Chinese Economics Thread
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supercat
Major
Don't forget RMB appreciation. The U.S. Federal Reserve keeps increasing money supply, and RMB will keep appreciating relative to the U.S. dollar. A 5% yearly appreciation of RMB plus 5% GDP growth will increase China's GDP by 1.05 x 1.05, or a total of about 10% effectively.
There are two ways for China to offset the dollar printing and inflation. One is via RMB appreciation as you said, the other is via domestic inflation. There are pros and cons with either one. Too strong RMB appreciation negatively impacts China's export competitiveness while too high inflation destabilizes domestic economy. The better approach is through a combination of both. RMB appreciation last year was pretty strong, from average 6.89 in 2020 to average 6.45 in 2021, a 6.4% appreciation while Chinese CPI in 2021 was a mere 0.9%. There is likely a delayed impact of dollar inflation on Chinese domestic inflation, via import particularly commodity imports.
broadsword
Brigadier
I think a gradual rise in currency appreciation is better than domestic inflation. It drives the companies to be more competitive through higher productivity or quality.
Yes, ideally. But if the appreciation is too strong within a short time period, it can hurt your export competitiveness. Last year, most currencies actually depreciated against dollar while RMB was almost the only major currency that appreciated, so there were even stronger appreciation of RMB against most other currencies. It would have affected China's export. Of course, last year was not just any year. There have been simply huge demand for Chinese export and Chinese export competitors were affected more by COVID.
The steady progress made on the development of an industrial zone in Abu Dhabi attests to the depth of cooperation with China under the Belt and Road Initiative even in the midst of the pandemic, experts say. Xiong Jun, executive deputy general manager of the China-UAE Industrial Capacity Cooperation Demonstration Zone, or ICCDZ, said work on the zone has continued throughout the pandemic and is running on schedule.
Since 2019, the zone－in the Khalifa Industrial Zone in Abu Dhabi－has attracted more than 3.2 billion yuan ($505 million) in investments.
"Over the past three years… the ICCDZ has signed land-leasing agreements with seven companies and factory-leasing agreements with five companies, representing over 30 percent of usable land within the zone," said Xiong.
The industrial zone has attracted attention as an important cooperation project between China and the United Arab Emirates under the China-proposed BRI. In December 2015, an agreement for the zone's development was signed at a meeting between Chinese President Xi Jinping and Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed Al Nahyan. Construction began in May 2018.
Chinese exports reached 29% YoY last year. Without significant Yuan appreciation, likely would have been closer to 40-45%.
The Yuan was undervalued until 2021, probably as a way to hedge the trade tariffs and to create leverage in any trade negotiation with the Americans. This year, the space to appreciate is lower but the energy shock is already behind us. I don't think we'll see oil going from $85 to $150 this year. So the Chinese leadership kept their currency undervalued until a "rainy day" and then used it with great timing. High-class management.
I just used a simple approach, but I agree with your argument.
There is still one point that remains to be highlighted, the RCEP came into force this year. It may be that we will see an even greater impact on trade relations with the countries of the agreement (ASEAN) which has the ultimate goal of eliminating tariffs on more than 90% of goods between member countries. This agreement is the most extensive free trade agreement in the world. According to the data, RCEP member countries will cover nearly a third of the world's GDP (US$26.2 trillion) and population, compared to the United States, Mexico, the Free Trade Agreement of Canada (USMCA), or the volume of trade between the European Union's Common Market Union members (representing 18% of total global foreign trade) are much higher.
A BIG middle finger to amerikkkunts...
China's Xinjiang handed in a report of solid achievements in 2021, with its GDP expanding 7 percent year-on-year to about 1.6 trillion yuan ($250 billion) despite the COVID-19 onslaught, and the region has seen no violent terrorist attacks for five consecutive years, the local government work report pointed out during the fifth session of the 13th People's Congress of Xinjiang Uygur Autonomous Region, which kicked off on Sunday.
In the eyes of observers, this resilient performance is the result of the region's hard-won battle of moving past chaos and toward stability, and is also closely linked with China's strong emergence from the COVID-19 impact last year. It also served as solid proof that the region's social and economic development is on a stable track, despite becoming the target of a US crackdown. They also pointed out that under the leadership of the region's new Party chief, the region is moving to a development path that puts more emphasis on high-quality economic growth.
, which kicked off on Sunday, three drivers of the region's economy - fixed-asset investment, social retail and foreign trade - increased by 15 percent, 17 percent and 5.8 percent respectively. Value-added output of enterprises above a designated size rose to 456 billion yuan, up 8.8 percent on a yearly basis.
China's Xinjiang handed in a report of solid achievements in 2021, with its GDP expanding 7 percent year-on-year to about 1.6 trillion yuan ($250 billion) despite the COVID-19 onslaught, and the region has seen no violent terrorist attacks for five consecutive years, the local government work report pointed out during the fifth session of the 13th People's Congress of Xinjiang Uygur Autonomous Region, which kicked off on Sunday.
In the eyes of observers, this resilient performance is the result of the region's hard-won battle of moving past chaos and toward stability, and is also closely linked with China's strong emergence from the COVID-19 impact last year. It also served as solid proof that the region's social and economic development is on a stable track, despite becoming the target of a US crackdown. They also pointed out that under the leadership of the region's new Party chief, the region is moving to a development path that puts more emphasis on high-quality economic growth.
, which kicked off on Sunday, three drivers of the region's economy - fixed-asset investment, social retail and foreign trade - increased by 15 percent, 17 percent and 5.8 percent respectively. Value-added output of enterprises above a designated size rose to 456 billion yuan, up 8.8 percent on a yearly basis.