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Archive for the tag “yuan”

Are China’s GDP Numbers Believable?

Almost immediately after the Chinese National Bureau of Statistics released its second quarter GDP growth estimate of 7 percent in mid-July, a group of China watchers were crying foul. China officially targeted full-year growth of around 7 percent in 2015, a number matched exactly by its reported GDP figures for the first half of the year.

Read Here – The Diplomat

China Stock Plunge Hits World Stocks, Dollar; U.S. Stabilizes

World stock markets plunged on Monday, after a near 9 percent dive in China shares and a sharp drop in the dollar and major commodities sent investors rushing for the exits. After dropping more than 1,000 points, or almost 7 percent, at Wall Street’s open, the Dow Jones industrial average eased losses but was still off more than 1 percent at midday. The Standard & Poor’s 500 index was down by a similar margin after the U.S. benchmark earlier dropped nearly 10 percent below its record.

Read Here – Reuters

The New “Two Chinas” Question

Today, a new, but very different, “two Chinas” question is emerging. It centers on whether China is best understood as a strong country, with a promising future despite some short-term difficulties, or as a country facing serious structural problems and uncertain long-term prospects. In short, two very different Chinas can now be glimpsed. But which one will prevail?

Read Here – Project Syndicate

China Wants Great Power, Not Great Responsibility

Forty-three years after Richard Nixon made his famous visit to China, that country has seemingly decided to take a page from the former U.S. president’s Treasury Department. As China lowers the value of the yuan, the country’s economic policy makers are mimicking the blasé attitude of Nixon-era Treasury chief John Connally, who dismissed international complaints about U.S. monetary policy with a curt remark: “It’s our currency, but it’s your problem.”

Read Here – Bloomberg

Emerging Asia Can’t Just Rely On China

If you think Federal Reserve Chair Janet Yellen is stressed, spare a thought for Agus Martowardojo. On Tuesday, the governor of Indonesia’s central bank had to choose between cutting interest rates to support growth or hiking them to prop up his currency. He ultimately decided to split the difference and do nothing. Martowardojo’s dilemma is emblematic of the increasingly chaotic situation in the world’s emerging markets.

Read Here – Bloomberg

Americans Buy A Fifth Of China’s Exports

Americans bought almost $1 out of every $5 worth of goods that China exported in May, the highest share since August 2010. While Chinese shipments to trading partners including Japan, Europe and South Korea tumbled last month from a year ago, those to the U.S. climbed 7.8 percent. That helped make America the destination for 18.8 percent of China’s exports, outstripping all others.

Read Here – Bloomberg

The Dollar Sinkhole

China’s $3.8 trillion of currency reserves are the largest stockpile ever amassed. Economists have long seen that money as a strength — the ultimate rainy-day fund should China’s shadow-banking system blow up. Trouble is, the value of those holdings depends on China’s $1.3 trillion of U.S. Treasuries. If they plunge in value, all hell breaks loose and officials from Beijing to Brasilia will scramble to exit the American bird cage, writes William Pesak.

Read Here – Bloomberg

In Dollar We Believe

Since 1976, the US dollar’s role as an international currency has been slowly waning. International use of the dollar to hold foreign-exchange reserves, denominate financial transactions, invoice trade, and as a vehicle in currency markets is below its level during the heyday of the Bretton Woods era, from 1945 to 1971. But most people would be surprised by what the most recent numbers show.

Read Here – Project Syndicate

In China It’s About Debt, Not Liquidity

The problem is that China does not really have a liquidity crisis; it has a debt crisis, and the debt crisis is the result of a slowdown in the economy. Despite claims from China’s National Bureau of Statistics that the economy is growing 7.7 percent, growth is more like 3 to 4 percent. And if you strip out economically useless production, the growth rate might even be 0 percent. Slow growth means borrowers will not be able to service their debts, and highly leveraged businesses and government entities will default in domino-like fashion.

Read Here – World Affairs Journal

Nobody’s Talking Of A U.S.-China Currency War. Why?

Little noticed during last weekend’s milestone summit between Barack Obama and Xi Jinping was another landmark event: China’s currency hit a record high, reaching almost 6 yuan to the dollar.

In recent years, one of the few things Republicans and Democrats could agree upon was that an artificially cheap yuan damaged U.S. exports and stole U.S. jobs. The currency’s climb thus seemed like a nod from China’s president to America’s, a quiet signal that Xi understands how sensitive the issue is. During Obama’s time in office, in fact, the yuan has risen more than 10 percent in value. Talk of a currency war has faded.

Read Here – Bloomberg

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