Trading Off Tim Geithner's Speech

Treasury Secretary Timothy Geithner started

and it's need for a stronger currency. Geithner said that China presents "enormous economic opportunities", but despite this, the Chinese currency "needs to strengthen". The obvious way to benefit from this is to buy WisdomTree Dreyfus Chinese Yuan Fd ETF

. Chinese policies have imposed costs on emerging economies, and allowing the country to continue its ways, could pose serious threats to the global economic recovery. China's principal economic challenges are "how to manage the next phase of development" from a developing country to an international player. As the country continues to grow, its population becomes wealthier and to continue this from receding, China will ultimately need to make significant changes to ensure its long-term prosperity. "China still closely manages the level of its exchange rate and restricts the ability of capital to move in and out of the country," Geithner

at Johns Hopkins University. "These policies have the effect of keeping the Chinese currency substantially undervalued." China's growth was made possible by American leadership, and following many of our policies for capitalism that have allowed us to become the greatest economic superpower on the planet. Seeing as China owns gobs of our debt, we are mutually indebted to each other, both figuratively and literally. "We are willing to make progress on these issues, but our ability to move on these issues will depend of course on how much progress we see from China," he said. If the Chinese government allows the yuan to rise further, then the global economy will continue to prosper, as exports from around the world will be more competitive with Chinese made goods. Our exports to the Far East are growing, but not as fast they should, due to the yuan trading lower than it should. The yuan is "substantially undervalued", and by artificially maintaining an undervalued currency, it brings up inflation issues. Chinese inflation is soaring, while there is little to no inflation here in the U.S. If the yuan were allowed to float higher, this could offset some of the inflation concerns there, and give our economy the inflation is so badly desires and needs.