Views: 1258|Replies: 6

China's Dream of Achieving International Reserve Currency Status About to Burst [Copy link] 中文

Rank: 8Rank: 8

Post time 2015-11-14 12:45:54 |Display all floors
This post was edited by abramicus at 2015-11-14 12:48

The carrot dangled by the IMF in front of China, of inducing China to overvalue the yuan for the past five years, has served its purpose well.  It had slowed down China's growth and turned its enormous foreign currency reserves against itrs own economy, by using it to buy up Yuans, in order to make the Yuan appear unshakably pegged to the US dollar, to give the rest of the world the impression that the Yuan is indeed as stable as the US dollar, and a bit better even, as the Yuan had steadily appreciated against the US dollar year after year by 1-2% at the least, further bolstered by the interest rate of Chinese banks being higher than the interest rate in America, Europe or Japan.  All based on the mirage of an infinite amount of China's forex reserves, which have finally taken a big hit this year, of more than half a trillion dollars, masked by the greater amount of forfeited export earnings, and the even greater amount of reduced production by its manufacturing sector, and finally topped by the even greater amount of foreign currency denominated debt that Chinese businesses, banks, factories and even local governments had been encouraged to borrow, in order to boost what is called "capital account surplus" which in layman's term is what China owes the rest of the world in foreign currencies.


Now, the public execution of the Chinese economy is about to unfold.

When Yellen raises the Fed rate, the axe will fall on the neck of the Chinese economy, heretofore sore from being strangled for so long by the noose of its overvalued Yuan exchange rate.  Now, the real economy will collapse, factories will close, workers will be laid off, and banks will go belly up.  What a sad ending to such a great economic miracle, started by Deng.  Yes, China will be given its carrot.  The IMF will allow the Yuan to become one of its reserve currencies, which account for no more than 2% of the total reserve currenceis held by banks around the world.  And it would not save China's economy from total destruction.




Use magic tools Report

2018 Most Popular Member 2018 Most Popular Member 2016 Most Popular Member Medal Gold Medal

Post time 2015-11-16 09:51:15 |Display all floors
Reminder: Author is prohibited or removed, and content is automatically blocked

Use magic tools Report

Rank: 8Rank: 8

Post time 2015-11-16 17:16:35 |Display all floors
seneca Post time: 2015-11-16 09:51
The Chnese Yuan is going to be another currency in the basket of internationally currencies. I welco ...

So do I, but being a reserve currency of the IMF SDR is not the same as being the reserve currency of the central banks of the world.  The former is less than 4% of the total, and the latter is 96% of the total, and whatever the IMF does for the Yuan, the Yuan cannot tap into the rest of the 96% of the international reserve currencies held by all the central banks around the world.

And the price that China is paying for this token IMF pat on the back is to lose more than a trillion dollars of combined forex reserves, export earnings, and manufacturing profits.  

A big price for a big ego trip, which earns China not a penny, but rather loses each week, another 10 billion dollars for the fun of it.

Use magic tools Report

Rank: 8Rank: 8

Post time 2015-11-16 17:16:35 |Display all floors
seneca Post time: 2015-11-16 09:51
The Chnese Yuan is going to be another currency in the basket of internationally currencies. I welco ...

So do I, but being a reserve currency of the IMF SDR is not the same as being the reserve currency of the central banks of the world.  The former is less than 4% of the total, and the latter is 96% of the total, and whatever the IMF does for the Yuan, the Yuan cannot tap into the rest of the 96% of the international reserve currencies held by all the central banks around the world.

And the price that China is paying for this token IMF pat on the back is to lose more than a trillion dollars of combined forex reserves, export earnings, and manufacturing profits.  

A big price for a big ego trip, which earns China not a penny, but rather loses each week, another 10 billion dollars for the fun of it.

Use magic tools Report

2018 Most Popular Member 2018 Most Popular Member 2016 Most Popular Member Medal Gold Medal

Post time 2015-11-17 09:28:34 |Display all floors
Reminder: Author is prohibited or removed, and content is automatically blocked

Use magic tools Report

Rank: 8Rank: 8

Post time 2015-11-17 16:19:06 |Display all floors
seneca Post time: 2015-11-17 09:28
I support China, David Goldman derogates China.

His Brazilian family had exposed him to the media in protest of the court order that returned him to David Goldman’s custody.
Which side did the kid choose?

Use magic tools Report

2018 Most Popular Member 2018 Most Popular Member 2016 Most Popular Member Medal Gold Medal

Post time 2015-11-17 19:52:25 |Display all floors
Reminder: Author is prohibited or removed, and content is automatically blocked

Use magic tools Report

You can't reply post until you log in Log in | register

BACK TO THE TOP
Contact us:Tel: (86)010-84883548, Email: blog@chinadaily.com.cn
Blog announcement:| We reserve the right, and you authorize us, to use content, including words, photos and videos, which you provide to our blog
platform, for non-profit purposes on China Daily media, comprising newspaper, website, iPad and other social media accounts.