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This post was edited by abramicus at 2013-7-28 02:25|
DeDeMouse Post time: 2013-7-28 00:05
Yuan will not overvalue. That is absurd statement. If productivity is increasing, prices should defl ...
Again, your post attempts to distract readers by attacking deflation, while just a while ago, you were attacking inflation. Neither deflation nor inflation are the causes of the problem of China's GDP growth rate collapsing at an alarming rate. Rather deflation of manufucturing and inflation of fixed assets will result from further deceleration of China's GDP if the OVERVALUATION OF THE YUAN AS IT IS AND HAS BEEN FOR MORE THAN TWO YEARS NOW is not quickly corrected.
You are stalling for time, because you know if Chinese leaders vacillate listening to their economists and central bankers explaining away the GDP deceleration using other reasons, then China will not avoid a HARD LANDING, indeed, a CRASH OF ITS ECONOMY will no longer be avoidable, MEASURED NOT JUST IN FALLING STOCK PRICES but in widespread and prolonged unemployment, because once a factory closes, it will take at least another 5 years to build one again.
China's productivity, as measured by its GDP, is decelerating at a rapid rate. Eventually, the GDP growth rate will drop to zero, if the overvaluation of the Yuan is not stopped, but before GDP growth rate drops to zero, when it reaches 3% annual growth rate, massive unemployment will begin to take place as businesses cancel plans for production in order not to be burdened with unsellable inventory.
Yuan is overvalued, this is not an absurd statement. This is the truth which accompanies the fact that China's GDP growth rate is the worst it has been since Deng began economic reforms. Parroting Deng's call to open up the economy while making all Chinese products harder to sell abroad (because their prices in dollars would be higher than before) or inside China's domestic market (because their prices in Yuans would be highter than foreign, especially Japanese, imports) is a betrayal of the Chinese people.
Your post shows that China's enemies are quite worried that the truth about China's Central Bank's pernicious policy of overvaluing the Yuan will be known, and corrected in time. The Chinese central bank is not just planning to overvalue the Yuan, but already has overvalued the Yuan by 34% from its original exchange rate. The absurd exchange rate, where the demand for the Yuan causing it to rise is NOT coming from their natural buyers, foreigners, but from its own creator, the Chinese Central Bank, buying Yuans from foreigners and SOES/bigwigs planning to invest abroad, using the national savings stored in its foreign currency reserve - when it has NO REASON TO SPEND A SINGLE DOLLAR TO BUY ANY YUAN BECAUSE IT CAN JUST PRINT IT. If China wants more Yuans, it does not need to buy the very currency, it can just create it by a few keystrokes from its central bank transmitted to a commercial bank, or just print it for the price of paper. When foreigners demand dollars for repatriation, or when Chinese SOES/bigwigs demand dollars for their foreign investments, they can and should bid for it with Yuans, and this natural demand will naturally lead to them paying more Yuans for the dollars they demand than what the Chinese Central Bank is asking from them. This leads to the natural clearing price for the Yuan, or, its true market rate, which is going to be lower than the current exchange rate. All China has to do to find out if this is true is to tell the Chinese Central Bank to award dollars to foreigners and SOES/bigwigs based on their highest bid in Yuans, and the truth will be known in an instant.
This prolonged and massive misuse of China's foreign exchange reserve has caused China to lose hundreds of billions of dollars that are taken from its foreign exchange reserve by the Chinese central bank and given to Japanese and other foreign investors in China to repatriate MORE DOLLARS THAN EVER BEFORE to their home countries - every dollar and penny of which is TAKEN FROM CHINA'S OWN FOREIGN CURRENCY RESERVE!
Even more worrisome for the future, this erroneous Chinese Central Bank policy of persistently overvaluing the Yuan has caused Chinese export AND domestic markets to be closing up to Chinese producers, who find their products overpriced abroad AND inside China. The overvaluation of the Yuan will NOT stimulate domestic production and will NOT increase national wealth, but will reduce both to zero if uncorrected.
This could lead to massive unemployment, within a year, at the rate China's GDP is decelerating. Palliative temporary easing of credit and bank reserve requirements may temporarily slow down the slide of the Chinese growth rate, but as long as the Yuan remains overvalued, as it IS, all these liquidity easing measures only create a credit bubble that will cost China even more to overcome later on. They are compounding the problem by easing credit when the real cause of the GDP deceleration is the overvaluation of the Yuan. The inflation of fixed assets in China right now, is one of the bubbles created by the public trying to survive the onslaught on their savings led by their own Chinese central bank.
All the corruption combined of the worst officials cannot equal the wealth being stolen from the Chinese foreign currency reserve every day, every week, every month, year after year.