Author: cestmoi

The argument for a stronger RMB. [Copy link] 中文

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Post time 2010-3-28 01:28:59 |Display all floors

Post #33

Originally posted by ganzhuolin at 2010-3-27 00:35

...the possible influence policies of Washington might have on the thinking of PBOC and the Commerce Ministry. The policies of the PBOC and the Commerce Ministry will always put China first but ...




Thx for your insights.

This is the age of globalization and internationalization, we Chinese should expect and embrace a fair degree of cross fertilization of ideas. China is not exempt from this, China is and has been an international player for a while now. China does not and cannot afford to act in isolation and make policies in a vacuum because of China's international clout. China, as it is today, is simply too powerful (if that's the right word to use) to enact macro-economic policies without taking into account the knock-on effect for other countries.

I wouldn't get too carried away by this Goldman Sachs thing, they are just people like you and me, albeit the GS people are "hungry" all the time. They are also consultants and as such, professional mercenaries. Greece wanted a certain outcome and the decision rested with Greece whether to adopt the course of actions designed and engineered by GS. GS is good at that.

Isn't it poetic justice though, that EU wants IMF to bail out Greece? Goldman on Goldman
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Post time 2010-3-28 01:41:48 |Display all floors

Post #20

Originally posted by interesting at 2010-3-26 18:16
In any case, the simplest thing for China to do both politically and economically, is allow domestic inflation to wipe out the currency difference by increasing the RMB cost of everything in China.



I don't think that will work.

Although that said, China is well on its way, many factories in the coastal area raised salaries and wages by 20% or more to attract skilled and semi-skilled workers. The stimulus programs and the drive to industrialize inland China can only add to the inflationary pressure.

I don't think it will work because the other determinant factor in exchange rate is perception. Once the international community loses confidence in a currency... fill in the dots

For now, best course of action is to sell down the holdings in bonds and t-notes but keep the repos to smooth out the swings, as will surely happen. Use the repos like a control-current in a transistor.

Interesting thought though.
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Post time 2010-3-28 02:51:46 |Display all floors

The Looming Trade War With China

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Post time 2010-3-28 04:10:22 |Display all floors

Dumbo,

Originally posted by cestmoi at 2010-3-28 01:41



I don't think that will work.

Although that said, China is well on its way, many factories in the coastal area raised salaries and wages by 20% or more to att ...
.

We can import more low skill workforce from the USA.
China won't need to pay these dummies the same high salary the locals.
Thus no need to worry about inflation in the Mainland.

You lack lateral thoughts Cesspool!
You'll be on your way out,
the same direction of Google if you don't wise up a little more gal!

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Post time 2010-3-28 06:23:36 |Display all floors
CM,

RMB aren't freely convertible, so confidence in the currency is not an issue. In any case, there is huge deflationary pressure in China, so inflation isn't such a huge problem.
"Justice prevails... evil justice."

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Post time 2010-3-29 04:02:33 |Display all floors

Deflation

Originally posted by interesting at 2010-3-28 06:23
CM,

RMB aren't freely convertible, so confidence in the currency is not an issue. In any case, there is huge deflationary pressure in China, so inflation isn't such a huge problem.



Deflation is in many ways worse than inflation, it suggests over-capacity and no markets. China needs to tap the internal market more aggressively.

Some inflation is necessary for growth.

At the moment, I am concerned with the amount and the shrinking value of near-zero coupon bonds and t-notes that we are holding and the exchange rate.

I am looking forward to a time when mainland China is mature enough and confident enough to float the RMB. It is neither at the moment, China is obviously feeling very insecure.

[ Last edited by cestmoi at 2010-3-29 04:04 AM ]
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Post time 2010-3-30 13:43:43 |Display all floors
CM,

I'm not arguing against inflation. We don't really have any disagreements which are substantive or not utterly moot.
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