Yuan

October 12, 2012

Read how Stock Markets, Copper, Cotton, Solar, Steel, Fired Western Miners all are pointing to an Ominous Chinese Hard Landing

China China has been hurting tremendously from a global slowdown with its powerful export industries choking under the weak demand. While we had predicted that China […]
January 14, 2012

China's Hot Money Outflows , Reduction in Forex Reserves May Indicate Coming Slowdown

China has reported the first decrease in its forex reserves in a qtr since the 1998 crisis. The Chinese Foreign Exchange Reserves which are humongous at over $4 trillion has shown a $100 billion decrease in Nov and Dec 2012 .While the sharp decrease in the Euro may account for some change , there is also anecdotal evidence that the hot money is flowing out of China . Note earlier Hot Money was pouring into China given the potential of yuan appreciation but with the potential of a Chinese Hard Landing ,the opposite may be happening . China has a distorted economy heavily dependent on exports and investment for growth . However changed macro economic conditions make this model unsustainable . How China manages to transition out of this investment export fueled condition is an open question . That they must is in no doubt nor the fact that China's 10% GDP growth days are definitely over.
January 3, 2012

Chinese Wind Tower Companies face Dumping Danger after Solar Panel Makers

Chinese Solar Panel Producers have become a famous target of an anti dumping petition brought on by Solarworld and other companies.Though US Solar Installers have opposed the move as it will increase the solar panel prices in US,ITC has gone ahead with the investigation.Though the charges of subsidies and efficiency can be debated,the fact remains that US Solar Panel Producers can't compete with Chinese Solar Panles.Massive industrial overcapacity in China has made the prices of products very cheap and made it difficult for Western producers to compete in most areas such as Chemical,Renewable Energy,Textiles etc.The Chinese win because of their low interest rates,cheap labor,free land,massive government support.
January 2, 2012

Chinese Challenges in 2012 and What China Intends to do about it (Nothing Much)

China faces multiple challenges 1) Slowdown in Europe and USA means that their exports are sputtering and manufacturing has already started contracting 2) Protests in cities and villages grows against rampant corruption and land grabbing by Communist officies.Lack of democracy means violent protests at times. 3) Debt is becoming a huge problem with local government vehicles facing trouble as they can no longer raise money from real estate sales which has fallen by 20-25% 4) Massive industrial overcapacity is being exported outside.This has made the other trading nations put duties and curbs.A big trade war with USA cannot be ruled out.Chinese solar and wind products faced countervailing duties and dumping charges.China has already imposed high duties on US car imports.
April 2, 2011

India Criticizes Renminbi Undervaluation,Calls for Diversifying away from Chinese Imports

India has become the latest country to join in the bashing of Renminbi undervaluation saying it leads to a massive advantage for Chinese exporters.A research paper from India's Central Bank says that its artificially boosts China giving it a competitive advantage over Indian exports.Note Brazil another one of the famed BRIC quartet has too been complaining about Chinese imports swamping its industry.Note Brazil has seen massive currency appreciation in recent years due to a combination of high interest rates and strong economic fundamentals.
December 21, 2010

Vietnam's Currency Problems underline Political Strength of Dollar

The Dollar is being relentlessly attacked by Bears due to massive QE program unleashed by the US Fed.However the US Dollar continues to be a safe refuge in many parts of the world.For countries affected by major politicial and economic problems,dollar is looked upon a safe haven for capital preservation.Many of these places have a history of high inflation and major political upheavals.In these places,Gold and Dollar are looked upon as equals for preserving wealth during times of chaos.Vietnam serves as a reminder where even citizens of relatively fast growing stable economies look upon as Dollar as a rock of stability.The South East Asian country has seen high inflation in recent times and numerous devaluations of its currency.The Communist led country has tried to replicate China in many of its policies some of which have backfired.The recent scandal and debt default of a major government owned company has shaken the confidence of investors.With high inflation and depleting foreign reserves
September 27, 2010

Currency Chaos – "Buy Dollar and Sell Local Currency Club" Growing Rapidly

Brazil,Peru,Colombia and now South Korea have all joined the "Buy Dollar and Sell Local Currency" Club.The Brazilian Real has appreciated by 34% in the last 2 years while similar stories lie behind Peru and Colombian interventions as well.With yields at near zero,Developed World Investors are pouring money into debt,equity and commodities fueling some of the Emerging Markets to all time highs.Some of the valuations like the Indian market are already stretched with local investors shunning the bubble markets.Countries with large Export Sectors like South Korea are particularly sensitive to currency appreciation and are joining in the chaos that the currency markets have become.The $4 Trillion Currency Markets are too big for a single country to take on as the Swiss found out losing Billions of Dollars in the process.The Currency Chaos is set to persist as the Financial System has become Unstable with Huge Debts,Moral Hazard and Central Bank Meddling.Gold has touched an all time high of $1300 with Silver following closely.With such volatility in Currencies,Business has become quite difficult with faith in currencies eroding at a fast pace.
September 17, 2010

Rise of American Protectionism – Two cases against China in WTO and "Buy American" Bills by Congress

