[sgbuffett]

The capital flight will accelerate because the US side is raising rates causing Yuan to plunge.

So China is stuck with a slowing economy. Reserve ratio cuts are not powerful enough and infrastructure spending results in misallocation.- High speed rails that are under utilised, roads etc but China has no choice but to go this route.

Many solutions are political in nature and cannot get done like cutting tariffs and unwinding the trade war.

Also unlike in 2008, when US and China had relatively good relations when both sides could coordinate an exit from crisis, should anything go wrong it will be harder this time.

Right now each side is just fixng its own problem in an uncoordinated manner.

[sporeguy]

The capital flight will accelerate because the US side is raising rates causing Yuan to plunge.

So China is stuck with a slowing economy. Reserve ratio cuts are not powerful enough and infrastructure spending results in misallocation.- High speed rails that are under utilised, roads etc but China has no choice but to go this route.

Many solutions are political in nature and cannot get done like cutting tariffs and unwinding the trade war.

Also unlike in 2008, when US and China had relatively good relations when both sides could coordinate an exit from crisis, should anything go wrong it will be harder this time.

Right now each side is just fixng its own problem in an uncoordinated manner.

Good move by China!

Low interest rate environment spurs economic activities while high interest rate environment results in recession!

And China can afford low interest rate environment because they have tonnes of extra money to play with - imagine the USD3.1 trillions of reserves to play with ... while US is in hundreds of trillions of dollars in DEBT! And 1 critical fark up manoeuvre US has made - politicised the US dollars warning other countries the danger of their savings being locked up by US in the event of hostile moves and intimidation by US! In order to attract money US has BUT NO CHOICE to increase its interest rate ... and worse US is spending trillions on proxy war instead of using the money for re investment! 

So please think before posting nonsense about China low interest rate policy and zero covid policy ...

China is not suffering - US UK Australia are all facing economic collapse!

[cityhantam]

Capital flight?

I don't think so.

Many foreign investors invested in China earlier when  Yuen Chinese Yuan was strong. Now that Chinese Yuan has depreciated against USD, it's not worth moving the money out of China while the returns from investment in China is good.

China's strategy is very good.

[maxsanic]

The capital flight will accelerate because the US side is raising rates causing Yuan to plunge.

So China is stuck with a slowing economy. Reserve ratio cuts are not powerful enough and infrastructure spending results in misallocation.- High speed rails that are under utilised, roads etc but China has no choice but to go this route.

Many solutions are political in nature and cannot get done like cutting tariffs and unwinding the trade war.

Also unlike in 2008, when US and China had relatively good relations when both sides could coordinate an exit from crisis, should anything go wrong it will be harder this time.

Right now each side is just fixng its own problem in an uncoordinated manner.

I don't think that's the only reason, the CNY depreciation and so called capital flights is being ridiculously exaggerated by the western press as usual. 

First off compared to other major trading currencies such as GBP, Euro and JPY, the CNY depreciation is relatively mild. The raising of US interest rates followed by USD appreciation and repatriation of highly liquid foreign denominated assets is an expected outcome that is not unique to China in any way.

Secondly, it is not entirely in China's interest to maintain the CNY at an elevated level compared to other foreign currencies, something which will definitely happen should it choose to maintain USD parity. Maintaining USD parity has significant repercussions on exports and inflation as well. Considering their CPI is relatively healthy while economic activity has been impeded by the global economic slowdown and COVID measures, letting the CNY depreciate mildly against USD does seem like a sensible choice.

The western press keeps arguing that China is in trouble and attempts to cite the fact it dares not adopt loose monetary policies and/or maintain CNY parity as evidence. This in itself is a false premise - Regardless of Federal Reserve actions, the PBOC has never given any indication in the past few years even in the midst of the Wuhan outbreak that loose monetary policy is their preferred way to generate economic growth.

All these China doomsday articles from Bloomberg/ CNBC/ WSJ appear to be predicated on a strawman generated by extrapolating their own government's actions. They are simply making assumptions that what their own US / European government have been doing is the "correct and standard" way and then concluding that anyone that does not follow their path is in trouble. 

This narrative is rather comical as it is only 12 months ago that they were going on and on about China manipulating its currency to be artificially low to steal from the free markets, now suddenly a CNY drop is evidence of economic troubles and a strong USD is suddenly some tok kong thing.

[sporeguy]

I don't think that's the only reason, the CNY depreciation and so called capital flights is being ridiculously exaggerated by the western press as usual. 

First off compared to other major trading currencies such as GBP, Euro and JPY, the CNY depreciation is relatively mild. The raising of US interest rates followed by USD appreciation and repatriation of highly liquid foreign denominated assets is an expected outcome that is not unique to China in any way.

Secondly, it is not entirely in China's interest to maintain the CNY at an elevated level compared to other foreign currencies, something which will definitely happen should it choose to maintain USD parity. Maintaining USD parity has significant repercussions on exports and inflation as well. Considering their CPI is relatively healthy while economic activity has been impeded by the global economic slowdown and COVID measures, letting the CNY depreciate mildly against USD does seem like a sensible choice.

The western press keeps arguing that China is in trouble and attempts to cite the fact it dares not adopt loose monetary policies and/or maintain CNY parity as evidence. This in itself is a false premise - Regardless of Federal Reserve actions, the PBOC has never given any indication in the past few years even in the midst of the Wuhan outbreak that loose monetary policy is their preferred way to generate economic growth.

All these China doomsday articles from Bloomberg/ CNBC/ WSJ appear to be predicated on a strawman generated by extrapolating their own government's actions. They are simply making assumptions that what their own US / European government have been doing is the "correct and standard" way and then concluding that anyone that does not follow their path is in trouble. 

This narrative is rather comical as it is only 12 months ago that they were going on and on about China manipulating its currency to be artificially low to steal from the free markets, now suddenly a CNY drop is evidence of economic troubles and a strong USD is suddenly some tok kong thing.

Wow ... really insightful! Non biased objective accurate assessment of the situation rather than making claims without substantive evidence.

I must say again: An excellent prognosis of current situations in US and China

[revealer]

The capital flight will accelerate because the US side is raising rates causing Yuan to plunge.

So China is stuck with a slowing economy. Reserve ratio cuts are not powerful enough and infrastructure spending results in misallocation.- High speed rails that are under utilised, roads etc but China has no choice but to go this route.

Many solutions are political in nature and cannot get done like cutting tariffs and unwinding the trade war.

Also unlike in 2008, when US and China had relatively good relations when both sides could coordinate an exit from crisis, should anything go wrong it will be harder this time.

Right now each side is just fixng its own problem in an uncoordinated manner.

China keeps changing its monetary control policies and they have been using 7 or 8 methods so far to make sure CNY is under control to curb inflation and promote growth.   Of late,  they have been trying to use a basket of trading currencies to control the exchange rates just like Singapore.   Singapore does not use the interest rate to control its monetary policy.  

https://www.cnbc.com/2018/08/06/china-mo...-rate.html

[webinarian]

Due to rising interest, USD is rising against other currencies including Yen and Euro.  

The strange things is why Ruble is the exception? It means Ruble is now the strongest currency even against USD even though it is even kicked out of SWIFT.     







.

[webinarian]

You know what Alam Kok said about why ruble is stronger than USD?    

This self-claimed know all but actually know nut said, Putin makes Ruble stronger to save his face.  

Alam, if Putin can manipulate ruble, then, Biden and EU don't have to spend time and effort to sanction Russia liao lor.   

Alam really shows he himself know nut but pretend to be know-all.   

  

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