Here's why China devalued its currency

[jhungary]

In a worse time of world economy, '薄利多销' means this.

lol you know 薄利多销 is the problem for Oil Price in Russia and Saudi Arabia now, right??

China is in a more or less the same predicament, only replacing oil export to general export...

 

[EAsian]

The problem is, JPY is at the bottom, it already sent the message a long time ago (about 20 years ago) that their economic model is none other than healthy.

There is a point of no-return for devalue its own currency, I am not saying this is necessarily a bad thing, but it could be a piece of alarming news. Again, not all the company can take the devaluation, some company will definitely gone bust after this in order to weed out the unhealthy enterprises, again, the question is, how many Chinese Company can take this devaluation and how low can Yuan go? Obviously the value now is still too high. as 2% actually did not make any different.

Too high？Our trade surplus just get the highest of the whole Chinese history this year.How does this conclusion come from?

 

[cnleio]

The problem is, JPY is at the bottom, it already sent the message a long time ago (about 20 years ago) that their economic model is none other than healthy.

There is a point of no-return for devalue its own currency, I am not saying this is necessarily a bad thing, but it could be a piece of alarming news. Again, not all the company can take the devaluation, some company will definitely gone bust after this in order to weed out the unhealthy enterprises, again, the question is, how many Chinese Company can take this devaluation and how low can Yuan go? Obviously the value now is still too high. as 2% actually did not make any different.

U forget there's a huge market of 1.3billion Chinese ... inside China these customers purchase goods with Yuan, above post i said '薄利多销' for overseas export business, for local market there's another words called '出口转内销' 1.3billion market also can spend many 'Made in China' goods ... Before world economy go for better, China just need '薄利多销' & '出口转内销' to drive 2015 GDP. Anyway the lower Yuan will kill many developing nation's export trade without competitive goods with 'Made in China'.

Just recent days visited Super-market here, i saw many '出口转内销' goods selling in Wal-Mart & Carrefour. Maybe this time 'Made in China' earn less but still can sell out.

 

[EAsian]

U forget there's a huge market of 1.3billion Chinese ... inside China these customers purchase goods with Yuan, above post i said '薄利多销' for overseas export business, for local market there's another words called '出口转内销' 1.3billion market also can spend many 'Made in China' goods ... Before world economy go for better, China just need '薄利多销' & '出口转内销' to drive 2015 GDP. Anyway the lower Yuan will kill many developing nation's export trade without competitive goods with 'Made in China'.

Devaluation of yuan won't improve our export much.I hope you know that.The value of yuan is not the problem，Other countries' economy and currency situation is the problem.

 

[cnleio]

Devaluation of yuan won't improve our export much.I hope you know that.The value of yuan is not the problem，Other countries' economy and currency situation is the problem.

Of course it works ... the worse world economy, the more foreign middle-class families to purchase cheaper 'Made in China' ... coz in their wallet money just for necessary living expenses, no more luxury. Without competitive goods from other developing nations, there's only 'Made in China' with cheaper price to fit for their demands.

Even though foreign economy get worse, there's a 1.3billion Chinese market support 'Made in China' with Yuan ... difference is earn less than overseas trade with USD. China economy & 'Made in China' not easily to die coz at least China has a 1.3billion huge local market for survival compared with other developing nations not.

 

[NiceGuy]

Of course it works ... the worse world economy, the more foreign middle-class families to purchase cheaper 'Made in China' ... coz in their wallet money just for necessary living expenses, no more luxury. Without competitive goods from other developing nations, there's only 'Made in China' with cheaper price to fit for their demands.

Even though foreign economy get worse, there's a 1.3billion Chinese market support 'Made in China' with Yuan ... difference is earn less than overseas trade with USD. China economy & 'Made in China' not easily to die coz at least China has a 1.3billion huge local market for survival compared with other developing nations not.

Wrong ! CN is not allowed to join TPP, so pple in TPP will have to say bye bye to CN products if they want free tax trade.

SO, after TPP come out, CN economy will collapse in abt 10 years as I said

 

[jhungary]

U forget there's a huge market of 1.3billion Chinese ... inside China these customers purchase goods with Yuan, above post i said '薄利多销' for overseas export business, for local market there's another words called '出口转内销' 1.3billion market also can spend many 'Made in China' goods ... Before world economy go for better, China just need '薄利多销' & '出口转内销' to drive 2015 GDP. Anyway the lower Yuan will kill many developing nation's export trade without competitive goods with 'Made in China'.

Just recent days visited Super-market here, i saw many '出口转内销' goods selling in Wal-Mart & Carrefour. Maybe this time 'Made in China' earn less but still can sell out.

The problem is that, which China have 1.3 billion people, not all of them are targeted overseas customer. On average, a middle class Chinese earn somewhere about 17000 USD (100,000 RMB) per year, that is significantly lower than middle class in the west. The Chinese market is big, but not all could digest foreign goods.

Domestic goods does not change the currency value, basically it's still within the same cash flow model, and that too could face saturation.

Indeed the lower Chinese currency would kill many developing nation's competition edge, but at what cost? Do remember, it's a double edge sword, while it kills off foreign competitor, it also kill off domestic competitor, and what China going thru is what the West had gone thru in the past, take mobile phone maker for an example. In 1990-2000, there are 10+ major Mobile phone maker (Nokia, Motorola, Samsung, Sony, Ericsson, Apple, LG, Segam, HTC, Alcatel, and Siemens, just to name a few), how many of those are still in business? China today, have more cell phone maker than the world used to have, and that would much like all these 10+ major phone maker, will be slim down to 2 or 3. But the only different is, while those 10+ are all over the world, all these Chinese Phone maker are within China, so, say 70% of those have to close down would mean quite a disaster for China.

