipulation than Recovery [China Briefing]