Emerging Markets : Economy Set To Pass Germany’s

Chinese monetary authorities have allowed the pace of the Chinese yuan’s appreciation to accelerate in recent months, passing the seven-to-one dollar-to-yuan threshold in early April. China’s exchange rate policy, which fixes the yuan’s value to a basket of currencies according to an undisclosed formula, has been a source of controversy in recent years, with some trading partners accusing China of keeping the yuan’s value artificially low to encourage exports. The more rapid appreciation in recent months should silence some criticism, but authorities are unlikely to allow the yuan to float freely in the near future.

Retail sales in China grew at the fastest rate in at least nine years in January and February, increasing by a fifth over the same period last year. The stronger retail growth may help offset falling export growth as the global economy cools. Spending on food, petroleum products, and gold and precious metals contributed much of the increase, however, indicating that inflation, which also was high in January and February, may be responsible for much of the higher retail spending.

China’s Olympic summer got off to a bumpy start after protests interrupted the Olympic torch’s 85,000-mile journey through 20 countries. International attention has turned more intensely to China’s human rights record after the largest demonstrations in Tibet in decades resulted in destruction and violence in March. In the days following the demonstrations, authorities prevented journalists from entering Tibet and several Tibetan regions in surrounding provinces, fueling fears of a harsh government crackdown on Tibetan protesters. The torch’s journey, the longest in Olympic history, is triggering huge demonstrations of both criticism and support for the Chinese government.