China's Exports and GDP Surged in July Because It Devalued the Yuan in April.

abramicus

The lesson is clear, clearer than the noon day sun, that China's PMI index shot up to record levels, its GDP growth once again surged past 7.5%, and its monthly exports in July (47B) surged and imports dropped to historical levels as well, because someone with authority and wisdom required the People's Bank of China to devalue the Yuan from 6.09 in January 2014, back to an economically sustainable level of 6.18 in April 2014.  The 6.09 rate was a critical lethal exchange rate that guaranteed that Chinese manufacturing products would be overpriced both abroad and domestically, against foreign products, and it was reflected in the rapid retreat of China's GDP growth rate, and its loss of foreign exchange.  Clearly, China cannot go below 6.18, as it is attempting to do once again in August 2014, as if it had not yet learned its 200 billion dollar lesson.  If it does, those who mandate the return to an unsustainable exchange rate should offer to pay for it with their own private monies, even if that would have been just a drop in a bucket of foreign exchange losses.

The final equilibrium sustainable Yuan/Dollar exchange rate is 6.15 to 6.18.

Below this level, it is a form of economic sabotage.

dusty1

This will be interesting since Russia will have to import Chinese food since they have banned Western imports

abramicus

coralbay Post time: 2014-8-10 10:43
I think its shocking that you are criticizing China's leadership.

Keep this up and we will have to  ...

You?  

I am praising the leaders who demanded the PBOC correct is mistake of overvaluing the Yuan especially in the last half of 2o13, when China's PMI and GDP both crashed below expected targets, and which now have been restored to targets by the simple mechanism of devaluing the Yuan back to 6.18 in April 2014.  Unfortunately, someone is trying to move the Yuan back to 6.10, as the current rate stands at 6.11, and China's exports and GDP are bound to drop again in September or October of this year because of this.  A mistake can be honest and forgivable.  A repeat mistake is unlikely to be honest and needs to be investigated as economic sabotage.

abramicus

dusty1 Post time: 2014-8-10 10:53
This will be interesting since Russia will have to import Chinese food since they have banned Wester ...

China is itself a net importer of food, so China cannot replace the shortfall.  Brazil can.  But isn't this a good opportunity for the two largest in land area countries to figure out a way to produce more food, enough to sustain their populations for at least a year even with famine or war?  People should learn to eat more of what the land can produce, instead of forcing the land to produce what the people want to eat.  Water should be used for growing food, not just for factories to use in their manufacturing processes.  Agriculture should be the number one product of any country.

abramicus

abramicus Post time: 2014-8-10 11:20
China is itself a net importer of food, so China cannot replace the shortfall.  Brazil can.  But i ...

TIME TO HEAD FOR THE HEARTLAND OF MACKINDER'S GEOGRAPHICAL PIVOT OF HISTORY - SIBERIA!!!

Siberia contains thousands of miles of flat fertile plains which are not even planted on.  China has a chance at creating a bread basket to feed its people with by first investing heavily in domestic agriculture, while at the same time, partnering with Russia in developing Siberia and Outer Mongolia.  Waterways from the glacial mountains of Siberia to the dry deserts of China will turn the norther part of China into another agricultural powerhouse.  Of course, dependence on another country for water is never nice to think about, but who is to say that Russia will act in bad faith in the future when it benefits so much from China's investments and market?

jay_dee

The growing season is short in Siberia, even with 'Global Warming' having an impact.
Water shortages will continue to plague the world and affect life as we know it.