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futsanglung Post time: 2015-5-22 03:45
As an importer and exporter in China I know the problems with fluctuating exchange rate but most o ...
Didn't realize you are such a good apologist for the Economic Hit Men who are steering China, Inc., toward stagflation.
You mention that you are doing more business, making more profits, with an overvalued Yuan exchange rate of 6.20 Yuan/Dollar, compared to when the exchange rate was 8.00 Yuan/Dollar, but all things being equal, your statement is a mathematical IMPOSSIBILITY. The only way you can claim to have made more money exporting with an overvalued Yuan exchange rate is if you have offsetting imports which may benefit you as a firm, but which drains the public treasury, i.e., the foreign currency reserves of the PBOC, faster than ever before, as you can now import $1 of goods with 6.20 Yuans, whereas before you had to pay the PBOC up to 8.00 Yuans. Roughly, your imports were subsidized by the PBOC by 29%, using China's hard earned foreign currency reserves, all for nothing, except to make you rich, i.e., the importers and their foreign suppliers.
Your next point that the reason the foreign currency reserves of China is dropping is because of China's investments abroad lacks numerical proof. This is just a conjecture, because you have to prove that the amount invested abroad exceeds the trade balance surplus of China by the same amount that China's foreign currency reserves have decreased.
Your third point, that the increase in expensive luxury imports again suffers from lack of numerical basis. The total imports of China actually dropped such that even if luxury imports increased, it could not have caused the total foreign currency reserve of China to drop by some 300 billion, plus another 200 billion of lost export earnings.
All in all, your arguments sound convincing only when you do not assign numbers to your variables. Once you do, you realize that your conclusion about other reasons for the crop of China's foreign currency reserves are MATHEMATICAL IMPOSSIBILITIES.
In fact, by INDIRECT PROOF, you have lent support to my thesis, that the reason for the drop in China's foreign currency reserves is because of the iniquitous and criminal effects of its self-imposed overvalued Yuan Exchange Rate of 6.20 CNY/USD, which must be corrected by an act of political decision from the State Council, which can no longer hide behind the veil of the PBOC that is its responsibility to supervise and direct for the benefit of the nation's well-being.