Posted on 12/01/2008 7:36:11 AM PST by TigerLikesRooster
China's currency falls by record against U.S. dollar
Decline may signal official policy shift towards devaluation, analysts say
By Chris Oliver, MarketWatch
Last update: 6:34 a.m. EST Dec. 1, 2008
HONG KONG (MarketWatch) -- China's currency staged a record loss against the U.S. dollar Monday, falling to the lower end of its daily trading limit, in what some analysts said is a policy shift as authorities let the yuan depreciate against the greenback in an effort to help bolster the decelerating economy.
The yuan eased to 6.8848 against the dollar, falling to its 0.5% trading limit, its lowest level since May. Against the dollar, the Chinese currency was at 6.8349 yuan Friday.
A gauge of China's manufacturing activity in November, as compiled by brokerage CLSA Asia-Pacific Markets, showed the sharpest contraction in the history of the survey, which began in 2004. The Purchasing Manager's Index fell to 40.9 in November, from 45.2 in the preceding month, its fourth straight monthly decline. Another PMI, released by the China Federation of Logistics and Purchasing, showed a similar result. That survey showed a PMI of 38.8 in November from 44.6 in October.
(Excerpt) Read more at marketwatch.com ...
Global dynamic is shaping up. It is likely that China is heading for a bust as bad as or worse than U.S..
The death of Chimerica is a good thing.
Ping!
China has been hiding their bad debts for years and it is in the trillions. Couldn’t happen to a nicer oligarchy.
The US economy is a hollow shell of what it used to be, after years of sending manufacturing jobs abroad, but it is still fundamentally more sound than China, a Communist command economy.
I think there’s a good chance that China will break down into provinces and have one of its recurrent civil wars, before finding a new stability.
Of course with Obama in charge, and decades of polarization, there’s a good chance the US will end up having a civil war, too.
Not good.
pflr
But wasn’t the Yuan being artificially kept low so that it would be easy to export to America? So if it goes lower, won’t it be easier to import?
China has age-old correction mechanism, simple but brutal.
I don't believe the USA is headed for a "bust". We're in a recession, but our economy, even despite the monkeying by Bush and Co. and the presumed monkeying that will be done by Obama and Co., is still fundamentally sound. A recession does not equal the destruction of our economy. It means that our economy is re-adjusting itself to be more in line with reality - i.e. our credit bubble is bursting, and soon people will have to live within their means again. Sure, there goes the falsely inflated prosperity, but we'll be a fundamentally stronger economy in the long run, IF we just ride it out and don't inject too much government "help" into the proces (which I'll admit is looking iffy right now).
China, on the other hand, I wouldn't count on not to get hit hard. Their GDP is over 40% exports, and that is waaaaaay too much to be considered sound when a downturn comes.
Chinese politicians desperately need economic growth to meet the demands of their people. Flat or declining growth is very bad news for them. They brought it on themselves and it is going to be ugly. For our part, we need to clean house while we are at it. We need to make it easier to manufacture goods here in the US. My 2¢’s.
we can manufacture things in the US but a few things have to happen. Union wages make items expensive, regulations and tax accounting don’t help either. Lastly, Americans are all too willing to pay for cheap and disposable items which means plastic instead of wood or glue instead of screws.
Do you know that the US has the largest manufacturing economy in the world? Your post indicates that we manufacture little or nothing.
RMB to USD:
2005: 8.08
2006: 7.84
2007: 7.39
It’s been gaining on the USD for the last 3 years, with a low around 6.8 in October of this year. That’s a 16% correction in the last 3 years, a small but steady increase in the value of the RMB. If you had $1000 in a Bank of China account in December of 2005, at 1.5% interest, you’d have $1200 today primarily because of the currency exchange rate.
Smart money, though, does its business through Hong Kong which IS pegged to a narrow band around the dollar (I believe 7.70 to 7.85) and avoids most of the taxation felt when dealing inside China.
They brought it on themselves and it is going to be ugly
No, all China did was buy the “It’s a Small World After All” BS from Rockefeller, and his merry band of CFR/Trilateralists/Globalists.
There might be another way to analyze this, but for now, that 40% overhang on imports for GDP looks pretty bad.
US$ in Yuan, Jan vs Dec
2007-12-31 December 31, Monday 7.2946 CNY
2008-01-01 January 01, Tuesday 7.2946 CNY
2008-01-02 January 02, Wednesday 7.2946 CNY
2008-01-03 January 03, Thursday 7.2755 CNY
2008-01-04 January 04, Friday 7.2695 CNY
2008-11-28 November 28, Friday 6.8254 CNY
US$ in Euros, Jan vs Dec
2007-12-31 December 31, Monday 0.684791 EUR
2008-01-01 January 01, Tuesday 0.684791 EUR
2008-01-02 January 02, Wednesday 0.678518 EUR
2008-01-03 January 03, Thursday 0.67861 EUR
2008-01-04 January 04, Friday 0.676315 EUR
2008-11-28 November 28, Friday 0.787774 EU
The ruble is devaluing quickly as well.
Are you counting making hamburgers as "manufacturing" (as the goverment does)?
How can we manufacture anything here if there are no tariffs and those same items can be manufactured more cheaply elsewhere? It's not possible!
And, if we're the #1 manufacturer, why did Bush find it so difficult to find boxes reading 'Made in America' to serve as the backdrop for his various economic propoganda speeches?
I'm sure we still manufacture some things.
“How can we manufacture anything here if there are no tariffs”
oh please...we can’t do anything without the govt nanny state? Get off your butt and find a way of making things cheaper.
Hint: it’s called robots.
http://reason.tv/video/show/451.html
I totally agree. To this end, I would say that we:
- Drastically lower taxes on businesses, to encourage them to "in-source" jobs back to the USA.
- Replace our trade barriers with lower-end, third-world nations (incl. China) which have received a lot of our manufacturing capacity arrive over the last three decades.
- Break the power of the unions, so that wages and benefits are brought back into line with where they "should" be if the market were operating unimpreded. The unions are a lot of the reason why our workers are priced out of the marketplace.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.