Skip to comments.China’s central bank to pump US$110 billion into economy as US trade war intensifies
Posted on 10/07/2018 8:54:27 PM PDT by JohnThree3to16
https://m.scmp.com/economy/china-economy/article/2167332/china-central-bank-seeks-pump-extra-us110bn-economy-us-trade war intensifies
Sidney Leng Zhou Xin UPDATED : Sunday, 7 Oct 2018, 11:24PM
China on Sunday announced a big cut in the amount of cash commercial banks have to put aside at the central bank, a move that will make an extra US$110 billion available for lending as Beijing works to shore up confidence in its economy and markets.
I wonder how the Chinese like being gutted by President Trump as he stands there facing them with a pleasant smile on his face?
I do not understand the Chinese reaction to Trump. He is widely admired and respected there. He has won every trade battle so far from my view. The Chinese have far more exposure to a trade war than we do.
Yet, they continue to stubbornly refuse to admit unfair practices, intellectual theft, or make concessions. This is a sign that they are hurting, but it is not a wave of the white flag. The longer they hold out and refuse to come to the table the more confusing it becomes. The best explanation I have heard was that they plan things out so far in advance that something this drastic in the short term simply does not compute for them. Who knows?
Personally I hope the Chinese keep it up.
Will this result in increase or decrease of Chinese currency value in the world?
If the Chinese are going to inflate their currency, that is not good news for stability. Inflation here is going somewhat unnoticed because of built in wage hikes(socialism). In China(communism)it may not be so cut and dried for the locals. All fiat currencies go inflationary eventually.
What will be the resulting impact to our economy?
If I understand correctly basicly they are printing more money?
Quantitative Easing? Am I understanding this correctly? Essentially devaluation of their existing money supply which obviously increases the value of other currency in trade?
I really have no idea but I would be hedging towards a decrease.
This is an interesting admission from China. However, loans to help businesses float through a bad time is not a long-term solution. Our country would reduce the interest rate to do this. I cant see how China intends to make this work from what is said. Making money available without a reduction in final interest rate (the overnight rate doesnt really do this) is interesting.
The markets are saying “not enough” LOL!
China is so far out on the limb...
am I misunderstanding what they are doing. The way I read this they are printing more money which results in DEVALUATION correct?
It’s nuts isn’t it?
I think international investors tell China that Trump won’t do what he says... because they don’t believe it themselves!
Explain how this puts them “on a limb”?
I’m sure that it will be just as effective as the hundreds of billions of dollars that 0bama gave away to friends and assorted fat-cats every time he wanted to ‘stimulate the economy’ with ‘shovel ready jobs’.
Maybe a few of the buildings in a few of their ghost cities will get a new coat of paint.
Chinese Communist..centrally planned economy. Totalitarian government. No freedom of speech. Only politically correct speech. Yet the peasants do not seem to get any subsidies at all. I thought Marxist was supposed to be about giving free stuff to the poverty people. Is it possible that the Chinese are Totalitarian Capitalist with only regards for themselves and complete disregard for the poverty people?! Sort of like the robber barrons of the American 1900s ?
That is close to what I was thinking but not 100% sure if that is what China is really doing or if I am not understanding the economic impact
They’re out on a limb NOW.
A decade ago China could drop it’s currency any time because exports were (say) 90% of their balance sheet.
But now China has expanded into other countries and needs to keep their currency up.
A cheap Yuan is good for exports, but bad for foreign investment.
The Yuan’s down about half a percent right now.
They are not expanding the money supply. They are making more capital held in reserve by banks available by reducing a different requirement of interest charged overnight and the difference will be loanable.
I explained that to a Chinese H1-B lady just a few weeks back.
She had told me their president, Xi, had so much cash he could make a mansion out of the physical bills. I said that he was a very bad communist.
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.