China Growth Stocks

[Shengli]

They would either have to subsidize exporters even more (in reality it would be not possible) or the yuan would have to appreciate. Terms of trade would go up and it would destroy their main engine of their economy

I agree with your point and think China and the US are in difficult situations .

But countries dont always act rationally .

What if China's demand for Treasuries declines ?

It could cause US rates to sky rocket. I know it would be financial suicide but they do hold some cards in this game .

The US holds a lot more cards and is in the drivers seat. I do not think China will do anything except hike rates and let the Yuan appreciate .

Do you think QE2 will turn out to be a success , failure or non factor ?

Most people seem to be in the camp of non factor right now .

These policies scare me