China's currency reform would not help lower the US$617bn US trade deficit, of which US$162bn is with China, Federal Reserve Chairman Alan Greenspan said in a speech recently. He said if the yuan were allowed to appreciate, one effect would be a rise in domestic prices, since Chinese goods would become more expensive, and secondly, rather than turn to American producers for goods, businesses will turn to other countries capable of producing low-cost goods, such as Thailand and Malaysia.
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