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Another Benefit of China Devaluing the Yuan - Abenomics Begins Sinking and Fast! [Copy link] 中文

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Post time 2014-8-11 18:02:00 |Display all floors
This post was edited by abramicus at 2014-8-11 18:17

Why does the PBOC have to assume and accept that the Bank of Japan has the right to devalue the Yen, while the Yuan must instead appreciate against the dollar?

No reason.  None.

Because of the pernicious effect of the revaluation of the Yuan, particularly in the last half of 2013, from 6.20 to 6.09, China's GDP, PMI and trade balance went directly SOUTH.  

Because of the salutary effect of the devaluation of the Yuan back to 6.18 by April of 2014, China's manufacturing sprang back to life, trade balance jumped, foreign exchange earnings leaped, the GDP growth rate shot past 7.5% again, and the PMI hit top marks.

And, now, with the pernicious effect of the UNILATERAL DEVALUATION OF THE YEN by Japan having been merely CORRECTED by the devaluation of the Yuan, Japan's net trade balance has dropped back into the RED, and although its inflation is steady at 1%, its production is again in decline.  Why?  Because Japan is fundamentally not competitive as to cost of production and price of finished products, and both remain simply too high because Japanese labor, Japanese capital, and Japanese treasury all want more out of Japanese manufacturing more than it could actually produce.  This hunger for more is translated by Abe into a call to take over Diaoyudao, much as Japan took over the same island in 1895 by force and without lawful consent of China, just a few months before it signed the Treaty of Shimonoseki.

It is time that those who wish to carry out the economic destruction of the Chinese economy by revaluing the Yuan back to its LETHAL LEVEL OF 6.09 CNY/USD be required to explain their extreme measures against their own country.  Some accountability and transparency is needed, especially when the livelihood of 1.3 billion Chinese men, women and children are at stake.  The people demand an answer.

Give China's competitiveness back to the Chinese people, instead of tying one of their arms behind their back with an artificially revalued Yuan, while allowing the Japanese and foreign producers to hit their foreign and domestic market shares with both arms free, as happened in the last half of 2013.    Has China been infected with foreign ECONOMIC HIT MEN in its banking system at the most important levels?



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Post time 2014-8-11 20:15:48 |Display all floors
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Post time 2014-8-12 10:04:11 |Display all floors
This post was edited by abramicus at 2014-8-12 10:08
coralbay Post time: 2014-8-11 20:15
More economic word salad ... with a dash of nationalism thrown in.

I think you've done this one to  ...

I must have hit on the nerve of our foreign economic hit men's apologists in this forum.  Nothing in my post is controvertible.  The fact is that the Yuan/Dollar exchange rate has been UNILATERALLY revalued by the PBOC while the YEN/Dollar exchange rate had been UNILATERALLY devalued by the BOJ, in a twin and parallel pincer movement that both REDUCES CHINA'S PRODUCTS' COMPETITIVENESS IN THE GLOBAL AND CHINESE MARKETS, while BOOSTING JAPAN'S PRODUCTS COMPETITIVENESS IN THE GLOBAL AND JAPANESE MARKETS.  

This self-inflicted TRANSFER OF WEALTH FROM CHINA TO JAPAN HAD NOT OCCURRED SINCE THE TIMES OF LI HONGZHANG IN 1895, WHEN CHINA GAVE JAPAN 200 MILLION TAELS OF SILVER, PLUS THE LAND, PEOPLE, AND RESOURCES OF KOREA, TAIWAN AND LIAOTUNG PENINSULA.

Calling the instigators of this Grand Larceny, economic hit men is a very mild way of putting it.  The nerve therefore of these fellows to try to reverse the devaluation of the Yuan back to 6.11, in the face of the COLOSSAL COST OF THEIR REVALUATION ERROR in the past few years, especially in the last half of 2013.  This requires investigation at the highest levels of government, by calling in the true native self-taught economic Giants that China had produced, such as ex-PM Zhu Rongji, and keeping out all foreign-trained economists from the audit and analysis.

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Post time 2014-8-12 10:42:18 |Display all floors
This post was edited by abramicus at 2014-8-12 10:55

If you talk to tourists and visitors of China in the past 1-2 years, you will elicit a very surprising perspective of how UNCOMPETITIVE THE CHINA PRICE HAS BECOME in the retail marketplace.  Chinese manufactured products have become more expensive than equivalent foreign manufactured products across the board, in practically all the major cities of China.  Wholesale prices may still be lower than foreign products, but that is because the Chinese factories are willing to make extremely thin profits, compared to the foreign manufacturers.  Even so, on the retail side, China's products have become as expensive, and sometimes, even more expensive than foreign products of equal quality.  This is the turning point that was narrowly averted by the recent devaluation of the Yuan beginning in mid-January 2014, from 6.09 Yuan/Dollar to 6.20 Yuan/Dollar by mid-April 2014, whereupon the GDP growth rate, PMI, trade balance, and foreign exchange earnings, all shifted back from their negative trends to positive ones, all across the board.  It is pathetic when a pair of sandals produced in China sells for $100 US dollars equivalent in China, that sells for $75 US dollars in America.  Pathetic!

Pathetic because the only way that same pair of sandals can sell cheaper abroad than in China is because the manufacturer of that pair of sandals had to sell at or below cost to recover part of his fixed expenses, and hope that the domestic buyers can supply him with enough profits through higher pricing, to pay his employees, the interest on his borrowings or loans, and the raw materials for his products.  What economic cruelty this represents to the manufacturing arm of China!  And why do they deserve this treatment, when the Japanese manufacturers are being treated in the very opposite manner, where their products can sell cheaper than their Chinese competitors inside China, because the PBOC has given them extra milleage through unilaterally up-valuing the Yuan, while the BOJ unilaterally de-values the Yen?

This twin phenomenon of so-called "UNILATERAL REVALUATION OF THE YUAN BY THE PBOC" and the 'UNILATERAL DEVALUATION OF THE YEN BY THE BOJ" when viewed side by side, occurring in the same time, and affecting the same markets, constitute PRIMA FACIE PROOF that they were COORDINATED MOVES, but ALL TO THE DETRIMENT OF CHINA, AND FOR THE BENEFIT OF JAPAN, and therefore CANNOT BE MOTIVATED BY PATRIOTISM AND DUTY TO CHINA, but rather, its OPPOSITE.



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Post time 2014-8-12 10:59:57 |Display all floors
There is a major difference, the Yen is a free floating currency, the Yuan is not

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Post time 2014-8-12 11:54:48 |Display all floors
futsanglung Post time: 2014-8-12 10:59
There is a major difference, the Yen is a free floating currency, the Yuan is not

The Yen is actually highly manipulated rather than free floating, as the BOJ interventions have always taken place when the Yen is starting to be not undervalued.  Thus, the Yen and the Yuan are in a sense fixed by their respective central banks, unlike the US dollar which is truly free floating.  China's control of the Yuan is even tighter, but ironically, the Chinese central bank, the PBOC, uses its dollar reserves to buy up its own Yuan in order to overvalue it, thus costing the Chinese people twice:  (1) the dollars used to buy up the Yuans, which are of no value to the PBOC since it can print them out of nothing anyway, and (2) the loss of sales of Chinese products both abroad and domestically as they become overpriced across the board.

Japan's BOJ actions can be understood as defensive of the Japanese economy and aggressive towards its trading rivals.

China's PBOC actions cannot be understood as defensive of Chinese economy or aggressive towards its trade competitors.  Instead, it drops a massive stone on its own feet, and call it "hard work".

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Post time 2014-8-12 15:39:22 |Display all floors
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