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My Opinion On Chinese Monetary Policy

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My Opinion On Chinese Monetary Policy

Unread postby mattduke » Fri 10 Dec 2010, 19:40:09

I think that what is happening now in China is that the government is preparing for its ultimate emancipation from the dollar. When that day comes there will be much turmoil and panic so the banks must be prepared. Simultaneously China is suffering across the board strong market price increases which risks trouble. The obvious step is to give a giant dividend to all renminbi holders in form of a revaluation up. That day will come. In order to prepare, gradually increase bank reserve requirements towards 100%. This simultaneously absorbs the dollar inflow without further stimulating prices, and strengthens the position of Chinese banks to weather the coming Dollar storm. When that day arrives Chinese banks will be in a SOLID financial position from which to watch the US ship go under.

http://news.yahoo.com/s/nm/20101210/bs_ ... na_economy
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Re: My Opinion On Chinese Monetary Policy

Unread postby the48thronin » Fri 10 Dec 2010, 21:07:42

lol
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Re: My Opinion On Chinese Monetary Policy

Unread postby SeaGypsy » Fri 10 Dec 2010, 21:52:15

$this->bbcode_second_pass_quote('the48thronin', 'l')ol


Actually I think this is a pretty spot on assesment.

There are definitely plenty of bubbles in the overall Chinese economy; but there is still the fundamental productivity equation which will continue to pull resources from everywhere with a surplus.

Americans have for too long been dismissive of Chinese financial accumen and ignorant at the level of collusion between the Chinese government and corporate/private wealth holders/investors.

Paradoxicly, as alluded to often by AmericanDream; China is a capitalists wet dream. Short of mega war, nothing is going to interupt China or the USA's trajectories over the next several years.
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Re: My Opinion On Chinese Monetary Policy

Unread postby Outcast_Searcher » Fri 10 Dec 2010, 22:46:32

$this->bbcode_second_pass_quote('SeaGypsy', 'P')aradoxicly, as alluded to often by AmericanDream; China is a capitalists wet dream. Short of mega war, nothing is going to interupt China or the USA's trajectories over the next several years.


Doesn't China have a HUGE demographic problem due to the aging of its population, exascerbated by it's one-child per couple rule?

I'm not saying it will be the end of the world, but it seems a significant impediment.

I suspect that's part of what hit Japan in the 90's - a demographic problem. With an older population than the U.S., they were just ahead of us.

This is farther out than the next several years, but not to be completely dismissed.

Plus, if you can believe the MSM, China will have to put the brakes on an inflation problem, real soon now, which will put a crimp in its growth rate.

I'd much rather the U.S. be in China's positon fiscally and growth-wise, don't get me wrong. I'm just saying China doesn't just get everything their way in the coming decades.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: My Opinion On Chinese Monetary Policy

Unread postby the48thronin » Fri 10 Dec 2010, 22:47:23

$this->bbcode_second_pass_quote('SeaGypsy', '')$this->bbcode_second_pass_quote('the48thronin', 'l')ol


Actually I think this is a pretty spot on assesment.

There are definitely plenty of bubbles in the overall Chinese economy; but there is still the fundamental productivity equation which will continue to pull resources from everywhere with a surplus.

Americans have for too long been dismissive of Chinese financial accumen and ignorant at the level of collusion between the Chinese government and corporate/private wealth holders/investors.

Paradoxicly, as alluded to often by AmericanDream; China is a capitalists wet dream. Short of mega war, nothing is going to interupt China or the USA's trajectories over the next several years.



Yeah and down under too.>>>>!!!!!! LOL
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Re: My Opinion On Chinese Monetary Policy

Unread postby SeaGypsy » Fri 10 Dec 2010, 23:50:50

$this->bbcode_second_pass_quote('', 'D')oesn't China have a HUGE demographic problem due to the aging of its population, exascerbated by it's one-child per couple rule?


For sure it's an issue, but there are still hundreds of millions yet to play a part in the boom. In the long run, exactly the sames issue as Japan, South Korea.
One recent change however which undoes the immediacy of this problem is that China has made it very easy for foreign workers to come in, especially for it's ASEAN neighbours. This adds a vast pool of cheap labour to the mix, which can be cut and sent home in a recession.