 

[cnleio]

Wrong ! CN is not allowed to join TPP, so pple in TPP will have to say bye bye to CN products if they want free tax trade.

SO, after TPP come out, CN economy will collapse in abt 10 years as I said

LOL ... i just have one question, Do u think which kind of goods of 'Made in Vietnam' can competitive with 'Made in China' with the same price ? Just now What's ur advantage of 'Made in Vietnam', pls tell me ?

 

[jhungary]

Too high？Our trade surplus just get the highest of the whole Chinese history this year.How does this conclusion come from?

Are you for real?

How else would those 3.5 trillion got write off from your stock market??

Trade surplus is one thing, currency valuation is another. You can have high trade surplus at the same time having a high currency rate. Traditional wisdom suggest from the stock market reference, we can see Chinese currency is currently 15-20% over value at the moment.

 

[TheTruth]

lol you know 薄利多销 is the problem for Oil Price in Russia and Saudi Arabia now, right??

China is in a more or less the same predicament, only replacing oil export to general export...

Except China doesn't rely on exports to fund government spending.

Are you for real?

How else would those 3.5 trillion got write off from your stock market??

Trade surplus is one thing, currency valuation is another. You can have high trade surplus at the same time having a high currency rate. Traditional wisdom suggest from the stock market reference, we can see Chinese currency is currently 15-20% over value at the moment.

laugh out loud. The stock market is still up over 50% on the year. There is no "traditional wisdom" tying currency valuation to stocks.

What on earth were you learning in school?

 

[NiceGuy]

LOL ... i just have one question, Do u think which kind of goods of 'Made in Vietnam' can competitive with 'Made in China' with the same price ? Just now What's ur advantage of 'Made in Vietnam', pls tell me ?

VN beat CN up Furniture and many things made by wood

Vietnam, the largest supplier for U.S. wooden bedroom furniture imports, saw its share of the market rise in the first seven months of 2014, Moreno reported. As measured by dollar value, Vietnam’s U.S. wooden furniture imports accounted for 43.8 percent of the market year-to-date through July, up from 41.8 percent in 2013. Imports from Vietnam were up 8.0 percent year-over-year from January through July.

China followed far behind with a sourcing share of just 14.0 percent year-to-date, down from 15.7 percent in 2013. Imports from China were down 9.0 percent year-over-year from January to July.
Housing demand drives up US wooden furniture imports | JOC.com

And VN will pass CN in all field after joining TPP coz CN is not allowed to sell there

 

[EAsian]

Are you for real?

How else would those 3.5 trillion got write off from your stock market??

Trade surplus is one thing, currency valuation is another. You can have high trade surplus at the same time having a high currency rate. Traditional wisdom suggest from the stock market reference, we can see Chinese currency is currently 15-20% over value at the moment.

Yeah,Yeah,And how do you know What is yuan's ture value?I still remember US government keep saying that Chinese yuan is undervalued because we have the biggest trade surplus in this world.The truth is no one knows it cuz there isn't one.In fact trade surplus is the best indicator to weight is a currency overvalued or undervalued，Imagine China and Japan selling all their US dollar reserves.The US dollar would become as valuable as toilet paper.

 

[cnleio]

Furniture and many things made by wood

And VN will pass CN in all field after joining TPP coz CN is not allowed to sell there

Lower additional value ... a industrial country won't export that, when did u ever see U.S / Japan / China export these goods into Vietnam market ? They almost export to high value-added electronic products, automobiles, commercial plants ...

The problem is that, which China have 1.3 billion people, not all of them are targeted overseas customer. On average, a middle class Chinese earn somewhere about 17000 USD (100,000 RMB) per year, that is significantly lower than middle class in the west. The Chinese market is big, but not all could digest foreign goods.

Domestic goods does not change the currency value, basically it's still within the same cash flow model, and that too could face saturation.

Looks like u misunderstand the meaning of '出口转内销', LOL ... the West still can't understand it. Those exported goods sold in local 1.3billion market, price less than export price but still can earn money ... maybe more.

Selling in China market with Yuan still has the benefit, just lower than USD. The importance is with 1.3billion local market support, those Chinese companies not easily to bankrupt, that's the KEY here.

 

[NiceGuy]

Looks like u misunderstand the meaning of '出口转内销', LOL ... the West still can't understand it. Those exported goods sold in local 1.3billion market, price less than export price but still can earn money ... maybe more.

Selling in China market with Yuan still has the benefit, just lower than USD. The importance is with 1.3billion local market support, those Chinese companies not easily to bankrupt, that's the KEY here.

Right, CN will not bankrupt if TPP dont come out within 3 years .

So, US must start TPP next year, and bring the world in chaos wt currency war

 

[cnleio]

Right, CN will not bankrupt if TPP dont come out within 3 years .

So, US must start TPP next year, and bring the world in chaos wt currency war

LoL ... FANTASY ! 3 years not longer, just watch who will become the economy colony of U.S ... lol.

Before u happy for the TPP, just think twice what's kind of 'Made in Vietnam' vs 'Made in U.S' selling in Vietnam market ... if ur Vietnamese companies beat by U.S companies and bankrupt in local market, ur domestic economy over then that's i called 'Economy colony of U.S'. Even though there will be many Vietnam-U.S joint companies setup in Vietnam, still slavers to work for American parent firms ... did u ever watch the Mexico economy ? That's ur future after TPP.