Chinese currency devaluation

scorza

scorza

scorza

Caporegime
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http://www.theguardian.com/business/2015/aug/12/china-yuan-slips-again-after-devaluation

Any thoughts on this? Yuan devalued by ~4% over two days to the surprise of markets. This is quite annoying really, by keeping their currency low the sneaky Chinese are aiming to start importing western jobs again - just as the UK economy is recovering. All those trips by Cameron and Osborne to persuade the Chinese to buy British imports have been somewhat undermined. It's my contention that the currency wars of the last decade played a significant part in the crash of 2008 but I'd need to write an essay to spell out my arguments and I cba. I do think there should be some controls on how much business we do with countries that don't play nicely.
 
Apply tax to Chinese goods?
Tax the consumer has to pay?
When half of what we buy is made in China, to basically increase our own inflation by 2% to combat Chinese trying to make things cheaper for us.

No, I doubt that would work.
 
Hikari Kisugi said:
Apply tax to Chinese goods?
Tax the consumer has to pay?
When half of what we buy is made in China, to basically increase our own inflation by 2% to combat Chinese trying to make things cheaper for us.

No, I doubt that would work.
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But at least we'd have the right level of inflation for our economy. The problem with the Chinese "helping us" keep inflation low is that it masks problems in our economy such as excessive debt building. "Live within our means" - isn't that what we're supposed to do now?
 
Well, RMB was a nice place to earn a steady 5-7% for the last few years, fortunately I got out a few months ago (not through any prescience on my part, just luck, the CCP changing rates at will was always the risk).
 
Kermit said:
Could the EU and US should simply counter Yuan devaluations by applying the same percentage import tax to Chinese goods and services.

One thing that annoys me about developing countries like China is that while of course we enjoy goods (some cheap and rubbish and others quite well made) at incredable prices even after nominal taxes are applied (or not if bought direct via the auction site) I'm fairly sure many of the higher value goods the EU make such as cars (Mercs, Jags, Scotch Whiskey) etc have very high import taxes applied by the chinese

Example (figures not checked)
£50K Jaguar in UK costs a well off chinese person £50k+£30k tax
£15 whiskey in UK (already with high taxes applied) is £20 or more to those in China that can afford it.

I might well be wrong on their heavy import taxes on many western goods but don't think so
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You might well be right, which is why virtually all the car manufacturers have plants in China manufacturing the cars to be sold locally there
 
Will this force us to raise interest rates quicker and then cause a much needed housing market collapse? If so, I'm all in!
 
Scam said:
Will this force us to raise interest rates quicker and then cause a much needed housing market collapse? If so, I'm all in!
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No, the opposite - it will keep inflation lower as goods will be cheaper. Low inflation = lower interest rates = increased demand for housing and higher house prices.
 
It's not really sneaky - if they had a properly floating exchange system, it would have devalued on the low performance of exports anyway.

As for UK house price crashing: it's pretty silly to be yearning for such a thing. Lower house prices would be preferable (probably achieved with an increase of supply: i.e. buildin gmore houses), but a market crash is really not a good thing
 
Desperate times, desperate measures although I doubt they will work. As a side note, it's interesting to see just how insignificant China is in the big picture, their stock market has been burning for weeks yet the other markets barely seemed to care. Had that happened in the US/UK/Japan, the effects would've happped instantly and globally.
 
I know nothing about economy, but isn't this the same as UK and quantitative easing? I follow the GBP-CNY exchange rate daily as I live in China, but get paid in sterling. Every time UK goes through quantitative easing, it seems to have the affect of weakening the pound.

So for a purely selfish reason, I'm very happy the yuan has got weaker. In my third year here, in 2004, the exchange rate was 17 yuan to the pound!

Kermit said:
I might well be wrong on their heavy import taxes on many western goods but don't think so
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You are not wrong. A 100g jar of Nescafe Gold Blend costs over £10 here!
 
Its not a complete free ride for China. Their inputs like oil, iron ore and so on are all priced in dollars and those just got more expensive. They likely gained far more from the drop in commodity prices over the last year than a few tweaks to an already heavily managed exchange rate.
 
Zethor said:
Desperate times, desperate measures although I doubt they will work. As a side note, it's interesting to see just how insignificant China is in the big picture, their stock market has been burning for weeks yet the other markets barely seemed to care. Had that happened in the US/UK/Japan, the effects would've happped instantly and globally.
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Thats because the traders know its just the market correcting its self as a bubble has popped. The Chinese stock market is still up over last year and the last 5 years.

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Interesting that today it looks like the British steel industry is under serious threat - with Redcar being mothballed and Tata Steel announcing 1500 job cuts at various sites. One of the main reasons is the price of Chinese steel exports thanks in no small part to the devaluation I mentioned in the OP. IMO this is unacceptable and China must face consequences for this, possibly in the form of tarrifs on their exports of steel. The only problem is that we don't negotiate issues like that with China, the EU does on our behalf - what are the chances that the EU will give a toss about unemployed steel workers in the north of England and Scotland? :mad:
 
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