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Time for China to Quit the Beauty Contest of the IMF - and Tend the Homestead. [Copy link] 中文

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Post time 2015-4-20 14:08:29 |Display all floors
China's central bank governor, Zhou, in Washington, DC, expressed "frustration" at the delay in the shift of 6% quota share to emerging economies, after giving in to the demands of the IMF for "structural reform" that has resulted in the loss of hundreds of billions of dollars of unrealized export earnings, loss of hundreds of billions of dollars of currency reserve, and a domestic crisis where borrowers (manufacturers) were ignored in the ramping up of the overvalued Yuan, forcing their products to be overpriced abroad and at home, due to none of their own making, but due entirely to the revaluation of the Yuan to window-dress it for approval by the IMF beauty contest judges, who, as in most beauty contests, refuse to give the crown to the candidates without receiving something "extra", i.e, the ravishing of the Chinese economy to its bones.

Time for China to devalue the Yuan, junk the idea of ever being an "international reserve currency" via the IMF, and attain "global reserve currency" status through increased trade using its cheaper labor and volume-efficient technology shielded by a lower Yuan exchange rate of 6.50 to 7.00 Yuan/Dollar.

Your workers are waiting for you in Shenzhen, Shanghai and Tientsin.

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Post time 2015-4-20 15:54:08 |Display all floors
This post was edited by abramicus at 2015-4-20 16:14

China's going to bed with the IMF in the past several years, enticed probably by a promise of having the Yuan included in the select circle of elitist currencies, has been quite puzzling, to say the least, given the track record of the IMF imposing Draconian austerity measures on poor countries that have squandered monies loaned to their corrupt officials, and are now unable to pay back their debts.

Now, it is clear why.

It is the status of being elevated into "Darling" and "My Dearest".

Unfortunately, this title is reserved for those who are willing to throw away every piece of clothing with nothing left to protect its workers and manufacturers from losing their markets, due to overvaluation of their currencies, and China has many more parts of her bikini to discard before she makes the grade.

And after that, one can expect, "Nah!  But you are just too ugly!"

It is time to call a spade a spade, and a bad joke a bad joke.  

Why cannot China enjoy its own self-made status as a "global reserve currency" for the sheer reason that other countries want to trade with her due to her cheaper products, and would be willing to hold her currency as rreserve for the convenience of it, and the hedge it provides against any fluctuations in the exchange rate of the dollar or euro, since the Yuan never fluctuates with respect to itself - zero!  Holding the Yuan as a reserve currency provides the PERFECT hedge against fluctuations in the dollar and euro, which are sure to happen, when the bulk of one's trade is with China.  On this count alone, the Yuan will de facto, without the approval of the IMF, become a "global reserve currency" on its own merit.

Time to devalue the Yuan to 6.50 Yuan/Dollar, clear the market of the demand for Chinese goods, and get the GDP growing again at 8% per year for another 5 to 10 years, then ask the IMF if it needs any money to fund itself.

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Post time 2015-4-21 10:37:48 |Display all floors
It is so denigrating to have one's Central Bank governor beg to be admitted to the elite circle of "international reserve currencies" when in fact, China has the world's second largest economy, and by its trade volume alone, could have persuaded its trading partners to hold enough Yuans as reserve currency in order to hedge against fluctuations in the Dollar, Euro, Yen and Sterling.  Over time, holding Yuans becomes a long-term hedge for countries that plan to buy up Chinese businesses or factories which need a long time to accumulate the requisite capital for the purchases.

China, as the world's second largest economy, does not have to surrender its exchange rate, its export price, its export earnings, in order for its currency to become an international reserve currency.

China, can and should, immediately reset its exchange rate down to 6.50 CNY/USD, to boost its export trade, to boost its foreign currency reserves, and to grow its factories and businesses, at 8% per annum, and by so doing, would make the Yuan even more attractive as a reserve currency to its trading partners than merely having a 6% quota of the so-called "Special Drawing Rights" of an IMF that is ten times poorer than China itself.

The YUAN is already a global reserve currency, that needs no IMF approval, and requires no concessions of trade, of amount of currency reserve, to achieve.  The YUAN is the bird in hand, while the International Reserve Currency status is the one in the bush - let it go!!!

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Post time 2015-4-25 14:12:37 |Display all floors
pimpernel2 Post time: 2015-4-24 23:50
You may well be right. Should I cash in my GB Pounds for Yuan now; for long term interests?

Not at the current exchange rate of the Yuan, which is overvalued.  Foreign investors and exporters to China are instead cashing their Yuans for more Dollars than they could have expected a few years ago.  The biggest beneficiary of China's clearly contrived overvaluation of the Yuan are the Japanese who not only picked up the export volume that China lost due to the overpricing of its products in dollars abroad, but also increased their exports into China as their products become underpriced in Yuans compared to Chinese products, in the same stroke, and could repatriate their Yuan earnings into more dollars than ever before.

This looting of the treasury of China's hard earned dollar reserves makes any other scheme of expropriation of the Chinese people by imperial powers look puerile by comparison.

This is post-doc looting of China's foreign currency reserves, in the name of trying to make the Yuan an international reserve currency, when it is all to obvious that without a global reach of military power, the fiat authority of the Yuan cannot exist, or if it exists, could be instantly obviated by a simple military conflict directed against its sovereignty.

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Post time 2015-4-26 05:21:01 |Display all floors
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Post time 2015-4-26 05:34:25 |Display all floors
incarnate Post time: 2015-4-26 05:21
Against all odds, seriously I have my doubts if ever AIIB can stay on course, after leaving the sa ...

The AIIB was never intended to replace the IMF or World Bank.  It was intended to serve as a financing venue for countries that need to build their infrastructure, but could not get the funds to do it with.  Infrastructure is one of those investments that make sense on a collective scale, but cannot make sense on an individual or corporate scale, much like environmental protection.  Everyone benefits from it, but nobody profits from it as a matter of its business activities.  Unless . . . you are a builder.   And China is brimming with construction companies who can make money off these projects, and leave the customer with a product that its public can profit from, over and above what the Chinese construction company gets paid.  Thus, the AIIB is not a philanthropic organization.  However, foreign governments correctly sensed that it could grow into something like the IMF, and thus, made a point of peppering its board with their own representatives, which China welcomed, since it did not fully realize the potential of its own brainchild.

If the AIIB were even remotely thought to possibly replace the IMF, you can bet your last Yuan that the PBOC would have stepped in to scuttle it.

After all, the PBOC has determined that China's future is to be a member of the elite "international reserve currency" countries, that to date, include only the dollar, euro, yen and pound.  Heavens forbid the Yuan to be a "global reserve currency" that is NOT under the thumb of the IMF!  Heavens, no . . . !!!

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Post time 2015-4-26 05:41:21 |Display all floors
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