What if China agrees to revalue the Yuan?

[blazespinnaker]

http://www.bloomberg.com/news/2010-1...mbalances.html

Expect Gold and Commodities to decline significantly.

[GRG55]

Re: What if China agrees to revalue the Yuan?

http://www.bloomberg.com/news/2010-1...mbalances.html

Expect Gold and Commodities to decline significantly.

Really?

Haven't they "agreed" to revalue the Yuan at least a half dozen times in the past decade? Why would the outcome be any different this time?

Nice, soothing words have an immediate, but temporary, effect - witness the calming influence the rebuttal to Mrs. Merkel's hard line has had on European bond yields today. But in reality nothing has actually changed.

China can "agree" to whatever it wants...talk is cheap, and G20 talk is the cheapest talk of all. The proof is in actions. And I see absolutely no reason to believe there will be ANY change in the behaviour of any of the parties involved in this mess. Certainly NOTHING came out of the G20 that should inspire any confidence in any coordinated effort to deal with the critical issues including a looming escalation in the currency and trade war that is heating up...

[jpatter666]

Re: What if China agrees to revalue the Yuan?

Really?

Haven't they "agreed" to revalue the Yuan at least a half dozen times in the past decade? Why would the outcome be any different this time?

Nice, soothing words have an immediate, but temporary, effect - witness the calming influence the rebuttal to Mrs. Merkel's hard line has had on European bond yields today. But in reality nothing has actually changed.

China can "agree" to whatever it wants...talk is cheap, and G20 talk is the cheapest talk of all. The proof is in actions. And I see absolutely no reason to believe there will be ANY change in the behaviour of any of the parties involved in this mess. Certainly NOTHING came out of the G20 that should inspire any confidence in any coordinated effort to deal with the critical issues including a looming escalation in the currency and trade war that is heating up...

Got to agree. China has been very clever and smart about pre-emptive "agreements" just before the water hits boiling.

[blazespinnaker]

Re: What if China agrees to revalue the Yuan?

I think QE2 means the water is now boiling. At some point China may realize it just needs to bite the bullet and start letting the Yuan rise.

[GRG55]

Re: What if China agrees to revalue the Yuan?

I think QE2 means the water is now boiling. At some point China may realize it just needs to bite the bullet and start letting the Yuan rise.

We'll see in due course I am sure.

But I will accept that the Chinese do recognize that the current situation is not going to last indefinitely, and if this little video clip is any indication they are getting ready for that day.

http://www.zerohedge.com/article/stu...y-hotel-6-days

My observation, as I have posted before, is that economies that have "cheap" labour tend to squander that resource and are incredibly labour inefficient and deliberately unproductive [that is partly a "job creation" reaction to the surplus labour pool]. The Persian Gulf, India, parts of Africa, and Central Asia, all places I have worked and observed up close, fit that pattern. I have never worked in China, or observed it up close, but if indeed it truly has "cheap" labour then the productivity advance shown in this clip on Zero Hedge is highly anomalous...which suggests that China perhaps does not have "enough" cheap labour is certain parts of the economy [skills shortage] or is antipating that its cheap labour advantage will soon be eroded through inflationary wage pressure and/or an increasing currency value [as you are suggesting].

Now let's consider the implications of the sort of productivity shown in the video, combined with an extended resistance to revaluing the Yuan [e.g. dragging that out for maybe a few years?]. Anybody in the USA or Western Europe want to compete with that?

Then again, maybe this building is destined to follow in what might become a local tradition in China... ;-)

[touchring]

Re: What if China agrees to revalue the Yuan?

My observation, as I have posted before, is that economies that have "cheap" labour tend to squander that resource and are incredibly labour inefficient and deliberately unproductive [that is partly a "job creation" reaction to the surplus labour pool]. The Persian Gulf, India, parts of Africa, and Central Asia, all places I have worked and observed up close, fit that pattern. I have never worked in China, or observed it up close, but if indeed it truly has "cheap" labour then the productivity advance shown in this clip on Zero Hedge is highly anomalous...which suggests that China perhaps does not have "enough" cheap labour is certain parts of the economy [skills shortage] or is antipating that its cheap labour advantage will soon be eroded through inflationary wage pressure and/or an increasing currency value [as you are suggesting].

It is a common misconception that China depends on cheap labor. The fact is that labor isn't cheap in China. Wages are many times lower in Bangladesh, Vietnam and many parts of India. China's cheaper cost is very much dependent on subsidized energy, land, economies of scale and a super competitive parts and component market.

[blazespinnaker]

Re: What if China agrees to revalue the Yuan?

labor has to be cheap in china if they have a 4k per capita gdp

[touchring]

Re: What if China agrees to revalue the Yuan?

labor has to be cheap in china if they have a 4k per capita gdp

Do you really believe in China govt statistics. Even eggs can be fake - http://www.youtube.com/watch?v=T55tz...eature=related