Posted on 08/05/2019 9:48:58 AM PDT by SeekAndFind
The decline of China’s yuan on Monday to its lowest level in 11 years against the US dollar could continue into 2020 amid the apparent shift in its policy stance by the Chinese authorities, who are showing increasing reluctance to provide concessions to resolve its trade war with the United States.
The Chinese currency’s drop has also rattled the currency market, sending 11 regional currencies lower. The yuan slid 1.3 per cent to 7.0298 against the dollar on Monday in response to President Donald Trump’s threat to impose a new 10 per cent tariff on the US$300 billion of Chinese imports not yet subject to sanctions, effective from September 1, raising risks to the mainland’s slowing economy. China has vowed to retaliate if the US went ahead with the new tariffs.
The break in the yuan below the key threshold of 7.0 to the US dollar, analysts said, was likely to be a deliberate decision made by the People’s Bank of China (PBOC), China’s central bank, which has now decided that the currency can be part of its arsenal in fighting the trade war.
It was also a reversal from Chinese policymakers’ steadfast defence of the 7.0 level in recent years, including last year in the early months of the trade war and in 2016 after the stock market rout and sharp capital outflows in 2015. Those defences had also been a message of good faith to the Americans that Beijing had no intent to “weaponise” the exchange rate of the yuan, also known as the renminbi (RMB).
In a tweet on Monday, Trump hit out at the yuan’s decline, calling it “currency manipulation”. “This is a major violation which will greatly weaken China over time!” he tweeted.
(Excerpt) Read more at scmp.com ...
You mean when Trump trumped China’s own card?
Yep. I don’t see how China wins this game. If their plan of last resort is to continue to devalue their currency in proportion to Trump increasing tariffs on them, then it seems that their currency would become worthless at precisely the same time that they reach 100% tariffs on their exports. Good luck to them trying to buy food and other necessities with a worthless currency.
Of course, long before that point was reached they would have also lost most of their foreign manufacturing base to more trade friendly countries, like perhaps Vietnam.
Or the USA!!!!
What tax hikes are you referring to? Producer prices have actually deflated, rather than inflated during the trade war. So, contrary to all of the tariff doomsayers, consumer prices have not gone up one cent as a result, if that’s what you’re referring to.
Chinese Ghost Cities.
The country’s ambitious plans for urban growth have led to more than 50 abandoned cities whose empty buildings paint a dystopian landscape.
https://allthatsinteresting.com/chinese-ghost-cities
Tax hikes are a win?
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From your posts, I’m taking it that you import and/or sell Chinese product and employ foreign workers (illegal and/or legal). If not, you’ve fooled me.
How does China’ manipulation of currency have such a profound effect on the NYSE?
China is on the same track as Venezuela.
You just can’t fix Marxism...even with Fascism.
I wish what you said were the case, but China might be Communist by control, yet, inlike Venezuela, she allows most businesses abd farmers to flourish. China also does not impose price control like Venezuela.
Overheard on the internet about the phenomenon of Chinese capital flight that Chinese officials like to characterize as corrupt money fleeing abroad:
First of all, a large percentage of foreigners started leaving China starting in late 2018 because they didn’t feel welcome there any more. Really blatant suspicion and discrimination such that they couldn’t go about normal life any more. The trade-war stuff with Trump made it worse, but my impression is it was already underway.
One of the key factors is the banking laws. Sometimes you get blacklisted and just can’t use the bank any more. Any number of agencies, politicians, etc. can do it to you with no explanation, and not even bothering to inform you… you’ll likely never know why. Perhaps you can’t even do deposits, let alone withdrawals or international transfers. If you can’t pay your rent, or your utility bills, or even deposit your monthly paycheck, you start to feel really helpless really quick — and you can’t keep your business running either. Technically the govt hasn’t siezed any funds, your account is still there, you just can’t actually use it if bank branches won’t do business with you.
This sort of thing happens surprisingly often to foreigners, as they’re always under general suspicion, but Chinese worry about it too. To bring this back around to a iSteve theme:
From the Chinese perspective, this is one of the biggest and best reasons for birth tourism (or so I’m told): you have the right to open an American bank account in your child-citizen’s name. And then you’ll have less fear of local politicians getting pissed at you; you can run your business, and your life, more confidently. For many Chinese, this is seen as the big payoff, rather than all the other citizenship benefits — and this is what the birth-tourism companies lead with in their advertisements.]
* In those countries, they’ll nickel-and-dime you, but they won’t take your property lock-stock-and-barrel the way they can in China.
China has one advantage over the USA.
She, unlike us, has a permanent government ran by one party. Which means, she plays the LONG GAME and can wait us out. A drop in their GDP might cause some pain, but what can their people do? They can’t vote the party out of power.
We on the other hand, have a government that rans in cycles. There is no guarantee that Trump will be the President after 2020.
Hence, China can hope that a bad economy and a tanking stock market coupled with high unemployment will cause ANOTHER administration to rise and hopefully, be more conciliatory to their trade demands.
[She, unlike us, has a permanent government ran by one party. Which means, she plays the LONG GAME and can wait us out. A drop in their GDP might cause some pain, but what can their people do? They can’t vote the party out of power.]
https://en.wikipedia.org/wiki/Hua_Guofeng
And revolts by their subordinates:
https://en.wikipedia.org/wiki/Yuan_Shikai
That’s the reality of absolute rule - the threat is from ambitious subordinates who have carefully masked their ambition for the top spot in order to rise up the ranks.
Those are good points. However, China is no longer only populated by poor, uninformed farmers. The opposite edge of their economic sword is that the resulting prosperity has now created a generation of Chinese who have tasted modern life, and who might not be so willing to give it all up again for the “good of the party.” The ongoing unrest in Hong Kong, though not necessarily economically-related at the moment, certainly demonstrates a new willingness to push back against the central government.
When the American public understands just how much China is STEALING from us via IP theft and copying our goods, they'll get behind the President.
The most important thing to remember is that this is short term pain. The long term gain will be worth it, IMO (and YES, I'm impacted by all this currency manipulation too..)
[She, unlike us, has a permanent government ran by one party. Which means, she plays the LONG GAME and can wait us out. A drop in their GDP might cause some pain, but what can their people do? They can’t vote the party out of power.]
https://en.wikipedia.org/wiki/Zhao_Gao#Coup_following_Qin_Shi_Huang’s_death
When Plato talked about the shadows in the cave, he might as well have been talking about the CPC leadership. There are all sorts of palace intrigues going on behind the walls of the leadership compound that we will never find out about (unless the regime collapses and the archives are released) and what we see are merely the shadows of those intrigues. Even momentous events such as the Tiananmen Massacre are just byproducts of power struggles that we will never know about directly. We can never hope to learn in real time what is really going on – we can only guess at them from the shadows that we are seeing. Naturally most of the time we are going to guess wrong.
Ha!
Same thing I’ve been thinking about Chucky’s remarks...
And the media’s false coverage of them makes me sick.
They’re giving Chuck credit for being “tough on China!” for trying to sabotage Trump’s effort to do so.
Foreign exchange is a tough topic, not surprising Freepers (including me) have trouble understanding it’s importance in this.
Did your comment beat Trump’s announcement on ‘currency manipulation’? Kudos if so!
And if the PLA went into HK they could go into the banks and get the CCP all the foreign exchange it would ever need.
Would kill the Golden Goose, but they might think it worth it.
No, I just love America and hate to see our economy mismanaged by a fool.
Hey Free Traitors™ you had your 30 year run. We are on to you. Now kindly FOAD.
Regarding price controls...just wait for the inflation that comes from a weak currency.
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