Looks like Trump is right about Chjna anyway!
4
China is our banker.
You are always at the mercy of your banker.
You wanted global capitalism you got it, enjoy.
2
This is a puzzling news report that raises questions about whether the author fully understands currency markets. China has been accused of manipulating currency markets by keeping the value of the currency artificially low. If the value of the currency is currently falling dipped to market forces, as the author states, than thus would suggest that those past criticisms are no longer valid, if they ever were, and that, if anything, the currency is currently overvalued. On the other hand, the general implication of the article and discussion of events in China is that this devaluation of the currency represents a reversal of previous Chinese policy of allowing the renminbi to gradually appreciate over time, in which case it's current depreciation is not due to market forces, as stated in the article but due to government policy. Only one of these two interpretations of events can be true, yet the article discusses the issue as if both are happening. Some clarification is needed. Thank you.
6
When Japanese Yen was artificially devalued against the Dollar for the past 2 years, I don't hear Schumer saying to stop using the Yen as part of IMF.
1
Economic cheating is the backbone of the corrupt Chinese economy. It is what finances the corrupt so-called "communist" party, it is what results in the tyranny that tortures, denies freedoms of speech and religion, and a reign of genocide in Tibet. These currency manipulations by the would be technocrats in the central state serve their ends and create unfair competition. Penalize them here. The corrupt Chinese tyrants and their little princelings, the new aristocracy, need money more than the world does to legitimate their rule.
5
Personally i think that the Chinese are just trying to make THEIR goods cost less on the open market. If I am correct, I have no idea if I am or not, this is nothing less than the Chinese Government MANIPULATING their currance, AGAIN!
Powerful voices inside the Chinese government were pushing for its currency to go still lower.
Their comments, which offer a rare insight into the argument going on behind the scenes in Beijing, suggest there is pressure for an overall devaluation of approximately 10%.
Their comments, which offer a rare insight into the argument going on behind the scenes in Beijing, suggest there is pressure for an overall devaluation of approximately 10%.
1
Let's start with a fundamental corollary: a nation always acts on its own behalf. What China does when it comes to currency is hardly a departure from what other developed economies do for one reason or another. And a devaluation of 2 percent is hardly radical or monumental. The hyperbolic reactions to this are misguided at best.
Eclectic Pragmatist — http://eclectic-pragmatist.tumblr.com/
Eclectic Pragmatist — https://medium.com/eclectic-pragmatism
Eclectic Pragmatist — http://eclectic-pragmatist.tumblr.com/
Eclectic Pragmatist — https://medium.com/eclectic-pragmatism
2
China is devaluing its Yen, but it is also about to unload billions of US Dollars that they have in excess of due to imbalance of trade. This will happen through BRICKS new bank that will undermine the American currency and the plan is to move on to do the same with Euros. Once the market is flooded with worthless currencies, China's Yen will become the world's Reserve Currency. Before the West collapses economically we can expect WAR, Nuclear WAR!
Did I miss something. The devaluation of rmb is the result of PROC's loosing control over currency, giving more room for market force, which is what US had been wanting for long. I fully understand that the timing is very convenient for China, and not in favor of US. However, the article seems to suggest that the devaluation is manipulation in stead of market force. That bring my doubt on the qualification or motive of the author.
5
Today, most countries and corporations start drooling the moment that they have a chance to do any kind of business with the heinous Chinese Communist Party. Of course, totally ignoring the millions of human rights atrocities that have been and are still being committed by the brutal CCP. The weak U.N even appointed the CCP a seat on its Human Rights Council last year. Interesting, considering the fact that there are no human rights whatsoever in Red China. Shameful ! Right now the CCP is attempting the genocide of the tens of millions of Falun Gong practitioners who live in Mainland China. This genocide consists of torture, slavery, organ harvesting and murder.
1
In response to Senator Schumer's comment, it is the American consumer and executives who have hung the American worker out to dry. The US has no strong policy in dealing with China because consumers want those cheap goods that our corporations resell here. Executives make money from the sales but fewer workers do.
The renminbi rose and there has been some increase in manufacturing here, but it looks like that gain could be threatened. There was a Times article a few days ago on Chinese investment in a textile plant here. I wonder if that looks as lucrative to them now.
The renminbi rose and there has been some increase in manufacturing here, but it looks like that gain could be threatened. There was a Times article a few days ago on Chinese investment in a textile plant here. I wonder if that looks as lucrative to them now.
5
USA uses the central role of the dollar in world economy and massicely printed money during the last crisis to support their economy.
The EU artificially controls the exchange rate to 1.10 USD using the opportunity of the debt crisis to stimulate its competitiveness for exhortations for a whole year now.
And we ask China not to intervene on their currency ...
Talk about double standards ...
