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Why China is Important to Investors

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    Eurasia Group analyst Nicholas Consonery weighs in on China, U.S. relations and economies.

  • Duration 2:41
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Are right why China matters Treasury Secretary Jack -- Meeting with China's president putting trade and economic issues and cyber security at the top of their diplomatic agenda.

Joining me now from Washington Eurasia group analyst Nicholas -- -- -- And it does not want to start with the with the currency issue our viewers have been watching with frankly frustration for years as the Chinese have continued to what many believe is manipulate their currency.

Can Jack Blum -- the Treasury Secretary to turn the tide.

Well I think we have to look at today's -- which is actually pretty positive frame in the Chinese currency has appreciated pretty substantially since 2005.

Which is when the US government really made an attempt to elevate that issue in terms of the discussions with China.

But overall this -- does anything Jack clue anything that he says gonna really change the Chinese perspective on management of the currency no.

Mean -- currency policy in China has driven by domestic considerations much more than international ones.

I think there is a positive story here this year but it's because they've got an inflation concern in China.

And given that -- strong incentive to allow the currency to appreciate to help offset inflation also.

-- -- -- -- talking about the fact that they care about their economy they're not so much worried about about ours but certainly as a trade partner of the Chinese Chinese do you mattered to this country if you look at GDP we can actually show this.

To our viewers on a chart if you look at the growth and GDP in China.

This tells the story why this is so important to US investors.

And this is so important to anyone is looking to even invest in Chinese companies to trade on the NASDAQ for example the fact that they've had this incredible growth rate in their economy.

Is that in jeopardy if they come to the table and say we will work more closely with you on currency manipulation or lack thereof will fight it.

I think there is a concern and the concern is about the Chinese economy's exposure to -- to the international economic environment.

In the form of export straining the big advantage of China's currency policies allows them to be more competitive.

Than they otherwise would be in terms of selling their products abroad.

It as they allow their currency to appreciate more clearly they're going to become a little bit less competitive on lower value added.

Manufacture products for the goal of the government is actually do that intentionally to try to shift into higher value added manufacturing.

And be competitive at a higher -- Of product offering so I think in general there's a potential that you see continued currency appreciation out China over the next couple years.

And at the same time they continue to compete in the export sector it's just going to be a different industries and different products than -- -- China made in China products really being successful are right now.

All right -- -- sorry from Eurasia group Nicholas thank you very much for rapper weighed in on us.

Thanks for having me.

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