Here's why China devalued its currency

[cnleio]

Yes and no. Never said never. China wasn't an industrialized country before. Now it is. Knowledge is transferable.

How many years to get the knowledge ... 2 years , 10 years , half of century ? Other country like China just stop there, waiting for Vietnam just surpass ? Funny, i see the only problem here is the Vietnamese think them as same as Chinese, just following China development method will make Vietnam into the Dead End ... u r not China.

 

[vtnsx]

How many years to get the knowledge ... 2 years , 10 years , half of century ? Other country like China just stop there, waiting for Vietnam just surpass ? Funny, i see the only problem here is the Vietnamese think them as same as Chinese, just following China development method will make Vietnam into the Dead End ... u r not China.

I don't think that is the major issue. The real issue is China is occupying islands, etc, etc.

Vietnam has the ability to learn. Its government has been suppressing that. It's good that China occupies these islands and open the Vietnamese politician's eyes to see a bigger picture than themselves. America never like Communist, they are Capitalist. I believe in Capitalism and freedom. Not the other way around. When two people believe in one thing, they produce the strongest bond without prejudice. Race would be erased in their mind. People bond because they believe in something. They would die for them, etc.

Way before the Vietnam war, South Vietnamese were more prosperous than North. Even today South is still more influential than North. A farmer's mindset could never get you out from poverty and corruption.

There is reason why some people are rich and some are poor. It is because the rich constantly work on themselves while the poor constantly complaining and never bother to improve themselves.

Knowledge is power. Knowledge is money in western world.

 

[cnleio]

I don't think that is the major issue. The real issue is China is occupying islands, etc, etc.

Vietnam has the ability to learn. Its government has been suppressing that. It's good that China occupies these islands and open the Vietnamese politician's eyes to see a bigger picture than themselves. America never like Communist, they are Capitalist. I believe in Capitalism and freedom. Not the other way around. When two people believe in one thing, they produce the strongest bond without prejudice. Race would be erased in their mind. People bond because they believe in something. They would die for them, etc.

Way before the Vietnam war, South Vietnamese were more prosperous than North. Even today South is still more influential than North. A farmer's mindset could never get you out from poverty and corruption.

There is reason why some people are rich and some are poor. It is because the rich constantly work on themselves while the poor constantly complaining and never bother to improve themselves.

Knowledge is power. Knowledge is money in western world.

As a Engineer, i agree with the Knowledge is power and understand how the power bring the money, it works in my daily life. Just i see u dislike VCP and current government, wanna Capitalism & Freedom back to Vietnam ? The former Republic of Vietnam did that, but it looks not work and Vietanmese abandoned it. That's still not the right way for Vietnam development. The China development method or the U.S Capitalism method didn't fit for Vietnam, u need search for a your own development way.

 

[vtnsx]

As a Engineer, i agree with the Knowledge is power and understand how the power bring the money, it works in my daily life. Just i see u dislike VCP and current government, wanna Capitalism & Freedom back to Vietnam ? The former Republic of Vietnam did that, but it looks not work and Vietanmese abandoned it. That's still not the right way for Vietnam development. The China development method or the U.S Capitalism method didn't fit for Vietnam, u need search for a your own development way.

Capitalism wont work with current Vietnam government. Maybe mixed ecomony can. They just have to find the balance. Hopefully things change for the better.

 

[Guynextdoor2]

BS. Artifically devaluing the currency will be only a short term solution and will no way 'increase competitiveness'. Either the economy will remain 'export oriented' and slow down or become more inward looking with lower focus on exports and gradually stabilize that side. Export oriented boom days are over for good.

A drop in the Yuan is helping, not hindering the dollar by causing more investors to seek safety in its embrace, so if, as the Chinese members suggest, the dollar is being killed by the Yuan, they're having the opposite effect:

China’s Yuan Shock Boosts Dollar, Euro Amid Flight to Safety

China Shock Boosts Dollar in Safety Bid; Aussie at Six-Year Low

China's Yuan Devaluation Is Great News for U.S. Dollar

And persistent weakness in China helps the US too:

Treasuries Are a Winner as China Exports Deflation Says Bill Gross

The Yuan fell again today:

China tries to calm currency war fears as yuan slips further

Not 'helping'. A soaring dollar is not going to help exports, will spur flight of capital to other lower cost locations.

 

[Götterdämmerung]

Most of you guys are talking beside the point. In fact, it's a clever plan by the Chinese gov. to de-dollarise its currency and economy.

Let me put my two cents into this.

Here are the following facts:

China has tons of USD
Gold price is tied to the rate of USD
USD goes up, gold goes down
The lower the gold prices goes, the cheaper China buys gold

Now, with the devaluation, the psychological part comes in. Everyone who has little clue about the relationship about gold and the USD will think that the USD is a safe haven and so they flock to the USD pushing the USD up and the gold price down.

It's a catch 22 for the US and a clever move by China.

 

[Fenrir]

Not 'helping'. A soaring dollar is not going to help exports, will spur flight of capital to other lower cost locations.