The EU artificially controls the exchange rate to 1.10 USD using the opportunity of the debt crisis to stimulate its competitiveness for exhortations for a whole year now.
And we ask China not to intervene on their currency ...
Talk about double standards ...
4
@ Eric
You're either ignorant or have some agenda. The dollar and Euro are traded and float. The Yuan doesn't and is tightly managed. The Euro devaluation is a response to the overall slowdown over there and Greece. The dollar has been strengthening for two years and the administration probably aren't happy about it.
You're either ignorant or have some agenda. The dollar and Euro are traded and float. The Yuan doesn't and is tightly managed. The Euro devaluation is a response to the overall slowdown over there and Greece. The dollar has been strengthening for two years and the administration probably aren't happy about it.
2
Guess you did not notice that indeed the US "massively printed money" just as Eric states (it's called quantitative easing). Not that there's anything wrong with that. Worse is your (and this is true for many others here) objection to China NOW attempting to do exactly what you claim to want them to do - let their currency reflect current market conditions. Of course, current market conditions do not favour the devaluation from the US point of view. But they are a real reflection of currency markets, exactly what the US and IMF have been requesting.
2
When macroeconomists forget the growth locomotives of economy, they suggest wrong economic policy. Japan, the US, Spain and Ireland with many other advanced economies have entered into so-called 'aging economy'. The ratio of working-age population in total population peaked in those countries. However, policy makers without realizing the huge impact on the economic growth of declining ratio of afore-mentioned statistics tend to stimulate economy financially/fiscally as we have seen in Japan's 90's, dot-com bubble and housing bubble in the US recently or housing bubbles in Spain and Ireland. China's afore-mentioned ratio is peaking right now and Chinese government has been stimulating economy aggressively as you can see the renminbi chart inserted by the author. This has been causing housing and stock market bubbles clearly. Even though China is 'developing' country, this macroeconomic factor of peaking-out working age ratio will bring China drastically slow economic growth after the bubble collapse.
Fixating on currency exchange rates won't help anything. The problem is that for decades we have allowed and even incented manufacturers to ship jobs overseas, meaning we must import many of the goods that people buy. Meanwhile, countries like Japan and those in Western Europe have kept much of their manufacturing, which is why we run annual trade deficits with them despite their currencies trading at around the same rates and even higher than ours.
2
It's hard to see how a 3% devaluation would make much of a difference to anything. One wonders whether this is just the beginning - a testing of the waters. They are most likely targeting their competition in the region as suppliers of exports (given how our importers race to the bottom in real-time for the cheapest sourcing).
1
"It's hard to see how a 3% devaluation would make much of a difference to anything."......Perhaps you might consider that the difference between 5% and 8% unemployment in the U.S. is as put it, an inconsequential 3%.
2
exports are in the trillions in the PRC. over time, that decrease will mean very large gains in chinese exporters...
I talked to a chinese furniture rep in Boston yesterday that was "giddy" because she sold in dollars and reaped a big bonus when she converted in the new exchange rate...
And while that may be temporary as you suggest in your comment about a race to the bottom as other nations adjust their currency, it will let them gain leverage in their more global goal of reserve currency status, a much bigger economic fringe benefit it wants
I talked to a chinese furniture rep in Boston yesterday that was "giddy" because she sold in dollars and reaped a big bonus when she converted in the new exchange rate...
And while that may be temporary as you suggest in your comment about a race to the bottom as other nations adjust their currency, it will let them gain leverage in their more global goal of reserve currency status, a much bigger economic fringe benefit it wants
The difference between 5% and 8% is 60%.
If anything, this just shows how clueless our own trade policy is. We have been piling up trade deficits for decades as other countries manipulate currencies, underpay their employees and dump their excess productions on the US markets.
10
And they have kept US inflation low, allowed US companies to increase gross profit margins (Apple, Mattel, etc.) and made those countries depend on US demand (creating economic mutual assured destruction).
US policy should be to move up the value chain which is in innovation, design, etc., which is Tea Partyers are symbolic, intelligent people still think stupidly & do stupid things.
US policy should be to move up the value chain which is in innovation, design, etc., which is Tea Partyers are symbolic, intelligent people still think stupidly & do stupid things.
@chaspack
Red Bank, nj
Of course it has nothing to do with the American appetite for cheap clothes, furniture, smart phones and TV sets. I'm sure you'd never sully your conscience by participating in such an unseemly scramble. LOL.
Red Bank, nj
Of course it has nothing to do with the American appetite for cheap clothes, furniture, smart phones and TV sets. I'm sure you'd never sully your conscience by participating in such an unseemly scramble. LOL.
1
YES...simple and to the point.
And oh how we all love the low prices at Walmart. When Sam Walton was alive, he put American made products in his store over those made in China.
