Author: abramicus

BOJ DEVALUES YEN BY NEGATIVE INTEREST RATES, BUT WANTS CHINA TO OVERVALUE YUAN - [Copy link] 中文

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Post time 2016-1-31 17:07:27 |Display all floors
sfphoto Post time: 2016-1-30 15:57
The ECB has had negative interest rates since June 2014.
The BOJ is following suit to in order to s ...

Facts show China was being attacked by both the ECB and BOJ which have devalued the Euro and Yen repeatedly.  Why its leaders say China will not defend its workers and factories by a defensive proportionate devaluation of the Yuan is beyond human comprehension.  Maybe, Abe and Kuroda know best why China's leaders are helping Japan stay afloat even as China's factories and workers and sinking day after day, month after month, and year after year - Japan seems to be China's most favored nation in many, many ways.

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Post time 2016-1-31 23:03:04 |Display all floors
This post was edited by sfphoto at 2016-2-1 22:29
abramicus Post time: 2016-1-31 17:07
Facts show China was being attacked by both the ECB and BOJ which have devalued the Euro and Yen repeatedly.  Why its leaders say China will not defend its workers and factories by a defensive proportionate devaluation of the Yuan is beyond human comprehension.  Maybe, Abe and Kuroda know best why China's leaders are helping Japan stay afloat even as China's factories and workers and sinking day after day, month after month, and year after year - Japan seems to be China's most favored nation in many, many ways.

China's exports to the EU and Japan are mostly low-value goods which are not affected as much by the devaluation of the EURO and YEN. By contrast, China imports high-value goods from Europe and Japan including production machinery and industrial automation such as robotics which are needed to upgrade Chinese factories.

Currency devaluation is not needed; what is needed is monetary stability.

China does not need to export as much as it used to because the prices of commodities that it imports from commodity-producing countries have collapsed along with their currencies. China can no longer export its low-value goods to these developing countries now suffering from the commodity bust. Instead, China is now exporting its capital and technology to these developing countries by building their infrastructure, investing in industrial parks and relocating its excess capacity there.

The "supply-side" reforms being undertaken by Premier Li Keqiang includes the Internet+ strategy for China 2025. The goal is to restructure the economy away from low-cost manufacturing export industries to high-value technology and services industries catering to the domestic and later global markets. The idea is quite simple: build emerging industries based on new technologies for the domestic market instead of making lots of cheap stuff for export. As the domestic market is large enough to accommodate all players -- foreign or local, State-owned or privately-funded -- China could potentially emerge as the world leader in these emerging industries rather than just build stuff using old technlogies transferred or copied from somewhere else.


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Post time 2016-2-1 03:05:21 |Display all floors
This post was edited by abramicus at 2016-2-1 03:07
sfphoto Post time: 2016-1-31 23:03
China's exports to the EU and Japan are mostly low-value goods which are not affected as much by th ...

MONETARY STABILITY is not sufficient, MARKET-CONSISTENT VALUATION of the Yuan Exchange Rate is absolutely necessary to stem the collapse of China's economy, as the overvaluation of the Yuan has been strangling and continues to strangle China's manufacturing sector, and will lead to widespread factory closures and lay offs of millions of workers as well.  This is what the authorities should be worried about, instead of the few short sellers in Hong Kong of the RMB that they sensed is what is UNSUSTAINABLE, because the FOREIGN CURRENCY RESERVES OF CHINA ARE NOT INFINITE, AND ALREADY SUFFERED A DRAWDOWN OF HALF A TRILLION DOLLARS, PLUS A LOSS OF FOREX EARNINGS OF ANOTHER HALF A TRILLION DOLLARS.  

I never believed in short selling anything, but blaming the petty thief for the loss of a trillion dollars of bank money in the vault is a bit overstretching it, isn't it?  They should be looking at the foreign accounts of the bankers, and their handshake credits that can never be traced.

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Post time 2016-2-1 09:46:31 |Display all floors
TADASHI YANAI boss of UNIQLO is Japan richest persons.  He become very very very rich because most of his clothing made in China using highly skilled cheap labor.  He did not thank China for the opportunity he gets when China and Japan trade with each other again.  That is how the average Japanese mentality of looking down on other poor people and exploiting them.  China should give Japan the middle finger.

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Post time 2016-2-1 23:41:47 |Display all floors
This post was edited by sfphoto at 2016-2-2 00:13
bushier Post time: 2016-2-1 09:46
TADASHI YANAI boss of UNIQLO is Japan richest persons.  He become very very very rich because most o ...

China needs to develop its own consumer goods companies such as UNIQLO with their own brands and channels instead of just relying on cheap labor. That is the purpose of restructuring the economy away from low-cost manufacturing industries towards high-value technology and services industries. By focusing on the domestic market, China will be able to capture the entire value-chain of consumer goods/services industries rather than just the low-value end of manufacturing goods for export.

Making a shirt for export only captures the cost of goods but not the value of the brand. The consumer goods companies who own the brand and channels such as UNIQLO end up capturing the entire value-chain of the consumer brand. If a Chinese company such as SEPTWOLVES can build its brand and channels NATIONALLY, then it should be able to build its brand and channels GLOBALLY as well. Beyond low-cost manufacturing industries, those business activities depend upon knowledge-based SERVICES industries -- design, marketing, advertising, retail/distribution, logistics, finance, operations, supply-chain management, etc. -- which will require the adoption of e-commerce business models in the Internet era. By 2025, China will become the world leader of the Internet economy with world-class e-commerce companies operating globally.

THAT is the idea behind the Internet+ strategy for China 2025.





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Post time 2016-2-2 17:14:02 |Display all floors
This post was edited by abramicus at 2016-2-2 17:15
sfphoto Post time: 2016-2-1 23:41
China needs to develop its own consumer goods companies such as UNIQLO with their own brands and ch ...

All this is fine and dandy, but they do not require China to keep the Yuan overvalued, such that all products, of low or high tech, suffer from a pricing disadvantage against Japanese products.  If a product can sell in China for 200 Yuans with a 10% profit margin, it does not matter how much it is sold in dollars for the manufacturer, as long as the exchange rate allows him to get 200 Yuans for the sale of that product abroad, unless he imports a big portion of his materials from abroad.  If it is sold for $30 while a similar product by Japan sells for $25, then it will not be bought, and whether the workers in China are highly skilled or low-skilled, they all do not get paid and could get fired instead.  Let us not confuse the problem caused by the PBOC's foolish overvaluation of the Yuan with gearing up China for high tech manufacturing.  Even Japan, that is high tech, NEEDS TO DEVALUE THE JAPANESE YEN to beat China's low tech products, and in this, the BOJ is getting all the help it needs from the PBOC which has been OVERVALUING THE YUAN INSTEAD, at the expense of the high tech industries that it pretends to want to raise up, but is actually undercutting by forcing their products to be overpriced in dollars and yens abroad, and also overpriced in yuans at home.  High tech emphasis never needed the PBOC's outrageous overvaluation of the Yuan which is killing off China's manufacturing sector completely.

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Post time 2016-2-3 20:25:56 |Display all floors
......and again US, the grand old dame of democracy failed to name JAPAN as the utmost currency manipulator.

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