Views: 2960|Replies: 19

Did the G20 "Support" China In Refusing to Devalue the Yuan? [Copy link] 中文

Rank: 8Rank: 8

Post time 2015-9-7 03:07:10 |Display all floors
This post was edited by abramicus at 2015-9-7 03:09

Is it good or bad news that the G20 group of finance ministers endorsed Zhou and Zhu's proposal that all countries refrain from competitive devaluation, when it is China who is wearing the DUNCE CAP of keeping its currency OVERVALUED against even the US dollar, and is the only country hemorrhaging half-a-trillion dollars in six months to keep its currency at its "steady" and "stable" level against the dollar?

Bad news for China, good news for the world.

Zhou should have insisted that JAPAN stop devaluing its currency through its massive QE's which is destabilizing the world economy, why did he NOT POINT THE FINGER AT THE CAUSE OF THE CURRENCY TURMOIL, which is Japanese QE and intentional YEN DEVALUATION, and instead accept on behalf of China the RESPONSIBILITY TO KEEP LOSING AN ESTIMATED 86 BILLION DOLLARS A MONTH (BARCLAY'S ESTIMATE) JUST TO SUPPORT CHINA'S YUAN OVERVALUATION?

Who is paying for this largesse to the Japanese, who get to keep all the exports that China could not capture any more due to its overpriced products in dollars and yens?  The Chinese foreign currency reserve of the people, the manufacturing sectors and factories of the people, and the many jobs tied to manufacturing of the people.  

Is this now the function of the People's Bank of China, to give away everything that belongs to the People of China???




Use magic tools Report

Rank: 8Rank: 8

Post time 2015-9-7 04:38:59 |Display all floors
This post was edited by abramicus at 2015-9-7 05:13

The Japanese Yen (JPY) started devaluing against the Chinese Yuan (CNY) on November 11, 2012, starting from 12.72 JPY to 1.00 CNY.  Using the topsy-turvy convention of currency traders, where the numerator is always 1, the CNY/JPY was 12.72.

By August 5, 2015, CNY/JPY was 20.10, equivalent to a 37% devaluation of the Japanese Yen against the Chinese Yuan!  Did China complain about it?  Did China demand Japan stop manipulating the currency exchange rate in order to obtain an unfair advantage over Chinese exports?  Nobody complained, not even TRUMP.  But the effect on Chinese exports is not reflected alone in the 37% devaluation of the Japanese Yen against the Chinese Yuan.  It is reflected more accurately in the 58% appreciation of the Yuan against the Japanese Yen.  It means that for the same product of equal quality, Japan could sell its product priced 37% below the Chinese product, while the Chinese product would be priced 58% above the Japanese product.  This KILLS CHINESE EXPORTS instantly.  Instantly!

Where is the People's Bank of China protecting Chinese manufacturers and workers in the face of this WAR OF ECONOMIC AGGRESSION BYJAPAN ON CHINA starting with Abe's ascension to power in 2012?

Trade space for time again?  Or rather, trade China's foreign currency reserves for time?  But time for what purpose?  To win the war, or to lose it even more drastically in the end when China's foreign currency reserves drops below its foreign-currency-denominated debts, as is NOW HAPPENING?

China may not like a Chiang Kaishek, but it does not need a Wang Jingwei, who is trading space for ultimate surrender.  At least, Chiang was trading space for time to win, which worked in the end, with the cooperation of Mao and Zhou.  Now, China is trading its wealth for time, in order to achieve ultimate BANKRUPTCY in the end, as the stock market plunge already started doing, wiping out more than 4 Trillion Dollars of wealth stored in the shares of the stocks of China's most promising companies.

After the 2% devaluation of the Yuan against the Yen, from 20.10 Yen to 19.45 Yen for each Yuan, by August 14, 2105, Chinese products remain 49% overpriced compared to a similar product from Japan, and Japanese products remain 33% underpriced compared to a similar product from China.

So, who should be the one complaining about whom in the G20 finance ministerial meeting?