Years ago, I was in my local Walmart and came across a table full of hand tools. I asked what all of the tools were doing there. The Walmart employee explained, "that they were replacing the foreign made tools with Diamond brand tools made in the USA. Good old Sam Walton...American strong. Now, he's gone, and his corporation is forcing US manufacturers to go to China or go out of business. That's one reason North Carolina's textile mills have disappeared...we used to make pillows...among other things...PillowTex Corporation. Walmart told them to either manufacture in China and exist, or go out of business.
We, Americans, outwardly profess to hate 3rd world slave labor products...well, unless we need a TV, or some socks, or whatever other products these 3rd world, child slave labor countries are selling us...then not so much.
Talk about being bigots. Sooner or later, a fool will be forced to eat at his own table. Then what.
Just know, that the dinner bell is about to be rung.
But, don't worry...in the long run what goes around comes around...once we can't afford to pay our workers a fare wage, then we can pay them nothing and take bake all of the manufacturing that we gave to China.
And oh how we all love the low prices at Walmart. When Sam Walton was alive, he put American made products in his store over those made in China.
Years ago, I was in my local Walmart and came across a table full of hand tools. I asked what all of the tools were doing there. The Walmart employee explained, "that they were replacing the foreign made tools with Diamond brand tools made in the USA. Good old Sam Walton...American strong. Now, he's gone, and his corporation is forcing US manufacturers to go to China or go out of business. That's one reason North Carolina's textile mills have disappeared...we used to make pillows...among other things...PillowTex Corporation. Walmart told them to either manufacture in China and exist, or go out of business.
We, Americans, outwardly profess to hate 3rd world slave labor products...well, unless we need a TV, or some socks, or whatever other products these 3rd world, child slave labor countries are selling us...then not so much.
Talk about being bigots. Sooner or later, a fool will be forced to eat at his own table. Then what.
Just know, that the dinner bell is about to be rung.
But, don't worry...in the long run what goes around comes around...once we can't afford to pay our workers a fare wage, then we can pay them nothing and take bake all of the manufacturing that we gave to China.
Bang goes their (PBOC) ideals of becoming a leading trade currency superpower. When traders have no fundamental control over their risk management or investment policies, that CCY will fail.
2
Factories in China have been shuttered at an increasing rate as companies have gone under or move operations, leading to some massive and contentious street protests. The logic is simple for China's ruling regime: devalue to stem the speed of unemployment or risk the Communist Party's power. The Party ("stability") is #1.
2
The repeated, huge cuts in the Chinese currency reinforces the idea that we should never grant "permanent normal trade relations" status --- what used to be known as "most favored nation" status --- to dictatorships. There are many reasons for adopting this policy. Chief among them is the fact that dictatorships have an inordinate amount of power so don't need to respect the dignity of the individual. Consequently, a dictatorship can set labor prices as low as they please; they don't care much whether their people have lousy lives or starve to death. In this interconnected era, this pricing power lowers the labor cost curve around the world. With cheaper labor, businesses in a dictatorship can set prices very low and thus dominate markets. What's really tragic about that is that democratic countries then are under pressure to lower labor costs as well. This means that people in the democratic countries end up being treated almost as badly as the people in the countries with a dictatorship. This destabilizes the democratic country, gives rise to income disparity between classes of citizens, and in the long run undermines democracy. For these reasons, we should give "permanent normal trade relations" to democracies only. This would result in an appropriate standard of living for citizens of free countries. In China's case, revoking this status would also encourage their people to reject the communist dictatorship and establish democracy. Imagine: a free China!
1
The problem of "free" elections is that the populists don't always vote for George Washington types or if GW types exists, they are usually assassinated (by Taliban & Tea Partyer types). Just look to Africa post-colonial years and recent "Arab Spring," wit South Africa as an exception because institutions were already established (power transferred to Blacks). In your scenario, China will become Russia with free elections, Saddam Iraq became ISIL when left on its own, etc. and the transformations are far more dangerous than the present.
The Chinese leadership must maintain national stability, employment and keep most Chinese happy. One of the ways is devaluating the currency, which consequently is boosting exports and sustains employment. The west will keep buying lower cost Chinese products while China would be able to employ more of 2015 huge number of university graduates (about 7.5 million!!!). In parallel and in addition to the smart Chinese artificial trade barriers for Western products, the tight control on imports coupled with currency devaluation works well for the Chinese domestic economy. The West keeps the doors open to Chinese goods, the Chinese narrow again their door for foreign imports.
2
Obviously the Chinese Govt will print as much money as they can to get exports humming and destroy cheap goods markets abroad to do so. In the interim the rich Chinese folks who invest in Companies and Real Estate abroad particularly in the US will find doing so prohibitively too expensive so that we get hit with a double whammy. The recent Pacific trade deal would have been a great way to have trade advantages with countries that surround China or in the region, will now see their domestic manufacturing efforts hurt badly by low ball Chinese currency pushing down prices across the board for exported goods. Those surrounding countries' industries will be set back years because of this move. Ultimately the Chinese are living on borrowed time. they need to goose domestic consumption desperately to ever get off the export cycle. They cannot continuously devalue their currency to stay afloat, ultimately their currency will no longer be in demand as it will be valued as zero outside China.
