Posted on 09/07/2015 6:19:50 AM PDT by blam
Ben Moshinsky
September 7,2025
China is spending billions propping up its struggling currency and as a result its foreign currency reserves fell by a record amount last month.
China spent $93.9 billion in August, reducing its cash pile to $3.56 trillion. This is almost double the drop in July, when $50 billion was spent.
The People's Bank of China is spending all this cash on propping up its currency, the yuan, which has been suffering since China devalued it against the dollar.
China's central bank is selling the dollars it holds and buying yuan in a bid to boost the price by juicing the supply and demand ratios.
But the problem for China is that as it burns through its reserves at a faster pace, it signals to the market that the currency has further to fall — the currency needs propping up, meaning the demand is artificial.
That's speeding up a capital flight from the country. A falling currency makes it more expensive for people to shift their assets overseas and if it looks like the yuan is going to keep falling, people make a run for the exits.
And as money flees the country, China is forced to spend more to prop up the currency, which causes more angst for investors — it's a vicious circle.
(snip)
(Excerpt) Read more at businessinsider.com ...
Gee, a country that has been practicing Communism ever since 1948, has gulleted the golden jewel known as Hong Kong, and has since attempted to have a bi-polar identity with a Communist government attempting to understand and use the ‘pariah’ known as Capitalism, is finding out that all this time, they have not understood that their political system is to blame.
Caution - Business Insider is nothing but a mouthpiece for the Socialist Ruling Elite. This could easily be a lure to make the market do what the Ruling Elite want you to do - buy what they already own, or sell what they are looking to buy.
Somewhat supportive of your point, last I heard legendary investor Jim Rogers was still quite bullish on China. In fact he anticipates this century to be the Chinese dominated century, much like the 20th was ours.
He always did acknowledge there would be major bumps along the way, but the trajectory of America (down) and China (up) remain intact.
I will try to check to see what’s on his mind now, but I doubt he’s changed it on China.
As a bright guy said on CNBC....
China has central planning by engineers, scientists, and mathematicians.
And the US has central planning by lawyers.
Neither is good, but by definition we lose.
Given the pile of cash they have, they could do this $50,000,000,000.00 seventy-two more times before they run out of money (assuming they don’t get more, interest, etc). So who cares? Commie dogs!
A problem I have with the idea that China dominate this century is the effects of the one child policy. China is in a race between getting rich and getting old and set backs like what appears to be happening slows down getting rich, but nothing slows down the getting old. Also consider how vast amounts of capital and productivity have been wasted on projects that return no value like the ghost cities.
Not that America doesn’t have its own set of seemingly insurmountable problems, but ours can be fixed in a relatively short time by rediscovering our cultural traditions and educating people about them. We still have a reasonable balance between young and old (though ours is really starting to skew too) that the young can carry the burden is given a decent education and incentives. Reset the country on its moral foundations , cut the regulatory red tape, educate people and cut them loose to fend for themselves and this country can surge back. Not nearly as easy as it sounds, but surmountable in ways that China’s age demographic problems are not.
Protectionism doesn't work.
Tariffs don't work.
The job situation in this country isn't about "China...China...China". It's about making the country more businesses friendly and getting government out of regulating and taxing our business. To Trump's credit, he is for lowering (or zeroing out?) corporate taxes.
They are worth a try since Free trade didn't increase jobs nor did tax cuts under Bush. Time to try protectionism and tariffs.
1) Demographics, as you mentioned.
2) A shortage of potable water, and that supply is shrinking rapidly.
3) A terrible air pollution problem.
4) Corruption at all levels.
I don't think any of these problems are solvable by the current regime. Demographics are baked in, you can't do much. A crash desalination program might help the water supply problem, but where is it? They continue their industrial practices that exacerbate air pollution. Corruption is driving all these other problems and is a large factor in the flight of capital.
There is no way out. The country will implode.
I've read that anyone with any money are leaving the country ASAP.
Ask a real estate broker in Los Angeles, San Francisco, New York, Toronto, Vancouver if buyers are pouring in from China.
Pei Ping.
I stuck to number one because I see 2&3 as engineering and investment problems and 4 is a problem we have here as well and if I consider it a hurdle we could overcome overcome it they might too. Both of our countries have big problems.
China ended the one-child policy a while ago.
The US has a long tradition of following the law and the legal structure of the society goes back to the Old Testament, the Magna Carta, and English common law which the colonists brought over with them. There is no such legacy in China. Corruption is embedded in their society. I don't think this regime will reform that. It will take many generations if it is to happen at all.
Pollution and the demographic problems stem from corruption. Only a corrupt society would impose a "one child" policy or dishonor female children to the point of eliminating them because of their sex, hence the demographic problem.
It is easy to buy your way out of pollution problems in a corrupt society.
The water problem could be solved by engineering but as long as the elites don't consider it a problem, no one will address it in that way, see California.
Yes, both countries have big problems, but one of them is culturally unable to address the solutions.
I think you're being incredibly optimistic. Fact is, we have more people in this country taking Federal monies in one form of welfare payment or another, than we do working and actually paying for those welfare "benefits."
We see that reflected in terms of national debt, welfare payments including food & housing, healthcare and more.
Once you add on Social Security and Medicare, Social Security Disability Income (which is being over-loaded by many who simply ran out of unemployment) the problem here in the U.S. is damn' near intractable.
I hate to say this but I don't see how we "grow" our way out of this. Too many moochers in this country who are going to fight tooth and nail to keep what they perceive as being "theirs."
Lord knows I wish I was wrong .....
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