$this->bbcode_second_pass_quote('', 'P')lus, if you can believe the MSM, China will have to put the brakes on an inflation problem, real soon now, which will put a crimp in its growth rate.


It seems from Mat's heading that is what they are attempting to do.
There has been a flood of equity into China.
Much of this has gone directly into manufacturing project oriented real world investment; rather than fly by night fund hopping or forex trading.
This difference gives the Chinese economy a backbone sorely lacking in capital strategy in the USA.
Without the housing market the US economy is completely rats droppings. The true backside of the US housing market is yet to show it's fullness.
The housing bubbles in many cities in China can burst without destroying the fundamentals of the economy.

$this->bbcode_second_pass_quote('', 'I')'d much rather the U.S. be in China's positon fiscally and growth-wise, don't get me wrong. I'm just saying China doesn't just get everything their way in the coming decades


In the coming decades, noone gets anything like 'everything their way'; peak oil will rip chunks and shreds out of the entire global economy there can be no doubt. This decade looks like being about capital chasing growth through real world strategic investment under a very hard lense with no sense of nationalism.
China stands out for being not just massive, but having a system designed so that radical intervention will not be automaticly stymied politically.

The 'perfect storm' of subprime, oil spike 08, has caused a massive rethink in investors. The ruthlessness of fund managers has been multiplied when it needed to be tempered. The USG and EU are stalemated politically into printing their way out of debt. None dare regulate backwards against globalist policy for fear of upsetting the banking system, nor may they take the drastic cuts to government spending necessary to have any hope of balancing budgets.
It's financial suicide or political suicide, with the only alternative being inflation at a pace the populace will not tear down the ramparts.

$this->bbcode_second_pass_quote('', 'Y')eah and down under too.>>>>!!!!!! LOL


Australia is paradoxicly building a backbone by tearing it out.
If not for our resource abundance, low population and proximity to China, I think Australia's postion financially would be very similar to the USA's.
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Re: My Opinion On Chinese Monetary Policy

Unread postby deMolay » Sat 11 Dec 2010, 00:53:30

China will fall. http://www.telegraph.co.uk/finance/comm ... bites.html
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Re: My Opinion On Chinese Monetary Policy

Unread postby SeaGypsy » Sat 11 Dec 2010, 01:31:03

$this->bbcode_second_pass_quote('deMolay', 'C')hina will fall. http://www.telegraph.co.uk/finance/comm ... bites.html


From same:

$this->bbcode_second_pass_quote('', '&')quot;The Chinese growth machine is likely to continue to function in the minds of people long after it has no visible means of support. China’s potential growth rate could well halve to 5pc in this decade,"


$this->bbcode_second_pass_quote('', ' ')(IMF) concluded in a report last week that there was no nationwide bubble but that home prices in Shenzen, Shanghai, Beijing, and Nanjing seem "increasingly disconnected from fundamentals".


$this->bbcode_second_pass_quote('', 'F')itch Ratings has just done a study with Oxford Economics on what would happen if China does indeed slow to under 5pc next year, tantamount to a recession for China...The result of such a hard landing would be a 20pc fall in global commodity prices, a 100 basis point widening of spreads on emerging market debt, a 25pc fall in Asian bourses, a fall in the growth in emerging Asia by 2.6 percentage points, with a risk that toxic politics could make matters much worse.


as Mat said:

$this->bbcode_second_pass_quote('', 'W')hen that day comes there will be much turmoil and panic so the banks must be prepared. Simultaneously China is suffering across the board strong market price increases which risks trouble.

$this->bbcode_second_pass_quote('', 'I')n a sense, inflation is a crude way of curbing China’s export surpluses and therefore of resolving a key trade imbalance that lay behind the global credit crisis.

If China continues to stoke inflation – and blaming the US Federal Reserve for its own errors help – there will no longer be any need for a yuan revaluation against the dollar, and the US Congress can shelve its sanctions law.


$this->bbcode_second_pass_quote('', 'C')hina may have hit the "Lewis turning point", named after the Nobel economist Arthur Lewis from St Lucia. It is the moment for each catch-up economy when the supply of cheap labour from the countryside dries up, leading to a surge in industrial wages. That reserve army of 120m Chinese migrants everybody was so worried about four years ago has already dwindled to 25m

My numbers were off, but the principle of this I aleady dealt with; imported labour is already starting to flood into China from neighbouring countries.