2
Compared to the Japanese Yen, Chinese Yuan’s value to USD hardly changed over the last few years. For example, three years ago the exchange rate was 1 US$ = 78.58 JPY and now 1 US$ = 124.46 JPY, whereas three years ago 1 US$ = 6.36 CNY and now 1US$ = 6.389 CNY. So it’s okay when Japan did it, but not okay when China did it? It is okay if you change the rate slowly, but not okay if you do it suddenly? I don’t understand.
3
I appreciate the references to The Economist made by several fellow commenters. But I think that Lex in the Financial Times put it most succinctly in one of their headlines:
"Learn to hedge."
"Learn to hedge."
Japan's central bank (following the FED's playbook) has been engaged in quantitative easing i.e., creating money and devaluing its currency for quite some time. This year alone the yen is down 20% in relation to the US dollar.
China devalues its currency 2% and the sky seems to be falling. Why? in the case of China, the renminbi's importance goes goes beyond the realm of monetary policy and central banks.
Currencies play a strategic role in foreign policy among powerful nations. For example, the dollar is America's most potent foreign policy tool along with the use of military force. Iran's nuclear deal is a result of years of financial and economic sanctions against the Tehran's regime.
What strategic goal could Beijing policy makers be aiming with this currency move? the answer lies with the future of Asia-Pacific economic integration.
Beijing and Washington are engaged in a fierce battle to determine which country will prevail and lead the integration process in the region.
Detaching the renminbi's peg from the dollar sends a powerful message. The prosperity of the Asia-Pacific region is tied to the Chinese economy and the renminbi. The currency game renminbi versus the US dollar is just beginning.
The so called currency war is the continuation of conflict/supremacy by other means.
China devalues its currency 2% and the sky seems to be falling. Why? in the case of China, the renminbi's importance goes goes beyond the realm of monetary policy and central banks.
Currencies play a strategic role in foreign policy among powerful nations. For example, the dollar is America's most potent foreign policy tool along with the use of military force. Iran's nuclear deal is a result of years of financial and economic sanctions against the Tehran's regime.
What strategic goal could Beijing policy makers be aiming with this currency move? the answer lies with the future of Asia-Pacific economic integration.
Beijing and Washington are engaged in a fierce battle to determine which country will prevail and lead the integration process in the region.
Detaching the renminbi's peg from the dollar sends a powerful message. The prosperity of the Asia-Pacific region is tied to the Chinese economy and the renminbi. The currency game renminbi versus the US dollar is just beginning.
The so called currency war is the continuation of conflict/supremacy by other means.
6
It is the way that they do it that is the problem - their rate is set artificially and not allowed to trade to "natural" market forces, even if that "natural" involves extra bond issuance or buy-backs - at least it is transparent
1
I think your evaluation is correct. China will not engage in a military confrontation over US Far East Policy but it can and will continue to win the financial war. US names are still on the products, but US workers don't have a hand in their production.
There is a reason why the world's military mans outposts throughout the globe and it isn't to protect workers so much as the financial elite's worldwide holdings.
There is a reason why the world's military mans outposts throughout the globe and it isn't to protect workers so much as the financial elite's worldwide holdings.
China's leaders have a very sophisticated, advanced, and comprehensive foreign policy of world dominance, and we are only beginning to see the the breadth, depth, and scope of it as China starts to flex its muscles in a variety of important areas, including among other things: extending its economic and military power; growing territorial ambitions in Asia; acquisition of businesses and assets in other countries, particularly third world countries; the formation of competing international institutions; robotic manufacturing; and technology.
This comes at a time when the US has a very confused and withdrawing foreign policy that is no match for that of China's, or, for that matter, Russia's, or even the EU's. Whether we realize it or not, we are intentionally backing away from our world leadership role and limiting our influence in world affairs.
If we disregard what is going on in China, or assume it will not succeed, this will allow China to consolidate and extend its power. China will then assume an even more rapidly growing world leadership role that will lead to a world that will be very uncomfortable for the US in particular.
This comes at a time when the US has a very confused and withdrawing foreign policy that is no match for that of China's, or, for that matter, Russia's, or even the EU's. Whether we realize it or not, we are intentionally backing away from our world leadership role and limiting our influence in world affairs.
If we disregard what is going on in China, or assume it will not succeed, this will allow China to consolidate and extend its power. China will then assume an even more rapidly growing world leadership role that will lead to a world that will be very uncomfortable for the US in particular.