Not quite what I was alluding to. As per a few people on this forum, the Yuan is going to kill the USD as a global reserve, but when push-comes-to-shove and instability creeps across the lands, people flock to the USD as a safe investment and increase their holdings of USD and US Treasuries, thus helping the USD's status as a reserve currency, not hindering it.

The USD's impact on US businesses is a different, but no less important discussion.

 

[Hypersonicmissiles]

Most of you guys are talking beside the point. In fact, it's a clever plan by the Chinese gov. to de-dollarise its currency and economy.

Let me put my two cents into this.

Here are the following facts:

China has tons of USD
Gold price is tied to the rate of USD
USD goes up, gold goes down
The lower the gold prices goes, the cheaper China buys gold

Now, with the devaluation, the psychological part comes in. Everyone who has little clue about the relationship about gold and the USD will think that the USD is a safe haven and so they flock to the USD pushing the USD up and the gold price down.

It's a catch 22 for the US and a clever move by China.

The dollar has been getting stronger due to its safe haven status due to European economic weakness and US economic weakness. People are buying US dollar assets which has pushed up the value of the dollar to artificially high levels.

Renminbi has been weakening against its peg currency (USD) and PBOC has had to use its reserves to keep that peg. But the cost of keeping the peg has been too great.

I think the PBOC has decided it's not going to deplete its forex reserves to support the Renminbi and allowed the Renminbi to depreciate to market level. It's actually forced China to make the Renminbi value more market oriented.

Might be a blessing in disguise to get rid of that peg to the dollar.

 

[Guynextdoor2]

Not quite what I was alluding to. As per a few people on this forum, the Yuan is going to kill the USD as a global reserve, but when push-comes-to-shove and instability creeps across the lands, people flock to the USD as a safe investment and increase their holdings of USD and US Treasuries, thus helping the USD's status as a reserve currency, not hindering it.

The USD's impact on US businesses is a different, but no less important discussion.

It won't

 

[Götterdämmerung]

The dollar has been getting stronger due to its safe haven status due to European economic weakness and US economic weakness. People are buying US dollar assets which has pushed up the value of the dollar to artificially high levels.

Renminbi has been weakening against its peg currency (USD) and PBOC has had to use its reserves to keep that peg. But the cost of keeping the peg has been too great.

I think the PBOC has decided it's not going to deplete its forex reserves to support the Renminbi and allowed the Renminbi to depreciate to market level. It's actually forced China to make the Renminbi value more market oriented.

Might be a blessing in disguise to get rid of that peg to the dollar.

You are just repeating what has been said by practically all others, including the mainstream media. I'm afraid, you just didn't understand my post.

 

[NiceGuy]

I think VN will surely get better, no matter join TPP or not.
The low end industry are flowing from high cost China to low cost southeast Asia.
VN, with close distance to China and low labor cost, will surely attract more investment.
But once you get a bit richer, you will find that what you get is too less comparing with your labor work.

Correct, we will get better .

Any CNese such as Cnleio think VN is Non-Industrialized = ZERO Competitiveness should think again. What did CN had in 1987, before US-JP poured the huge investment to CN ??? Did CN have Jack Ma, Huawei etc before 1978 ?? Nope ! Jack Ma till 1988 still a poor peasant , and thanks to the internet which was created by USA, Jack Ma could sell things there and made billions .

Without US-JP investments, then, CN is just a big North Korea with No Jack Mabillionare coz there would be No internet in CN like in NK

 

[Jlaw]

lol.most people don't know what and why China lower the currency. Like any of us, your guess is as good as mine.

2% Devaluation is not much, however, the importance of this devaluation is not about actual number (ie the devalue %) but rather the message it sent to trader and investor.

Basically, it mean that Chinese Currency lost it appeal to the market, that's the only strong reason why one devaluate their own currency. When the interest on using Yuan lower, the only way to attract investment is to deflate your own currency but the question is, why would China need to do that if they have an absolutely healthy economic forecast like they want to say or they want to portrait. The only answer is that the glooming forecast is actually fake...

That did lead to an ultimate question, how low can Yuan go? There is a point it will actually hurt local business and local economy if the yuan deflate, however, on the other hand, the overestimation of Chinese market and over stretched export driven economy have to rely on a deflation to readjust back down to normal level. And that is the million dollar question itself.

So Japanese currency also lost appeal to the market?

 

[jhungary]

So Japanese currency also lost appeal to the market?

View attachment 246150

Well, the last time I hear someone invest in JPY is in the 80s.

And yes, JPY have lost almost all of its appeal. They have intentionally devalue their currency to bump the export number in the 2000s, and yes, this is what China is doing at this point.

 

[Jlaw]

another round of currency avalanche is expected later this yr with us federal reserve increasing interest rate. watch out.

If true will not be good for house prices in US.

 

[zeronet]

If true will not be good for house prices in US.

yes, house price and sale will go down with the interest rate increased, but good if you buy it with cash.....