"Brazil and India add to China Pressure"

Interesting development on China's currency policy:

Brazil and India add to China pressure, by Geoff Dyer, Financial Times: China is facing growing pressure from other developing countries to begin appreciating its currency, providing unexpected allies for the US in the diplomatic tussle over Beijing’s exchange rate policy. ...

Indian and Brazilian central bank presidents have made the most forceful statements yet by their countries about the case for a stronger Chinese currency.

While most of the public pressure on China has come from the US, the comments underline that a number of developing economies feel that China’s dollar peg has imposed costs on their economies. ...

Lee Hsien Loong, prime minister of Singapore, added his country’s voice to the debate last week, saying it was “in China’s own interests” with the financial crisis over to have a more flexible exchange rate.

Some in China have fended off US pressure for a stronger currency, describing it as a distraction from the real causes of the financial crisis. However, criticism from developing countries is not so easy to bat away. ...

The increase in criticism of China comes at a time of relative calm between Beijing and Washington over the issue, with many US officials and analysts assuming China has already decided to abandon its peg with the dollar over coming months. ...

I've been interested in how the crisis would affect the strategy of developing economies, in particular if we would see an increase in the number of countries abandoning Western-style development strategies that are, at their heart, market-based in favor of more centrally directed development such as in China.

However, part of China's development strategy includes its currency policy, and if both developed and developing countries begin to view these policies as coming at the expense of other nations, at the expense of developing nations in particular, there may be less willingness to pursue similar strategies (e.g. due to fear of retaliation in the form of trade restrictions imposed by nations that believe they are being harmed by the policy).