2
If the IMF seriously considers classifying the Yuan as a reserve currency--after all, doesn't the market decide what it thinks a reserve currency is?--you will have all the information you need on how corrupt the IMF is.
How can you call a currency a reserve currency when it pegs itself to another currency?
How can you call a currency a reserve currency when it pegs itself to another currency?
The article describes but never really said whats actually happening. The Chinese government decided to let mainly market forces determine the value of the cny (at least as long as they keep the current system), only with controls on how fast the value can change and this has lead to a drop in the CNYs value. This tells us that the CNY today is over valued, which comes as no surprise to any economist following China.
To accuse the Chinese government of artificially devaluing its currency with the new system today simply shows a rather embarassing lack of understanding of basic economics. Just because a currency was undervalued several years ago does not mean it is still so today...
To accuse the Chinese government of artificially devaluing its currency with the new system today simply shows a rather embarassing lack of understanding of basic economics. Just because a currency was undervalued several years ago does not mean it is still so today...
2
Sorry, but this article makes absolutely no sense, both in economic or political matters. Does its author really believe the US is still the only one to call the rounds? That everything has to be done to accomodate Wall Street?
4
China's latest devaluation of its currency just reinforces the need for inclusion of “strong and enforceable foreign currency manipulation disciplines” in the TPP. See http://www.epi.org/publication/stop-currency-manipulation-in-the-trans-p...
Several years ago, I went to a party and met some folks with a tea party tendency. One of them was talking up the storm about gold and RMB. I wonder how he is doing these days
1
Apart from seeking trade advantage in world economytand restoring balance to economic slowdown at home, the currency devaluation move by China also seems loaded with intentions of challenging the prevailing dominance of the West over the global financial and economic regulatory framework, and thereby assert it's own decisive presence in the global order, or failing which to create parallel structures to the present World Bank/ IMF under its dominance, to which China has already made a beginning by setting up institutions like the Asia Infrastructure Investment Bank, or the BRICS nations' New Development Bank.
7
2% vs Japan's 50%? right
Events from the past few months have shone a light on how inept China's leaders are in what will be their ultimately-futile attempts to make markets behave the way they want -- and need -- them to behave. They're unelected leaders whose only claim to legitimacy has been that they, and they alone, can lead China's economic ascendency. This has been somewhat of a no-brainer for the past few decades, with westerners falling over themselves to send manufacturing there and buy the cheap products (and iPhones) that come out.
But that's hitting a wall now. And, if China's unelected can't keep incomes going up, they have big some problems justifying their existence. Hence, the desperate moves since June, when the Shanghai and Shenzhen stock indices started tanking. They outlawed not just short-selling, but selling altogether for those who owned large chunks of companies' shares, started jawboning market participants about being loyal (and therefore buying, not selling), and sunk hundreds of billions of taxpayers' money into buying stocks. Stocks!
Now the devaluations of the RMB over the last two days. Smoot and Hawley. The rest of the world should be worried.
But that's hitting a wall now. And, if China's unelected can't keep incomes going up, they have big some problems justifying their existence. Hence, the desperate moves since June, when the Shanghai and Shenzhen stock indices started tanking. They outlawed not just short-selling, but selling altogether for those who owned large chunks of companies' shares, started jawboning market participants about being loyal (and therefore buying, not selling), and sunk hundreds of billions of taxpayers' money into buying stocks. Stocks!
Now the devaluations of the RMB over the last two days. Smoot and Hawley. The rest of the world should be worried.
3
My goodness. What clearer evidence that readers need to go to the Economist or other publications whose editors and writers understand economic issues and are not driven by geopolitics ("official source say") to get a sense of what is going on and much needed context with the Chinese policy change to align its currency closer with market pressures.
I) NYT readers seem largely incapable of understanding this move brings China's currency closer to the market and the pressures now are for the Chinese currency to go down in relative value to the US dollar.
2) No context of current parallel currency devaluation by other countries of much greater magnitude are provided a key devaluation by the Japanese of the Yen of 50% against the dollar is left for a commentator to raise.
3) A 2% change in valuation is no big deal at all in currency markets. The silly season is truly upon us with Xi JinPing's upcoming visit to the US.
I) NYT readers seem largely incapable of understanding this move brings China's currency closer to the market and the pressures now are for the Chinese currency to go down in relative value to the US dollar.
2) No context of current parallel currency devaluation by other countries of much greater magnitude are provided a key devaluation by the Japanese of the Yen of 50% against the dollar is left for a commentator to raise.
3) A 2% change in valuation is no big deal at all in currency markets. The silly season is truly upon us with Xi JinPing's upcoming visit to the US.
19
As long as its not freely traded it doesn't matter what they say or do its just a fictional form of money. The more of it that one can buy with the dollar doesn't bring it closer to market and the Yen is freely traded and it slid 3.6% in two days according to this story. If it was freely traded it might just crash and they would need to spend their reserves to prop it up.
