April 2010: German-Chinese parallels

The parallels between Germany and China have been growing more evident during the past month. Whether you call the combination of the two economies ‘Chimany’ or ‘Chermany’ – or, slightly more fancifully, ‘Germina’ or simply ‘Gina’ – the evidence has been stacking up that generating current account surpluses is no guarantee of a quiet life. In their respective currency zones – for Germany, the euro area, for China, the Asia-Pacific region – both the Germans and the Chinese have come under attack for allegedly not doing enough to stimulate their economies. In a variety of instances, ‘Chimany’ stands in the dock. The charge is that of underpricing exports – either because wages have not risen enough (in the case of Germany) or because the currency is being unfairly depressed (as in China). There is no shortage of examples of a war of words on various repercussions of the two countries’ surpluses – ranging from the increasingly acrimonious debate on the renminbi through to German finance minister Wolfgang Schäuble’s go-it-alone idea of a European Monetary Fund.

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