USA is increasing its protectionist actions recently filing 2 cases in World Trade Organisation against China over Electrical Steel and Credit Card payment providers.Only last week a US Union had filed a complaint with the US government about the Predatory Practices of Chinese Green Companies.USA thinks that China has unfairly put duties on US made Steel and it is locking out Mastercard and Visa from the credit card processing market in China.There is little doubt that China indulges in favoritism and implicit and explicit support of domestic companies.However it the scale that is the only difference .Like all other things China also implements its policies king size.MNCs in recent times like GE,Google,Siemens have all criticized Chinse discrimination against foreign companies.However WTO remains an ineffective body to resolve complex Trades Disputes.The US Congress is also getting into the China-Bashing Act by passing 2 bills that mandate "Buy American" clauses.The US has already antagonized the Indian IT Industry by specifically targeting the Indian companies like Infosys and Wipro.These new bills target China making it mandatory for government departments to buy American made goods.With November Elections fast approaching,politicians are outdoing each other in protectionist rhetoric.
September 15, 2010

Has Competitive Devaluation of Currencies Started with Japan intervening to weaken the Yen

With Every Country wanting to Use Exports to get out of their Tough Fiscal Situations,it does seem that Currency Manipulation will become a mainstream activity.Gold and Silver are already touching new highs and with countries hell bent on competitively devaluing their currencies,expect the precious metals to go even higher.
September 14, 2010

Currency Wars seems inevitable as Global Economic Faultlines grow Deeper

Global Imbalances back to pre-Lehman Days Global Imbalances are growing deeper by  the day as the world returns to its unsustainable pre-Lehman days of Unbalanced Trade.Trade […]
September 9, 2010

Massive Buying of JGBs by China contributes to Yen Appreciation making Japanese see Red

One of the factors behind the Yen Rise is the Chinese record buying of Japanese Government Bonds (JGBs).The Japanese Finance Minister has become concerned as the Japanese cant reciprocally buy Chinese Government Bonds which are not freely traded.Note Japan has a huge government debt load of around 200% of Japans GDP which is mainly financed by domestic investors.China with its humongous Foreign Reserves is the biggest player in the Foreign Exchange Markets Today.
July 19, 2010

China's unfair treatment of MNCs comes under fire from Siemens and BASF also

China has recently come under strong criticism for unfairly treatment foreign companies.While MNCs are looking towards China as a source of growth ,Chinese are only interested in Technology that these companies offer.Rules and regulations are such that foreign companies are forced to tie up and share technology with local partners.This inevitably leads to local partners going on their own and competing with the same companies they got their technology from.China's Wind Energy Industry is a testament of this fact
July 17, 2010

What US and Bangladesh have in common – Unemployment and Low Wages

The Global Financial Crisis is truly global in its character of inflicting misery and impoverishment amongst workers.Bangladesh and US which are two highly disparate countries in […]
July 5, 2010

Falling Stock Markets and Economic Indicators makes Chinese Leadership wary

China’s powerful Economic Growth Engine is showing definite signs of a major Moderation.Earlier reports indicated a sharp slowdown in Industrial PMI levels even as a US […]
June 22, 2010

China's Currency Appreciation – Much Ado about Nothing

China’s Central Bank Statement which signaled more flexibility in yuan’s fixed exchange rate to the dollar led to a major market rally in commodities ,emerging markets […]
June 20, 2010

Strong Domestic Reaction makes China's Central Bank backtracks on its statement on Yuan Reform

China’s Central Bank had released a statement on Yuan Reform seeking to defuse international pressure.The statement which rambled about recovery,BOP,world macro situation,yuan history had a brief […]
June 19, 2010

China seeks to defuse pressure on Currency Appreciation ahead of G-20 through a "Statement";IMF and Obama rush to praise Yuan Reform

China and US Tensions increasing on Currency Valuation The US Senate and President Obama have been increasing pressure on the Chinese Government to revalue the yuan […]
June 17, 2010

MNCs in China face higher wage costs and labor unrest;Foxconn,Honda,Toyota all increase worker salaries

Labor shortage and improved opportunities for workers driving up wages China’s massive manufacturing base near the Eastern coast has been driven by cheap migrant labor from […]
June 11, 2010

Geithner and US Senate perform the "Good Cop/Bad Cop" Routine on China regarding Yuan appreciation

China has again come under increasing pressure from the US to appreciate the yuan against the US Dollar removing the hard peg it has against the […]
June 1, 2010

Seven Reasons that China's Economy might be slowing down

China has been called the “savior” of the world’s economy as its massive $586 billion  Government Stimulus and Easy Money policies sustained over 10% GDP growth […]
May 23, 2010

China to keep yuan stable – Chinese Commerce Minister

The sharp appreciation of the yuan against the Euro and the other currencies would make China think of depreciating the yuan against the dollar rather than […]
May 17, 2010

Will China "Devalue" Yuan against the Dollar?

The Euro’s rapid 15% decline against the Euro has had an important side effect against the Yuan which is pegged to the dollar.While currencies around the […]