1
Remember? China has been a currency manipulator since Deng Xiaoping state visit to Washington in January 1979 during President Carter's time. Xi Jinping will do the same thing but before his state visit in later September 2015. It is Simple, China wants to protect its national economy by devalue about 2%. How many percent U.S. has devalued American dollars during the past 10 years?
7
Since the Gold standard has changed based of papers, credit and service based economy currencies are playing grater part.
1
"If Beijing follows through on its pledge to let the market play a much bigger role, more declines will follow. "
? Why would the market cause a decline in value unless it is because they expect the Chinese to act to keep it from going up? The complaint until now was that the Chinese were keeping the currency from appreciating as much as would be expected given their trade surpluses. Allowing the market to decide things without Chinese intervention should cause the currency to appreciate more, not devalue. Please, Lucy, 'splain.
? Why would the market cause a decline in value unless it is because they expect the Chinese to act to keep it from going up? The complaint until now was that the Chinese were keeping the currency from appreciating as much as would be expected given their trade surpluses. Allowing the market to decide things without Chinese intervention should cause the currency to appreciate more, not devalue. Please, Lucy, 'splain.
2
That's because of Chinese economical slowdown! Therefore market forces do give devaluation pressures. How much is anyone's guess
Yes, I realized that shortly after I posted, that I was working on old info from when the yuan was undervalued - too bad we can't edit or delete our posts here.
If money talks, what is China saying?
1
How can the Chinese Renminbi ever be considered as a global reserve currency? The government manipulates a managed economy, and the value of the currency is whatever the Central Committee wishes it to be. Capitalism has been hijacked min China.
Just look at how the government has responded to the recent stock market slump--coercing its central bank and state-owned banks to buy stocks, and establishing laws about spreading rumors about the stock market.
http://thetruthoncommonsense.com
Just look at how the government has responded to the recent stock market slump--coercing its central bank and state-owned banks to buy stocks, and establishing laws about spreading rumors about the stock market.
http://thetruthoncommonsense.com
3
China put itself on path to destruction by buying close to Two Trillion Dollars of U.S. Debt. Now, it is forced to support a strong Dollar to save its own skin even at the cost of a high import bill that it would occur now. Secondly, the State run economy clearly has no clue as to how to manage Asset bubbles all over and has not been able to read the minds of its citizens who focus more on saving money than consuming finished products. Last but not the least, China over the last 4 decades clearly did not encourage scientific temper or invested anything in Research and Innovation. It gave its tactical approval to thieving patent robbers and counterfeit con artists, thus reducing the company to a specialist in producing plastic tooth brushes and other dollar store riff raff.
4
We can impose additional 2% tariff on imports from China and this additional tax revenue can be used to rebuild some of aging infrastructures such as road, port, bridges and etc
7
Could be used as a negotiating point but likely would not pass muster in WTO rules.
1
This just shows how good our media is at manipulating public opinion, and how easily the masses is manipulated. People, get a grip, this is a 2% devaluation! The daily fluctuation of the Euro and the Dollar is more than that! A US$600 iPhone that used to cost Y$3,690 is now Y$3,750, you think the Chinese consumers who can afford an iPhone will notice the difference? Learn some basic economics and math before you embarrass yourselves further please.
24
Markets are acting as it is something significant, and they should. The devaluation signals something important which has been lost on the one opinion of a simple journalist with nothing at stakes. Those who stand to lose from that "small" 2% in the investment community are taking action with the very real consequences we are seeing today. I would rather bet on the markets than on one journalist who never had to invest to make a living.
Indeed China has been manipulating the RMB all these years. Recently, however, the market has been pricing in a weaker RMB than the government's prescribed rate. Even the IMF has said the RMB is no longer overvalued. So the PBOC relaxes the currency policy and let the market play a larger role in setting the RMB. Opportunistic timing? You bet. But you'd still think free market capitalists around the world would be cheering. Of course we're talking about frenemy China which can do no right in the eyes of global media. No one said anything with Japan and Europe's QE which led to 30% declines in their currencies. China's RMB declines 3% and the world goes nuts.
6
Just the regular article to stimulate jingoism. The dollar is not the only currency in the world. The yuan has been linked to the dollar, which is real manipulation. As the dollar has strengthened against all the currencies of the world--Europe, Canada Japan, India, Russia, Brazil, you name it, so has the yuan. I read an estimate it has fallen behind 18% So now it worries about its loss of competitiveness vis-a-vis those we encouraged to devaluate (with Krugman in the forefront) and devaluates 2% against the dollar, the US screams.
Perhaps there is a sense that the US economy is far more vulnerable because of the world situation and that market is, indeed, a bubble.
