Author: cestmoi

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

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Post time 2010-3-30 14:41:53 |Display all floors
Originally posted by cestmoi at 2010-3-29 05:02


  1. China is obviously feeling very insecure.
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Actually it's not that difficult. For China it's better to be 'unsecure' and stable rather than secure and in turmoil, isn't it?

There will be a bit of adjustment but according to China's -  and not to the U.S.'s  terms.

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Post time 2010-3-31 00:08:43 |Display all floors

Just clarifying things for others here

Interesting:
No worries, mate, we seem to be on same wavelength

SJ:
China will do it sooner or later, and I would like to see China be more pro-active rather than be forced by circumstances beyond its control (nothing to do with USofA). China has grown too powerful (if that's the right word) and need to realize its actions have global knock-on effect.

With that, I'd like to talk about taking PBoC's macro-economic point of view rather than the narrower (oftentimes parochial) micro-economic point of view of other ministries... tonight (time is at a premium at the moment )
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Post time 2010-3-31 09:10:30 |Display all floors
The crux is that the US refuses to acknowledge China's lower wage costs, their impact on her non-tradable goods, and thus the valuation of her stage of development.  All this has a bearing on the econometric models the US choose to use as a weapon to create the impression that China's renminbi is undervalued.

This however doesn't relieve me from the concern that China is holding too much dollar-bonds whose cashing will be ruinous but whose holding will also be ruinous. Damn and double damn.

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Post time 2010-3-31 09:24:41 |Display all floors

This thread has nothing to do with USofA

Originally posted by markwu at 2010-3-31 09:10
...
This however doesn't relieve me from the concern that China is holding too much dollar-bonds whose cashing will be ruinous but whose holding will also be ruinous. Damn and double damn
...


The discussion here is about China from a macro-economic point of view, inflation and exchange rates are part and parcel of that.

Mark, for goodness sake, do you really want to discuss econometric models here? Whatever parameters you use for the model, its not working out.

Umm, for the few of us here, expletive allowed! I urge support for PBoC and Ministry of Finance from the macro-economic  view point.

[ Last edited by cestmoi at 2010-3-31 09:28 AM ]
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Post time 2010-3-31 10:06:10 |Display all floors

Some suggestions

Okay, I have suggested this approach prior. According to MS, we have repos and we will continue to smooth out the bumps in liquidity with repos and swaps on obligations while we sell down the holdings on near-zero coupon bonds.

Our current account surplus will be used to invest into resource eg. gold, crude oil  etc. In this case, it will be to our advantage to relax the exchange rate bandwidth and eventually to float the RMB altogether. It will happen sooner or later, I think Beijing should take a pro-active approach and influence the way things develop globally rather than be forced to accept the positions dictated by circumstances. I realize this is against Deng's thoughts about not sticking our necks out, but in this instance...

This is going to be rough on USofA because of the retirement of the baby-boom generation, social security, the new almost-universal health-care plan, and and and... But this thread is about China.

Thoughts?

Brainstorms?
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Post time 2010-3-31 10:35:39 |Display all floors
Originally posted by cestmoi at 2010-3-31 11:06


  1. I think Beijing should take a pro-active approach and influence the way things develop globally rather than be forced to accept the positions dictated by circumstances.
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Don't hold your breath and don't speculate so much. I remain with what I've said already some time ago. This year we'll see a moderate revaluation of the CNY, perhaps something in the range between 3% to 5%, give it 1 or 2% plus or minus.

As for a freely convertible CNY - my guess is not before 2012/2013.

We'll see who is right and who is wrong.

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Post time 2010-3-31 13:19:05 |Display all floors

Reply #55 satsu_jin's post

Free float of Rmb.....

wow! UK, American, French banks has more capital than China.....
The Rmb would be UP and DOWN to it's disadvantage....
Wait till China gets that US$5 trillion forex reserves first, then it can challenge the power of the American, British, French capital markets....

ha ha ha


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