Letter: Appreciating the Yuen
Filed under:-mini-posts, Analysis | Tags:China, US, Yuen
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First, no country including US has the right to tell other countries to appreciate their currency. The era of ‘you’re either my puppet or my enemy’ is long past and Obama is still living in the past glory. He blames China for all our ills, as he cannot fix our problems.
Keeping the Yuen low actually helps US’s consumers and US in buying wind turbines or HSRs from China at lower prices. Not to mention the huge loans from China. China does not want to withdraw the bad loans as they do not want to kill the goose that lays the golden eggs.
The major products of China and US are not the same, so there are no direct competitions. If we do not buy the products from China, most likely we’ll buy same products from Mexico or India.
Until China builds up its local market for its growing middle class, I do not see Yuen will appreciate by more than 5% a year.
A strong China is good for the world including US! China is just one part of the global economy. The other players are research companies from the west and the US, oil from Middle East and Africa, and commodities from Australia, Brazil… Everyone benefits including the consumers in every country.
Lord Obama and his ‘advisers’ including Uncle Ben and Tiny Tim can do a lot of good if they looked longer-term (more than 4 years for re-election). To give generous welfare to buy votes and creating jobs for the lazy government servants are definitely not good for the country. Have we learned from California?
Throwing money on HSR is stupid and reckless without calculating basic return of the investment. China is successful with HSR due to its dense population, but not here.
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March 15th, 2010 at 9:32 pm
I think you mean “yuAn,” the Chinese currency.
Or do you mean “yen,” the japanese currency?
Or “hwan,” the South Korean currency?
I really haven’t heard any “yuen.”
March 15th, 2010 at 11:32 pm
Intentionally I typed Yuen (Cantonese way) to test whether any one reads my post, haha. At least one so far.
Is a stronger China good for the world I was asked? Here is my opinion.
If China were as poor as Haiti, can the world afford 20% of the world population begging for food (like the last two earthquakes in China)? We should not use a developed country’s yardstick to measure developing countries. China has about 1/6 of the natural and farm resources per capita as US I guess. I do not blame them for pirating movies if we really understand them and their difficulties. They are no angels but no devils, but some one tries to improve their living standard (most cannot pay for our expensive DVDs anyway, so Hollywood does not lose much and Mr Gates is no angel in making his billions and he also has more money than God) .
Their military system is barely good for defense while we just commissioned a carrier with 2 nuclear generators (2 is not a typo). The % of defense (or offense for US) budget of GNP or GNP per capita is a big difference between US and China.
March 16th, 2010 at 2:01 am
If China revalued the Yuan, I would be unhappy–I spend a lot of time there and it would make it so much more expensive!
March 17th, 2010 at 3:49 am
Oh, Tony, on the back of the money, it literally spells YUAN, so Yuen won’t work. Kind of like 蔣介石 has to spell as Chiang Kai-shek — not until some Chinese history professor translated that back as 常凯申.
A good piece: China’s Under-Consumption Over-Stated.
As to if Yuan/Yuen should appreciate and when it will, don’t know…
March 17th, 2010 at 10:08 am
I presume you are talking about the Chinese YUAN dear boy. Spelt with an A. Y-U-A-N.
I think you’ll find, if you look, that the YUEN is a Crowned Gibbon (Hylobates pileatus, to be precise) that is found in Thailand.
Although I happen to think that Liu Minkang and his bunch of cronies dealing with the USD/Yuan position are in fact simian in mental capacity, it does make it easier if when blogging you can at least spell the name of China’s currency correctly.
Thank you
March 17th, 2010 at 2:27 pm
Hi K, every time I went to China, I found everything was more expensive. To save some money, just buy local produced products. If you try Listerine for example, the price is far more expensive than from US.
The Yuen seems taking too much space here. It was my error and I did it all the time. I wrote very fast and usually did not read what I wrote. I found out this mistake right away I sent. It is the usual habit of some one who does not write much in my life except in computer programming (and now in investment language) that does spell check automatically.
It is funny that no one corrects my error in blogging in Seeking the Alpha.
http://seekingalpha.com/article/193461-china-s-yuan-dollar-peg-untenable-unsustainable-indefensible-unsound?source=commenter
I’ve received the highest approval ratings among most bloggers there in same article (both initial posts have over 16 net approvals that is quite high for that blog). I guess the bloggers’ attitudes are different between the two blogs. My ‘intentional’ error could tell the attitudes of the two cultures if most folks here are Chinese.