Perhaps there is a sense that the US economy is far more vulnerable because of the world situation and that market is, indeed, a bubble.
3
Ok China fine , you say that this latest move is only in response to market conditions.
Let's see how China reacts when economic data is actually better than expected.
Who here actually believes they will let the Yuan appreciate 2% in a day?
Let's see how China reacts when economic data is actually better than expected.
Who here actually believes they will let the Yuan appreciate 2% in a day?
3
Beijing signaled with its currency devaluation that the domestic economic slowdown it has failed to reverse is no longer a problem confined within China’s borders. It is now the world’s problem, too.
1-see the rest of this now at wall st journal
2-stop buying chinese goods
1-see the rest of this now at wall st journal
2-stop buying chinese goods
9
And what is our country doing for us!
3
Gee, we just printed how much more money recently? and Japan has devalued its' money by how much percentage in the past couple of years? and the Canadian $ and the euro....Oooooh, nooooono, China cant do it. It is very bad if she does.
18
You are missing the point. When a country engages in international trade the value of their currency should fluctuate in manner which reflects their balance of trade. When a country like China has a large trade surplus, the value of their currency should rise until a balance of trade is restored. When they deliberately devalue their currency without regard to their balance of trade, what they are doing in effect is putting a tax or tariff on imported goods. In other words, they are cheating their trading partners.
Moves like this should give pause on moves to make the renminbi a global currency. The value is determined by the Chinese government to benefit only its economy. Its process and thinking are not transparent. There was no advance warning, nothing. And 2% is not trivial.
I remember the furor over the Fed's remarks to increase rates back in August 2013 that resulted in the dollar rising really fast against other currencies. Other currencies have been trading at pretty much close to 2013 levels (hello India). The rate increase hasn't been done yet, but hey Yellen, thanks for the warning.
I remember the furor over the Fed's remarks to increase rates back in August 2013 that resulted in the dollar rising really fast against other currencies. Other currencies have been trading at pretty much close to 2013 levels (hello India). The rate increase hasn't been done yet, but hey Yellen, thanks for the warning.
That's a great point.
"Inflame the critics in Congress" you say?
How about this time just let them burn themselves out.
How about this time just let them burn themselves out.
3
Once again Chuck Schumer proves he doesn't care about Americans. Blaming China for policies he voted for like NAFTA and supporting companies that ship jobs overseas is what killed the American worker.
40
Exactly. Even when the yen and euro have been higher than the dollar, Japan and Germany have still run trade surpluses with us. Why? Because they continue to make things the world wants and can charge premium prices, while we let our manufacturers make those things overseas so they don't have to pay living wages and benefits. The problem isn't that the yuan is too low or the dollar is too high. It's that we've hollowed out our economy and left ourselves more vulnerable. If your only selling point is low prices, that says a lot.
Donald Trump will save us by selling China his worst hotels at exorbitant prices.
5
This is another manipulation of a currency that is already undervalued. China has been doing this for years, and will keep doing it until there are any consequences. The answer could be very simple -- US and the EU should have a surcharge tax on Chinese imports equal to the level that China undervalues its currency.
51
Gee, I wish the USA would devalue the $ a little. It would help our export economy. A high dollar is not necessarily a good thing.
4
This line doesn't make sense:
If Beijing follows through on its pledge to let the market play a much bigger role, more declines will follow.
If the market plays a bigger role, the RMB will appreciate, not depreciate.
If Beijing follows through on its pledge to let the market play a much bigger role, more declines will follow.
If the market plays a bigger role, the RMB will appreciate, not depreciate.
13
That's the thing isn't it. We won't know its market value unless the Chinese government lets the yuan float.
1
no it will depreciate. The CNY is over valued and the article states this, but never really spells it out in plane words. The US economy is doing well at the moment, China's is not and this has lead to a huge appreciation of the USD towards currencies like the Euro that the CNY automatically followed due to the USD peg. Today the CNY is over valued and free market forces would reduce its value.
You ask what the whole point of the article and congress accusing China of under valuing its currency is? You are not the only one...
You ask what the whole point of the article and congress accusing China of under valuing its currency is? You are not the only one...
not if economies around China are all devaluing. Thus, China was holding the currencies stable early this year but now succumbed to the pressure of devaluation just like other major economies. Look at the slowdown of Chinese economy! The market points downward for Chinese currency not upward. So it actually does make sense in the article
China is taking care of China while the US fails to take care of us.
It is time to talk about real limitations on trade but since we owe so much money
to China I wonder just how effective we can be.
It is time to talk about real limitations on trade but since we owe so much money
to China I wonder just how effective we can be.
14
The U.S. pays its debtholders when the debt comes due, including China. China, therefore, has an interest in the health of the U.S. economy and the U.S.' ability to pay for the maturities that China holds. Leverage works in both directions.
