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Huge Capital Outflow Likely in 2008 Second Half
$111.2 is net outflow under capital and financial account. Taking the $40 billion foreign direct investment in the second half of 2008 into account, foreign exchange outflow will be even larger.
March 23rd,2009
Analysts: RMB Must Depreciate Against USD and Stabilize Against a Basket
An export decline for four straight months is again generating RMB exchange rate disputes in and out of the government. Since currently most major world currencies are depreciating against the USD, if the government focuses on the RMB/USD rate only, risks in the settlement of other currencies will increase.
March 18th,2009
China to Launch RMB-Settled Foreign Trade to Address Surplus
Although China's exports are falling, its imports are declining more quickly, the monthly trade surplus is still vast, and China's forex reserve is still swelling. With the gathering fear of long-term USD depreciation, China is working to start settling its foreign trade with RMB, instead of USD.
March 7th,2009
China Accelerates Diversification of Forex Assets
The Obama administration's economic stimulus plan has got China in a bit of a quandary. On the one hand, China is boundless in its hopes the plan works and as soon as possible, for the rebound of the US economy would be angelic news for China's exporters. On the other hand, with the US government deficit looking to reach as high as $1.5 trillion, more and more economists and government officials are strongly suggesting China shy away from adding to its already vast holding of US national debt, and maybe relieve itself of some of that holding.
March 4th,2009
RMB Rumor Briefly Roils Markets before Denials
China's National Development and Reform Commission (NDRC) insisted on Feb. 18 that its officials had not speculated about RMB's possible depreciation to 7 against the dollar, knowing that any rumor about RMB depreciation before US Secretary of State Clinton's visit to China would put the cat among the pigeons.
February 19th,2009
China Still Buying US Bonds, Though Diversifying For-Ex Portfolio
China increased its holding of US national debt by over $200 billion in 2008, according to figures from Treasury International Capital (TIC), the reporting system of the US Treasury. By the end of December, China's holding of US national debt had increased by $14.3 billion over the end of November to $696.2 billion. China continued to be America's largest creditor, followed by Japan.
February 18th,2009
Savings Glut Not Addressed by RMB Appreciation, Says PBoC Governor
China is working on lowering its huge saving ratio by expanding internal demand, especially domestic consumption, but the government rejects trying to solve the savings glut by RMB appreciation.
February 11st,2009
The First Blast from Obama's "Speaker's-Corner" Cabinet
U.S. Secretary of Treasury, Timothy Geithner, has sounded the first deafening trumpet blast to China, calling the country a "currency manipulator." Following the diagnosis of Obama's cabinet along a model of "London's Hyde Park Speaker's Corner," can we expect to hear a softer note, maybe even issued privately? For details about the "Speaker's-Corner" model, see ChinaStakes January 2nd article: "Obama's Speaker's Corner Cabinet Yin Yang." The question at hand is whether another Obama cabinet member will offer an alternative view?
February 3rd,2009
Geithner Emphasizes More on Economic Recovery despite Calling China a Manipulator
Although Obama believes Beijing is manipulating RMB exchange rate, the Treasurer nominee Timothy Geithner may give more priority to economic stimulus policies in both China and the US.
February 3rd,2009
China Sells US Long Term T-bills in Fear of Capital Outflow and Deficits
China is increasing holding of short-term US treasury bills and reducing long-term bills out of the concern over capital outflow and more bond issuance brought by increasing deficit due to Obama's economic rescue plan.
January 21st,2009
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