Instead of complaining about Japan's EGREGRIOUS PRICE WAR ON CHINA, waged by ABE, since 2012, China's interests were 'DEFENDED' by the Zhou/Zhu team through accepting Japan's attack as fait accompli, rather than a real CASUS BELLI, and instead binding China to a consensus of CHINA'S OWN MAKING, to not devalue against the Yen, in response to JAPAN'S INTENTIONAL DEVALUATION OF THE YEN AGAINST THE RENMINBI.

With DEFENDERS like this, who needs AGGRESSORS?

IS IT TIME FOR A CHANGE IN THE TOP LEADERSHIP OF CHINA, OR IS CHINA ALREADY "SOLD" TO JAPAN?



Use magic tools Report

Rank: 8Rank: 8

Post time 2015-9-7 05:03:34 |Display all floors
WHAT CHINA GAINED ON SEPTEMBER 3, 2015

GAIN:  ATTENTION OF 31 WORLD LEADERS.
LOSS #1:  300,000 TROOPS + THE NEXT WAR AGAINST ANY AGGRESSOR (MOST LIKELY JAPAN).
LOSS #2:  AGREEMENT TO KEEP THE YUAN OVERVALUED AT THE G20 MEETING IN ANKARA (EQUIVALENT TO LOSING UP TO HALF A TRILLION DOLLARS EVERY SIX MONTHS TRYING TO SUPPORT THE YUAN'S OVERVALUED EXCHANGE RATE).

IS THAT THE NEXT 5 YEAR PLAN - OR HONESTLY, THE NEXT 1 YEAR PLAN?

Use magic tools Report

Rank: 3Rank: 3

Post time 2015-9-7 09:42:15 |Display all floors
abramicus Post time: 2015-9-7 05:03
WHAT CHINA GAINED ON SEPTEMBER 3, 2015

GAIN:  ATTENTION OF 31 WORLD LEADERS.

There are many probable answers to your questions.

But one that comes to mind is China knows just too well that Japan went into competitive devaluation of its currency. So too all advanced nations but since USD started and EUD and Sterling followed, its shameful for them to tell the Yen not to. Probably the Yuan lodged threatening complaints which got attention of the USD and EUD. In exchange to accommodate the Yen, they probably am willing to consider allowing the Yuan to become one of the elite currencies by joining the IMF's SDR.

Indirectly by allowing Japanese to compete on low prices, it is indirectly encouraging Chinese products to compete moving up the value chain. Chinese is still enjoying price advantage. If this can be enhanced by increasing VALUE to narrow the gap between Chinese made and Japanese made goods, China will widen its trade against Japanese, its primary competitor. Otherwise, why is Abe so anxious breaking out of East Asia and falling into US embrace even at the high cost of joining the TPP? The TPP allows a country to lock down others with intellectual rights - a skill that overwhelmingly favors advanced nations.

With the Yuan : USD having moved from 8.20 RMB to about 6.20 RMB, the Americans actually have very little to complain about - the world economic situation is still like it was.

Perhaps China should be more concern with how it is shaping up its society with all the growth. China has become the No. 2 economy, its military might with the recent 70th anniversary celebration is telling but internally the Chinese do not have the sophistication to match. Not that people are not advance but the thinking-gap between the upper-end and lower-end of the society is too huge and the number skewed too much towards the lower end. This is a qualitative issue which probably should worry China more. China cannot be up there as a country but its majority people still lagging far behind in many areas.

The other issue China needs to worry is its media prowess. Quite evidently many outlets try to paint China negatively. This is necessary so that the world does not place overwhelming false expectation upon China. Concurrent with these China needs to project the right image with the right expectation including guiding others along China's path. Also when its all praise, China needs to tone down unwarranted expectations which leave China having to shoulder unnecessary burden. In short China needs to have strong interaction channels with the external environment, a two way channel, one that others are receptive to.

Use magic tools Report

Rank: 8Rank: 8

Post time 2015-9-7 17:23:32 |Display all floors
leiztorc Post time: 2015-9-7 09:42
There are many probable answers to your questions.

But one that comes to mind is China knows just ...

CHINA AND AMERICA HAVING A HIDDEN UNDERSTANDING TO LET CHINA BECOME AN INTERNATIONAL RESERVE CURRENCY IS TOO GOOD TO BE TRUE.