2
This is an appealing argument in the abstract, until you take into account that it is not in China's long-term interests to have the US succeed. China's massive Dollar holdings can be used as a weapon at an appropriate time.
"China is taking care of China while the US fails to take care of us."......China is taking a short term view while the U.S. has a longer event horizon. Taking a longer view is better for the world economy, and eventually what it comes down to is that the world is where we live.
The fact that the TPP (Trans Pacific Partnership) has no provisions covering the sort of dark of night currency devaluations that the Chinese do regularly is one reason what support for it is very weak. This kind of devaluation disrupts the whole market and currently there is no way to hold any county accountable.
8
Despite the clamor for a free floating renminbi China absolutely needs to control the value tightly. Not to do so would unleash terrible inflation in China and crater the global economy. China has successfully required its businesses to sell the export earned USD to the government which in turn printed renminbi to cover. Then the government takes the real money and buys US treasuries, floating our debt. A brilliant strategy to make money from nothing and it works only because the value of the renminbi is controlled over a tight range. For the world's sake and ours they need to continue at least for the forseeable future, or such time when our debt is reduced to almost nothing.
7
Without thinking about it too much, such a strategy appears unsustainable and the longer it goes, the worse the collapse.
1
"Despite the clamor for a free floating renminbi China absolutely needs to control the value tightly. Not to do so would unleash terrible inflation in China"....No, the act of devaluing their currency creates inflation.
I am betting the IMF will cave and china will get to have its cake and eat it to.
5
Are you kidding... This is the best long term news the rest of the economic/developed world would have...
It shows the desperate position the Chinese gov't is in to keep their millions of workers occupied and productive ...
Imagine the social ( and political) unrest from all these poor souls who have left the agrarian countryside for a 'better life' in an economic zone .. Only yo have their hopes dashed of less and less manufacturing jobs ( because they are going to se Asia .. India .. And, believe it or not.. Africa)
It will get a lot uglier before it gets better
Wm
It shows the desperate position the Chinese gov't is in to keep their millions of workers occupied and productive ...
Imagine the social ( and political) unrest from all these poor souls who have left the agrarian countryside for a 'better life' in an economic zone .. Only yo have their hopes dashed of less and less manufacturing jobs ( because they are going to se Asia .. India .. And, believe it or not.. Africa)
It will get a lot uglier before it gets better
Wm
1
I rather imagine that President Obama will treat the issue of China's currency devaluation gingerly, what with all the awkwardness of reproaching one's creditor.
7
This is another example of where the U.S. government is not a household. Yes, China is a net creditor to the U.S., but buying U.S. bonds is more in the nature of an investment, one liquid enough to sell on a secondary market, than a loan that a creditor can suddenly call back. The U.S. makes the rules regarding its bonds, not the Chinese, making the Chinese tied to us as much as we are to them, perhaps more so.
1
Here We go again - China is trying to replace AQmerican workers with its own countrymen. I hope Obama will not let that happen.
3
A reasonable doubt .... Does Senator Schumer comments represents American interests or Israeli interests ?
40
As the Economist astutely pointed out, all this fuss over a 2% decrease!! Our media truly is run by a bunch drama queens, never miss a chance to make a mountain out of a molehill, particularly when China is concerned. Give it a rest already!
28
Somehow Japan's 50% devaluation went unnoticed.
But 2% devaluation of Yuan is stirring passions. The
views are not based on economic rationale but the
perception of adversary and ally. Our ally can do the same
thing and invite no criticism but we excoriate the
adversary. NYT never opened up any discussion
on Yen's major devaluation with Bank of Japan
flooding the economy with money.
But 2% devaluation of Yuan is stirring passions. The
views are not based on economic rationale but the
perception of adversary and ally. Our ally can do the same
thing and invite no criticism but we excoriate the
adversary. NYT never opened up any discussion
on Yen's major devaluation with Bank of Japan
flooding the economy with money.
32
It's not the 2%, it's the thought that counts...
1
You do realize that in FX markets (especially with the CNY) this sort of move is a once in a 20 year event ?
2% may not seem like a lot but when taken in context (given China's tight control of the currency and its largely one way appreciation over the last 5 years) it is astounding
2% may not seem like a lot but when taken in context (given China's tight control of the currency and its largely one way appreciation over the last 5 years) it is astounding
2
There is something wrong with this assessment of the Chinese monetary situation today: Bradsher writes that "If Beijing follows through on its pledge to let the market play a much bigger role, more declines will follow." Senator Schumer, in criticism of of the monetary situation in China, seems to be complaining that the Beijing government is ignoring the market by purposely devaluing the renminbi. I think we need to understand which it is. I'm not at all sure this news is worthy of torpedoing a meeting of Chinese and American leaders in Washington to try to address important geopolitical issues.
7