China Economic News

[BlueKelah]

Seriously, I can't wait to see if Trump will really call China a currency manipulator.

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China weakens yuan to eight-year low

China on Tuesday weakened the yuan’s fix against the dollar to a nearly eight-year low as the surging dollar put further pressure on the unit.
The central People’s Bank of China set the value of the yuan –- also known as the renminbi –- at 6.8495 to the greenback, down 0.30 percent from Monday’s fixing, according to data from the Foreign Exchange Trade System.
The unit has reached a series of six-year lows in recent weeks in the face of a greenback rising on expectations of sharper US interest rate hikes, with President-elect Donald Trump pledging during his campaign to ramp up spending and cut taxes.

But Tuesday's fix was the weakest since December 2008, and beyond the roughly 6.83 level at which Beijing virtually pegged the unit for nine months in 2009-10.
China only allows the yuan to rise or fall two percent on either side of the daily fix, one of the ways it maintains control over the currency.
During the presidential campaign Trump repeatedly accused China of keeping the yuan undervalued to boost exports and make imports from the US more costly, and has threatened to declare Beijing a currency manipulator once in office.

But analysts and officials say that Beijing is now intervening in the opposite direction, and trying to prop up the unit's value against a strengthening greenback.
The US Treasury in October cleared China of keeping the yuan cheap for trade advantages, saying the currency could have fallen more had Beijing not acted.

[Behappyalways]

Why China Can't Stop Capital Outflows
https://www.bloomberg.com/view/articles/...l-outflows

[Behappyalways]

China November forex reserves fall more than expected to $3.05 trillion, lowest since 2011

http://www.cnbc.com/2016/12/07/china-eco...-yuan.html

[BlueKelah]

China November forex reserves fall more than expected to $3.05 trillion, lowest since 2011

http://www.cnbc.com/2016/12/07/china-eco...-yuan.html

it seems in the past weeks China is drawing down the reserves to help the currency. yuan seems to be holding steady at ~6.8RMB to 1 USD. It recently even hit 6.9 to USD. Was kinda expecting it to drift above RMB7 to USD but looks like Beijing is trying to stop that from happening. Otherwise give another excuse for Trump to call them currency manipulator.

[weijian]

well, strictly speaking, PBOC is manipulating for sure. But just not in the way Trump has accused them of.

[BlueKelah]

well, strictly speaking, PBOC is manipulating for sure. But just not in the way Trump has accused them of.

do you think we'll ever get to 1USD - 8RMB ?

[tonylim]

well, strictly speaking, PBOC is manipulating for sure. But just not in the way Trump has accused them of.

do you think we'll ever get to 1USD - 8RMB ?

Believe most nations especially the big one do this .

[weijian]

well, strictly speaking, PBOC is manipulating for sure. But just not in the way Trump has accused them of.

do you think we'll ever get to 1USD - 8RMB ?

I think we have to go >10years ago for 1USD-8RMB (xe.com only shows last 10years..haha). Of course, China of those days is different from now and so my intuitive guess is that the conditions to go to 1 USD:8 RMB most probably will entail some form of crisis for the currency to depreciate another 20% from here. China is huge with resources, talent and FX reserves controlled by a pseudo-communist cum capitalistic regime which draws its legitimacy on keeping its citizens (whom themselves have had to endure the Cultural Revolution) happy. There is no historical precedency to guide future projections.

Might be easier to call for neighboring SGD:MYR I reckon

[BlueKelah]

well, strictly speaking, PBOC is manipulating for sure. But just not in the way Trump has accused them of.

do you think we'll ever get to 1USD - 8RMB ?

I think we have to go >10years ago for 1USD-8RMB (xe.com only shows last 10years..haha). Of course, China of those days is different from now and so my intuitive guess is that the conditions to go to 1 USD:8 RMB most probably will entail some form of crisis for the currency to depreciate another 20% from here. China is huge with resources, talent and FX reserves controlled by a pseudo-communist cum capitalistic regime which draws its legitimacy on keeping its citizens (whom themselves have had to endure the Cultural Revolution) happy. There is no historical precedency to guide future projections.

Might be easier to call for neighboring SGD:MYR I reckon

Even though Msia makes massive $$ as oil exporter, it is very likely end up like Venezuela lol, maybe very soon SGD1 : MYR4 in a couple years. Looks at their politicians, even running to China for help now, muslim cousins already scared of them liao. If the country start defaulting on other obligations like their 1MDB soveriegn fund did, then no one will even want to hold the currency.

for 11 years from 1994 till 2005 it was above 8RMB per USD. 
https://en.wikipedia.org/wiki/List_of_re...ange_rates
China I guess depends on hard or soft landing. If hard landing like what happened to Japan , like I predict, then 1USD:RMB8 is not unthinkable.

Also if next week FED does a rate rise and gives hawkish guidance, then likely USD up more again and RMB could trend towards RMB7 per USD relative to the USD appreciation.

[BlueKelah]

China faces battle over market economy status

China's battle for recognition as a market economy that would help it avoid penalties from key trade partners has been thwarted, as a key clause in Beijing's deal to join the WTO expires Sunday.

As China marks the 15th anniversary of its accession to the WTO, the United States, European Union and Japan are maintaining tough rules that protect them from cheap Chinese products flooding their markets. 

An outraged Beijing said the failure of its major trade partners to grant China market economy status on December 11 as promised was an example of "covert protectionism" and "double standard" by the West. 

Beijing highly covets market economy status, which would make it more difficult for other countries to launch anti-dumping cases against it. Dumping is when a country prices its exports below what it would charge for the same product in its home market.

When China joined the WTO on December 11, 2001 it was written into the terms of the deal that member states could treat it as a non-market economy, allowing them to impose heavy anti-dumping duties on the basis that its low prices did not reflect market reality.

China was told all that would change by the end of 2016 when it would be upgraded to market economy status.
But rather than enjoying this trade advantage, Beijing continues to face a climate of mistrust towards its exports, with critics arguing the country has not done enough to qualify for the designation.

"China will take steps to defend its rights if (WTO) members continue this old practice of anti-dumping regulation against Chinese products after the expiration date" of the accession agreement clause, China's commerce ministry spokesman Shen Danyang was quoted as saying by state media on Friday.

International trade experts say China will have to start a lengthy legal battle at the WTO against its trade partners in order to get recognition of its new status.