INtersting info. Sounds like they are trying to get their value up. Their consumerism has also grown with their youth making more and spending more. Sounds like thy have a good balance on the wealthy tryig to keep them down by brining up the poor. Is it possible they are trying to close the wealth gap?
That was the case about 2 years ago. I think that trend has slowed significntly. The USA has shown no sign of growth for a very long time. And the Chinese are monitoring the unemployment. But I think the Chinese have been investing heavy in South America and Mexico, as their countries growth outlook is better and their return on investment is 8 to ten times the rate of a US government investment. Plus, China needs their oil resources. I was supprised to recently see that there are a lot of Chinese culture and asian food in the South Americas. Seems like their long time trade was hiding under the radar.
china is also spending billions in canada and australia......they are in desperate need of oil and are willing to part with their cash in order to get it!
Please get your self informed on the subject, gold and other commodity trade in China is also very restricted, the only legal market to trade it is the Shanghai exchange and recently they cracked down again on the unauthorized onces, unless you think most people are going to "invest" in gold VIA buying gold jewelries.
Where do you come up with this stuff? China is able to purchase vast amounts of United States Treasuries due to their current account surplus with the U.S. With this said, Chinese investors purchase U.S. sovereign debt for a reason; it certainly is not to "import America's inflation."
Well no, he is correct in saying that China's monetary policy is in effect importing inflation, since it's lower than optimal exchange rate does in effect push up it's real inflation, while in effect it also lower ther higher than optimal USD's inflation. It is also relying a lot on the lower exchange rate for it's trade surplus since it is very heavy in labor intensive industries. Though the conclusion he leads to are way too ..... optimistic to say the least.
Chinese inflation is driven by economic growth, not some silly notion of exchange rates. Cross national trade surpluses are a result in a savings imbalance between trading partners. The fact that the RYB is undervalued is irrelevant.
how do you think china buys treasuries? They issue new yuans and then turn around and buy dollars with them....and this is how they import america's inflation! I have posted in more detail on several posts but I am getting tired of constantely repeating myself!
uhmmmm...the chinese government is actually encouraging its citizens to buy actual gold and silver coins...I think its you that needs to be better informed!
again I must repeat myself....I wish you guys would bother to read my other posts. merchants sell stuff to the US and in turn they get dollars.....the merchants then sell those dollars to the chinese government and get yuans in return so that they can meet the payroll and other expenses in china. Now has it ever occured to you that in order to buy those dollars from the merchants that china needs to issue new yuans?
Nonsense. Chinese inflation is undeniably driven by economic growth. A currency board/fixed peg arrangement within a nation with a persistent current account surplus does not equate to "importing inflation". Are we to believe that China also imports European inflation? You have posted a notion inconsistent within the mechanics behind foreign exchange markets and international trade. Making up concepts to suit your argument is a rather ineffective debate strategy.
economic growth within itself does not create inflation...that is typical keynessian nonsence. However, issueing a currency in order to buy another currency does create inflation especially when you do it to peg to the titanic....uhmmm I mean the dollar!
Your opinion does not suffice. You are conflating the situation as well as mixing up the mechanics. A central currency board redeems a national currency in exchange for a foreign currency in place of a floating exchange system (where the holder of foreign currency sells it to the open forex market). The reason a CCB (central currency board) does so is due to a various mandates that encourage a current account surplus with that particular country. You see, if China were to suddenly let the RYB appreciate to its fundamental value (there are $3 trillion in foreign reserves that back the RYB, not to mention a high domestic rate of saving), the U.S. would still have a current account deficit. The only difference would be with whom. Instead of $200 billion a year being pushed into China from trade with the U.S., lets say $100 billion would flow into China and the other $100 billion would flow into cheaper labor nations such as Vietnam, Indonesia, India, Pakistan, etc.... This gets us back to savings rates: the U.S. current account deficit is due to a savings imbalance and not your made up notion of the global forex market and international currency regimes.
a few things you are overlooking in your flawed logic. First if the yuan was allowed to appreciate then the chinese government would no longer need to buy dollars in order to peg the yuan. This would be catastrophic for the dollar as then the US would no longer be able to finance its huge deficit. But thats america's problem not china's. Secondly with a higher yuan all of the sudden there woul be a billion chinese that can now afford what china produces. Americans on the other hand would be paying double the price at best buy or walmart....again.....america's problem not china's