PBOC gov Zhou Xiaochuan doesn’t quite understand that the Fed sets policy for the American economy, and the PBOC sets policy for the Chinese economy. Have a taste of this fine whine from his speech at the Boao Forum yesterday, as reported on the Ruetres Reuters wire:
11:05 03Apr12 RTRS-CHINA C.BANK CHIEF SAYS EMERGING ECONOMIES SUFFERING FROM LIQUIDITY RISKS DUE TO U.S. FED’S LOOSE POLICY
11:06 03Apr12 RTRS-CHINA’S C.BANK CHIEF SAYS FED SHOULD CONSIDER OTHER COUNTRIES’ INTERESTS WHEN SETTING POLICY
I’ve said it before, I’ll say it again: if China doesn’t want to be exposed to the Fed’s policy decisions, it should stop pegging its currency to the US dollar. This is Macro 101 stuff, but the PBOC governorship seems to have a massive problem understanding it.