The Almghty Reninmbi

[Mega]

http://www.nytimes.com/2009/05/14/op...nt&tntemail1=y
The "Sheep" are getting informed.
Mike

[Fiat Currency]

Re: The Almghty Reninmbi

I hear the Chinese renminbi is in the running too

[Mega]

Re: The Almghty Reninmbi

http://www.telegraph.co.uk/finance/f...-currency.html

Mike

[jpatter666]

Re: The Almghty Reninmbi

I wonder how this will play out -- the Reninmbi will take time to be positioned as a true global reserve currency. Perhaps as long as ten to twenty years.

And then China is going to get gobsmacked by its own internal population crisis when it gets an inverted population pyramid due to the one-child policies. I remember reading some quote that China was going to be the first nation to get old before it got rich. Maybe they're trying to make the up fast? :-)

[D-Mack]

Re: The Almghty Reninmbi

So, if they do the right things, they can achieve a slow down of the decline.

Not a rosy picture

Now that the dollar’s position is no longer so secure, we need to shift our priorities. This will entail investing in our crumbling infrastructure, alternative and renewable resources and productive human capital — rather than in unnecessary housing and toxic financial innovation. This will be the only way to slow down the decline of the dollar, and sustain our influence in global affairs.

[KGW]

China mulls first offshore currency market

http://www.financialexpress.com/news...market/350041/

Beijing, Aug 17: Buoyed by the growing influence of the Chinese economy and strength of the Yuan, the government is set to establish an offshore currency market with Hong Kong and Shanghai in the race with Tianjin, the front-runner as a possible location.
The Chinese currency, Yuan, though still not fully convertible, will be traded among foreign companies and institutions as well as domestic players, who will be guaranteed tax benefits.
Though Chinese policymakers have not yet decided on the location of the offshore currency market, Tianjin, a booming northern port city is reportedly the top choice. But given its advanced financial infrastructure, Shanghai could be the ultimate winner, China Daily reported.
Hong Kong, a former British colony, now a Special Administrative Region under China, which many market-watchers speculated on, may not be considered at all, the state-run newspaper said.
The People’s Bank of China (PBOC) said this week that it had already set up a special exchange rate policy department and will develop “an offshore Yuan market in keeping with the process of the currency’s internationalisation”.
The new department will focus on administering foreign exchange, regulating domestic foreign exchange market, conducting analysis on the global foreign exchange market and international capital flows and advising to policy makers, the central bank said in a statement on Thursday.
The department will focus on foreign exchange policymaking and the State Administration of Foreign Exchange will implement the policies, Ma Ming, senior economist with the Beijing Institute of Technology, said.
The move shows the Yuan has become more influential, analysts said. “It is set to become a global currency,” Ma said. “And setting up such a market will be the first step toward that end.”
The report quoted a source close to the policymaking process as saying that Tianjin was a possible choice and the application process for the market was underway.
But policymakers could suspend the process, too, because the Yuan’s rise has slowed down recently, the source said. Hong Kong, already a leading financial hub, was considered a favourable location because it already has an informal offshore Yuan market. But the city may not be chosen because it would be difficult for Beijing to properly manage the establishment there, the report said.
Although Hong Kong is China’s Special Administrative Region, relevant laws state the PBOC, the country’s central bank, cannot be involved in its economic affairs, it said.
That is why Shanghai is one of the two choices, said Zhao Xijun, professor of finance at Renmin University of China.
The PBOC has set up an office in the eastern metropolis to manage the financial hub’s market.
China’s inter-bank and foreign exchange trading markets both are in Shanghai, giving it a competitive edge over Tianjin, Zhao said.
“Its financial infrastructure is stronger too, offering a better base for the market.” The country’s economy remains resilient and is likely to retain its growth momentum in the second half of the year despite the weakening global demand and natural disasters at home, the PBOC said.

[unlucky]

Re: The Almghty Reninmbi

http://www.telegraph.co.uk/finance/f...-currency.html

Mike

Prof Roubini argues that China is better placed than the US to provide a reserve currency for the 21st century because it has a large current account surplus, focused government and few of the economic worries the US faces.

Large current account surplus -
Chinese exports fall sharply

The total value of Chinese exports fell 22.6 per cent to $91.9bn last month compared with the same month a year earlier – a faster rate of decline than the 17.1 per cent year-on-year drop in March.

Focused government -
Chinese ordered to smoke more to boost economy

Local government officials in China have been ordered to smoke nearly a quarter of a million packs of cigarettes in a move to boost the local economy during the global financial crisis.

Few economic worries -
China's Other Worry: Wage Slowdown

Now that Western demand has collapsed, stimulating domestic demand is a "medium-term challenge" as China's domestic consumption has traditionally lagged behind its growth, mostly because Chinese non-farm employment and wage growth, while fast, have lagged behind the country's overall growth based on investment and exports.

To sum up: an economy that is over-dependent on collapsing export markets, guided by daft government directives, and still unable to re-orient itself towards self-sustained growth. Reserve currency of the near future? I think not.

[ASH]

Re: The Almghty Reninmbi

I remember reading some quote that China was going to be the first nation to get old before it got rich.

I believe that was the opinion of Ambrose Evans-Pritchard, in a blog entry about the decline of the US dollar, from a couple of years ago.

From July, 2007

Which brings me to China, a country that is growing old before it ever becomes rich. The working-age population peaks in 2015 - just eight years time. China then dives into the steepest demographic decline ever known by any nation in peace-time. As for China's current boom, you need only know three things so see where this is going: credit is being channelled for political purposes through Communist state banks that are not subject to market discipline; almost half of GDP is going on investment, leading to a glut of factories; return on that investment, measured by the incremental capital output ratio, is 4.4. Much of it is being wasted. Compare that to Japan (3.2), South Korea (3.2), and Taiwan (2.7) during their growth spurts. China is not going to take over the world economy, now or ever. The window will close shut before they get there.