March 23rd, 2010 at 1:31 am
The Chinese govt is doing the right thing with their Yuan.
The US is squealing and trying to goad the Chinese into stupidly appreciating the currency, because the US is not competing and wants a handicap.
March 23rd, 2010 at 1:27 pm
The Chinese did it right not to depreciate (suggested by US and other countries) during the last Asia financial crisis. They do have a good track record.
March 23rd, 2010 at 5:50 pm
On Krugman’s proposed 25% tariffs on all Chinese products”. My thought:
——–
Roach is correct and I do not know how Krugman got his Nobel prize and in this issue he is totally wrong.
Once you have 25% tariff, you have a trade war unless you believe you’re the master/policeman of the world (yes US was in the past but no longer true).
Every one will suffer. China will buy the technology they need and air planes from EU and Russia. The consumers in US will suffer – be ready to pay for a $20 toaster.
The oil price will plunge and so are most commodities. Middle Eat, Brazil, Australia and Canada… will all suffer
China will pull out the trillion of US debts and US will be plunged to a dark age and the entire world will suffer. Now, it is time to kill the goose that lays the golden eggs before it gets less and less meat.
China will go to about 5% GNP growth rather than the 8%. There will be social unrest due to excess laborers.
I just do not believe what planet this guy is from and the mockery part is he got a Nobel prize – trying to destroy the world economy!!! How ironic for his ‘contribution’ and how stupid are the members of the Nobel prize committee.
March 26th, 2010 at 4:27 am
Can the US force China to change its currency rate or what it called? Why does the leader of China keep on give into that. I feel like that there will be a really great depression happening in China because of it.
I still feel the problem is still in US, that some part of the government refused to try to do any about the problem in US and float other nation to keep going and continually ignore everything else.
March 26th, 2010 at 5:15 pm
Hi Wi,
It is the politicians’ trick: ‘if you cannot fix the problems, divert your citizens’ attention or blame others but yourself.’
China is run by pro business leaders. See the result.
If Russia asks China to depreciate the Yuan, should China agree? No, you need to do what is best for your country. US did ask China to depreciate the Yuan during the SE Asian crisis. China did not and it turned out good for the region. US did the same to Japan. Japan followed and now they have the lost decade.
The bargain chips: China may have a trade deficit soon (due to buying commodities and oil for future use) and US can ask China to lower the high tariff VAT/duty.
May 12th, 2010 at 3:22 pm
Economy is not a popular topic in FM.
FM is one of the few blogs defending China convincingly and ironically it is blocked by China. I write posts to defend China on Yuan, human rights, energy policy, Tibet… with facts and with a fair yardstick. No one will accept China and treat it as a evil empire if we do not use facts to convince the west.
As an example, recently I googled ‘Stem Cell and China’. I found they only appeal to the very desperate and/or the few uneducated folks. I do not believe any of the ‘cured’ cases. If you know anyone is cured using the stem cell in China, please let us know.
May 12th, 2010 at 6:03 pm
I’ve heard of stories of people affected by neurological disorders being “cured” with the doctors in China, not just stem cells. However, I haven’t really seen them or know exactly what their conditions are. I’m aware of how the situation is regarding healthcare in China though so I understand the skepticism.
Regarding the Yuan, I may not be a student of economics, but a lot of people are aware that whatever China decides to do with their currency other countries can’t have a strong hand in. The news agencies sometimes over-simplify the world a bit too much.
Pardon my strong language, but it is true what some of the semi-controversial commentators are saying that much of the world economy, (Western or US-led, modern would probably be the best definition) is a huge scam of some sort. A lot of financial institutions are playing with numbers, the values dependent on increasing or decreasing the record of different contracts. There’s also little justification why some of these service professions, including lawyers, doctors and analysts, should be charging a lot of money for their work.
Well, the last statement was a bit more personal for me, but I think you all get my point.
May 12th, 2010 at 6:21 pm
Hi TonyP4,
I think one reason why this blog is blocked in China is because it’s a bit too US-centric. Most of the topics here are comparison, written by and for people whose mentality is that way instead of being focus on China itself. You all talk about many different topics, but it’s kind of not wired in a significant way either for both government propaganda and the common (local) people’s concerns.
