Chinese Economics Thread

[Jeff Head]

This is not a place to discuss Women's Lib, or which nation, China or Jpana, is best at it...or any other nation for that matter.

We can discuss the economic conditions in China (which is what this thread is about) without delving into such competition, arguments, comparisons.

Those posts have been deleted.

THREAD TEMPORARILY CLOSED TO COOL OFF..

DO NOT RESPOND TO THIS MODERATION.

August 11, 2015 Update:

THREAD RE-OPENED.

Keep it civil and follow the SD Rules of Behavior.

 

[janjak desalin]

There's BIG Chinese economic news today!

China Rattles Market with Yaun Devaluation

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China devalues its currency as worries of slow down increase

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[shen]

There's BIG Chinese economic news today!

China Rattles Market with Yaun Devaluation

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China devalues its currency as worries of slow down increase

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What is interesting is that Chinese central bank is actually loosening government control of currency trading, giving market force a greater role in determining the exchange rate, exactly as IMF recommended.

"Like many things in China’s economy, the country’s currency is controlled by a mix of market forces and government decree. Every morning, Beijing sets a target for the trading of its currency against the U.S. dollar, then allows investors to buy and sell the currency for 2 percent more or less. Tuesday's change relaxes the government's control over setting that rate, instead setting the midpoint around the market's closing rate for the previous day."

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The NYT article also acknowledge that, but more briefly.

 

[AssassinsMace]

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Looks like Obama is losing interest in TPP. Now I can see why I've been reading about a Southeast Asian trade zone being pushed. China, Japan, and South Korea have spoiled Obama's plans in Asia too much.

 

[shen]

This new article by NYT is clearer in analyzing the intent of the big move by China central bank.

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[Blackstone]

What is interesting is that Chinese central bank is actually loosening government control of currency trading, giving market force a greater role in determining the exchange rate, exactly as IMF recommended.

"Like many things in China’s economy, the country’s currency is controlled by a mix of market forces and government decree. Every morning, Beijing sets a target for the trading of its currency against the U.S. dollar, then allows investors to buy and sell the currency for 2 percent more or less. Tuesday's change relaxes the government's control over setting that rate, instead setting the midpoint around the market's closing rate for the previous day."

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The NYT article also acknowledge that, but more briefly.

Some Western pundits criticize the PBoC for tight control of the RMB, and they scream even louder when it ends RMB's peg to the dollar and allow the currency to be market driven. That's called having your cake and eat it too.

 

[Blackstone]

This new article by NYT is clearer in analyzing the intent of the big move by China central bank.

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Well written article. Kind of a surprise, coming out of the New York Slime.

 

[janjak desalin]

More today:
China Weakens Its Currency Further By

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AUG. 11, 2015

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Following today's movement on the currency exchange (

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), it looks like actual market forces are at play today, unlike yesterday. Yesterday's CNY:USD rate set at a depreciation of 1.88% and stayed there throughout the US markets' trading hours. Today's rate is showing movement, and in fact, just appreciated by .7%. It might be a wild ride today; but, at least, we can see the currency responding to market forces in real-time. In the time it took me to write the last sentence, it appreciated another .07% (- 0.96). This should provide some sense of confidence, both in markets' assessments of the CNY value, and in the PBOC's willingness to allow the market greater day-to-day influence over its value. Of course, this could change during US trading hours, which might then raise the question of precisely which force(s) are constraining the dynamics.

 

[janjak desalin]

I drew a conclusion too hastily! The rate now seems frozen at - 1.00% for the day and this just popped up:

Yuan Tumble Tests China’s Free-Market Resolve as PBOC Intervenes

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So, a wild ride it will be; but of expectations and not of exchange fluctuations.

 

[broadsword]

From the IMF's perspective after the second day of cut.

The International Monetary Fund said China’s move to make the yuan more responsive to market forces appeared to be a welcome step and that Beijing should aim to achieve an effectively floating exchange rate within two to three years.

Beijing has been lobbying the IMF to include the yuan in its basket of reserve currencies, known as Special Drawing Rights, which it uses to lend to sovereign borrowers. This would mark a major step in terms of international use of the yuan.

“Greater exchange rate flexibility is important for China as it strives to give market forces a decisive role in the economy and is rapidly integrating into global financial markets,” an IMF spokesperson said.