$this->bbcode_second_pass_quote('', 'T')he sons of Mao insist that they have studied the Japanese debacle closely and will not repeat the error. And I can sell you an ocean-front property in Chengdu

The 'China will fail' heading is missing a word; eventually.
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Re: My Opinion On Chinese Monetary Policy

Unread postby Fiddlerdave » Sat 11 Dec 2010, 13:18:35

$this->bbcode_second_pass_quote('deMolay', 'C')hina will fall. http://www.telegraph.co.uk/finance/comm ... bites.html
Absurd, if only could it be that America could have the good fortune to have such problems as trying to slow REAL growth down to 9%.

It is amazing to observe how so many people find comfort predicting the splinter in China's eye will cause it to fall, yet ignore the redwood-tree-sized-log in USA's eye as an serious impediment to the USA's continued supremacy in the economic world.
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Re: My Opinion On Chinese Monetary Policy

Unread postby Fiddlerdave » Sat 11 Dec 2010, 16:13:26

$this->bbcode_second_pass_quote('GASMON', 'A')ll the money in the world is worthless when you have no clean water to drink.

http://www.ocnus.net/cgi-bin/exec/view. ... &num=27251

This link is 4 years old - problem is far worse now.

Gas
China has the same policy response for water and energy shortages as the USA , yet China (who has the cash on hand to spend on massive projects) going to fall and the USA (who is abandoning remediation and pollution standards due to budget disasters) will not fall???

From your link:$this->bbcode_second_pass_quote('', 'Y')et, rather than emphasizing water conservation, increasing the country’s water supply through major dam and water diversion projects continues to be a cornerstone of Beijing’s response to the water shortage.
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Re: My Opinion On Chinese Monetary Policy

Unread postby Ludi » Sat 11 Dec 2010, 17:12:59

$this->bbcode_second_pass_quote('Fiddlerdave', '
')From your link:$this->bbcode_second_pass_quote('', 'Y')et, rather than emphasizing water conservation, increasing the country’s water supply through major dam and water diversion projects continues to be a cornerstone of Beijing’s response to the water shortage.



Large dams and water diversion projects actually reduce the water available to people in the long term. Not to mention the water provided by these projects is much more expensive than if investment had been made in local small-scale dams and watershed management.

China is intent on repeating the mistakes already made in the US. I guess it's important for them to feel modern, or something. :(

References: "Water for Every Farm" by PA Yeomans, "Rainwater Harvesting for Drylands and Beyond" by Brad Lancaster
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Re: My Opinion On Chinese Monetary Policy

Unread postby SeaGypsy » Mon 13 Dec 2010, 23:37:01

$this->bbcode_second_pass_quote('', 'L')arge dams and water diversion projects actually reduce the water available to people in the long term. Not to mention the water provided by these projects is much more expensive than if investment had been made in local small-scale dams and watershed management.


I think the Chinese understand this but put centralization and state control too far up the priority list. Millions of little self contained farming villages is not conducive to party interests. The mega dam projects achieve other state objectives; propoganda and certain water supplies not dependent on glacial meltwater for part of the year. They have already had some major poisoning events, via industrial spillage, showing a major weakness in the plan.

If China is paranoid, it is not of invasion, but of ethnic/ regional economic independence leading to the breakdown of the nation itself internally.

From wiki.

$this->bbcode_second_pass_quote('', 'C')hina's many different ethnic groups speak many different languages, collectively called Zhōngguó Yǔwén (中国语文), literally "speech and writing of China" which mainly span six language families. Most of them are dissimilar morphologically and phonetically and are mutually unintelligible. Zhongguo Yuwen includes the many different Han Chinese language variants (commonly called Chinese) as well as non-Han minority languages such as Mongolian, Tibetan, Uyghur and Zhuang. According to Ethnologue, China has a total of 293 different languages, with 292 living languages and 1 extinct language (Jurchen).[3]


This astonishing strength in diversity is almost alone in the world.
Places with similar diversity have had mass language extinction, to me this suggests regionalism is the central risk to Chinese central government.
A protracted civil war in China would be a disaster for the whole country.
The treatment of dissidents together with the mega projects are the stick and carrot to Chinese nationalism.
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