Now India and Brazil have called on China to appreciate the yuan. China dismisses their calls. Meanwhile, according to IMF projections India is closing in on China for topping the growth league.

China doesn’t like it; “It smacks of protectionism,” said China, in a strange attempt to prove black equals white.

The governor of India’s central bank, Duvvuri Subbarao, said yesterday: “If some countries manage their exchange rate and keep them artificially low, the burden of adjustment falls on some countries that do not manage their exchange rate so actively.” In other words, it isn’t fair; India plays ball, China, doesn’t – at least that is the gist of the argument.

Talking of China not playing ball, no doubt Henrique Meirelles, who is the top man at Brazil’s central bank, would like to see China and India resolve their dispute on the football pitch, and the winner chooses the exchange rate. Alas, that option is not available to Mr Meirelles, who had to resort to words instead, saying it was “absolutely critical for the equilibrium of the world economy” that China allows the yuan to trade freely.

For its part, Chinese economists called foul. It seems Brazil may have fallen into an offside trap set by the Chinese defence. Chinese economists have argued that the arguments being put forward by India and Brazil are quite different from those ventured in the US, and that they are merely trying to protect domestic business.

Mind you, the latest projections from the IMF for India, and to a lesser extent Brazil, are pretty impressive.

The IMF reckons India will grow by 8.8 per cent this year and by 8.4 per cent next. That’s a big upgrade on its previous forecast. The IMF is forecasting growth of 10 per cent this year and 9.9 per cent for China. More to the point, the IMF has upgraded its forecast for India for 2011 by 1.1 percentage points. Its forecast for China is unchanged.
As for Brazil, it is now forecasting growth of 5.5 per cent for 2010; that’s 0.8 percentage points up on its previous forecast.

Brazil’s problem, however, is that it is reliant on the continuation of the commodities boom. This is in part being pushed by Chinese investment, which many say is portraying all the hallmarks of a bubble.

The IMF also had Mexico expanding at a tidy rate of knots: Russia 4 per cent this year and 3.3 per cent next, and Mexico 4.2 and 4.5 this year and next. But Russia, like Brazil, is vulnerable to a crash in commodity prices.

© Investment & Business News 2013