To postulate this possibility as the basis for China going along with shouldering the burden of overvaluing the Yuan through buying Yuans with its hard earned dollars is equivalent to throwing away the baby with the bathwater, because IMF inclusion of the Yuan in ITS basket of reserve currencies is NOT EQUIVALENT to the Yuan becoming a major reserve currency of the world.  IMF SDR's account for no more than 4% of all reserves held by central banks, and China's share of the reserve currencies used to back up SDR's is limited to the maximum of 6% allotted to developing countries.  This is why when asked, Bernanke told the reporter that China's inclusion in the IMF basket of reserve currencies is just a TOKEN, and will not affect the real wealth and economy of any country, including China's.

Even now, the total amount of Yuans being held as reserve currency by central banks around the world already is larger than the total amount of SDR's being held as reserve currency by the world.  So, why would China "NEED" to be included in the IMF basket of reserve currencies, when it is already, by its own merit, a reserve currency larger than the IMF's SDR's?  China's share of the world's current reserve currencies is estimated at 6% or more, compared to IMF SDR's of 4% or less.

To sacrifice 40-85 billion dollars every month just to keep the Yuan at 6.20-6.39 yuans/dollar is a waste of public treasury, and if it should benefit another country, a form of treason, and if it benefits one's pocketbook or ego, a form of corruption as well.

Use magic tools Report

Rank: 8Rank: 8

Post time 2015-9-7 19:37:05 |Display all floors
This post was edited by abramicus at 2015-9-7 19:39

THE LATEST FLIMSY EXCUSE WHY CHINA "NEEDS" TO OVERVALUE THE YUAN - "TO PREVENT MONEY FROM LEAVING CHINA" - SAY THAT AGAIN???

If the Yuan devalues as a result of the market demand for the Yuan being weak to begin with, making the Yuan cheaper to buy would attract foreign capital to invest in China, using their dollars, euros, pounds and yen, simply because they get more Yuans for each unit of their own currency, more Yuans that buy more Chinese products and more Chinese services.  So why in the world would foreign money LEAVE China if the Yuan should follow the market demand and float down to say 6.80 yuan per dollar?

Just as China can export her labor from within China and thereby attract foreign capital to invest in China so that their products produced in China could command a lower and more competitive price in their home markets and the international market, so too can Chinese products be exported to more countries, and even Chinese construction services can be exported to more countries, all of which INCREASE, rather than decrease the flow of money into China.

Note - China does not have lower its interest rate like other countries in order to devalue the Yuan, and therefore its bonds would not be any less attractive to foreign investors on the basis of their interest rates.  All China has to do is to stop the PBOC and its policy banks from buying Yuans with reserve dollars, period.  In fact, by maintaining a high interest rate, which offsets whatever effect devaluation has on any bonds that China sells to foreigners, China can borrow at the same current rates.  But why does China even need to borrow from foreigners whatever dollars it already has in surplus of in the PBOC?  This "worry" about foreign money leaving China is facetious, any more than one should worry about owing others less and less over time.  What is there to worry about this?

Thus, there are no reasons left why China would benefit from the continued overvaluation of the Yuan, and hundreds of billions of dollars of reasons why China would suffer losses from doing so, making it even more suspicious as to why highly educated and presumably intelligent economists and bankers would insist that China continue to overvalue the Yuan, knowing that it is Japan, China's arch enemy, that will benefit the most from it.  Why are they so keen on benefiting an enemy of China, instead of doing everything they can that will halt the militarization of Japan, especially when doing so will benefit Chinese citizens instantaneously and immensely?  Who are they working for?

Use magic tools Report

Rank: 8Rank: 8

Post time 2015-9-8 01:43:26 |Display all floors
WORLD  ASIA WSJ PRO
China’s Forex Reserves Fall by Record $93.9 Billion on Yuan Intervention August 2015
PBOC has been selling its dollar holdings to prevent the yuan from sliding further
I've made my living, Mr. Thompson, in large part as a gambler. Some days I make twenty bets, some days I make none. There are weeks, sometimes months, in fact, when I don't make any bet at all because ...

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.