Too many China sites, by locals, overseas Chinese, expats, any “experts” or travellers, or really too subjective in the neutral sense. Like whatever their focus is on or their knowledge at the time, that is what they see. Mr. James Fallows is a very good commentator but not everything he writes about, including non-China topics, are entirely accurate. Sometimes they are a bit shallow but no human being is perfect so I give credit to anyone who tries. A lot of the sites are also too sensational, weird news or scandals, like reading something from celebrity magazines except it’s not.
Gossip is too ingrained in many communities but we can not move forward substantially because of it. Only a few times, it may have progress society, but most of the time beyond the superficial layers, a lot of it is treated as entertainment or just part of the “game”. Otherwise, even if the gossip item is worth taking a serious look at, we would all be slaves to people’s ever-changing shallow opinions and that is not the way to live.
May 12th, 2010 at 8:28 pm
Here’s a comparison – the EU just intervened on behalf of its supposedly free exchange currency big time, by illegally invoking EU’s “natural disaster” clause to bail out Greece.
Where’s the cry for currency manipulation? The truth is Euro is under “managed/pegged float” thru constant market intervention mandated by EU monetary policy, just like the Yuan, our greenback, most if not all currencies out there.
May 12th, 2010 at 9:42 pm
That’s a very good point, Charles.
If the governments of EU mismanaged their own economy, one can hardly call it “natural disaster.” It is in fact, “man made disaster.”
Manipulation of currency in such a situation is just printing money to save EU’s collective political asses.
In a sense, it is total corruption. Afterall, why should people be taxed to pay for the errors of governments?
Afterall, if an official gambles away public money in a casino, should the tax payers pay for the missing money?
May 31st, 2010 at 1:07 am
To me, Euro is a mistake. Without Euro, Greece can recover better. When the economy is losing, then your country’s currency depreciates, so it will attract more tourists and your export is more competitive. Basically Greece acts like a loser who blames every one else but himself and the rich country like Germany is bailing it out without a lot of choices.
May 31st, 2010 at 2:15 am
Greece hasn’t been acting well, for sure, but I wouldn’t count out the euro so far. The EU, btw, shows that everything isn’t economics – there’s been very little talk about the “European century” despite its economy being larger than the US.
May 31st, 2010 at 1:46 pm
Last, last century is Europe Century when they colonized, looted, pushed drugs, enslaved natives and shipped back all the treasures from around the world with their big cannons. Go to any larger museums in Britain, France.., and you can tell the loots everywhere from the hands with blood dripping.
May 31st, 2010 at 2:42 pm
Tony, that’s quite a witty answer, so I’m not going to rebuke it. 😉 But at the same time, if you think making people richer shows that the CCP is a “human rights lover,” then there are quite some European candidates out there too. Also, it wasn’t like every country in Europe looted “with blood dripping.” Britain and France (not to mention Spain) were pretty bad, though.
May 31st, 2010 at 7:17 pm
Thanks for not to rebuke with me as you’re quite a good debater and I’m just telling the facts. Who provides the basic necessities in life such as food, shelter and sex is human rights lover. I believe you get this lover stuff from my satire as follows. It does change at least several’s attitude towards China, but not any Chinese basher.
http://tonyp4idea.blogspot.com/2009/11/china-human-right-lover.html
June 1st, 2010 at 11:53 am
I’ll say this, Premier Wen, unpeg the damn yuan!
Let it float at the level at which China has a trade balance.
June 1st, 2010 at 1:35 pm
It is not as simple as that. Every 1% Yuan appreciates, thousands of jobs will be lost (forget the exact no.). China should appreciate the Yuan but at its own pace.
June 1st, 2010 at 8:53 pm
Continuous trade surplus isn’t sustainable, jobs or not. On the other hand, having a more valuable yuan can buy more imports and people can enjoy their fruit. Work less, enjoy more.
June 2nd, 2010 at 1:09 pm
That’s what I propose to CCP, but they never listen, haha. We need to balance on jobs (CCP wants jobs to reduce social unrest, similar to Obama using bailouts for votes) and improving living standards (such as air/water/food pollution). We really have to develop a consumer middle class so we do not have to depend on export that much. SeekingAlpha has a Yuan debate:
http://seekingalpha.com/article/207775-china-the-case-for-yuan-devaluation?source=hp_wc