Tracing The History Of China's Forex Reserves And Trade Balance
Today Bloomberg picks up where we left off yesterday, and in its "chart of the day" analyzes the underpinnings of Albert Edwards' assumption that not only will the Renminbi not increase in value, as so many battered manufacturers in the US hope and pray (and complain to Congress every day), but will in fact be further devalued once China realizes the only way to avoid America's fate down the financial rabbit hole is to unpeg, but in the opposite direction from where Geithner would like. The causal factor: a collapsing trade balance which drags China's forex reserves, resulting in a major shift in international capital flows.
In either case, here is what Bloomberg had to say:
As the CHART OF THE DAY illustrates, Chinese exports have exceeded imports every month since May 2004. During the period, foreign-exchange reserves jumped fivefold to $2.27 trillion as of September, the most recent month available.
In light of this chart, have fun convincing China to inflate the yuan. Also, consider rereading the Edwards piece, as it may be the best approximation of what happens in 2010 not only in terms of China's trade balance, but its trade balance, and by implication, China's capital flows. And the second they divert away from the US and refocus on its own economy, it would mark the end of the Chairman's liquification strategy.
(3 votes)
»
- Login or register to post comments
- Printer-friendly version
- Send to friend
on Tue, 11/24/2009 - 16:14
#141016
CHART OF THE DAY.
on Tue, 11/24/2009 - 17:22
#141119
ZH post of the year.
on Tue, 11/24/2009 - 16:16
#141020
I guess the turkey has to get it's stuffing shoved in somehow. But if that is not a bitch of a way to serve up thanksgiving. I don't know what is.
on Tue, 11/24/2009 - 16:22
#141030
When they finally look inside this Black Swan they are gonna find a TurDucHen!
on Tue, 11/24/2009 - 16:39
#141050
http://www.youtube.com/watch?v=eZA0qNsf4m0
on Tue, 11/24/2009 - 18:06
#141179
Thx Arnold.
on Tue, 11/24/2009 - 16:51
#141068
Maybe that is why the Chinese have apparently been telling their citizens to buy gold and silver...?
on Tue, 11/24/2009 - 18:39
#141234
Am right now visiting China, you can buy gold at most banks (from small grams to 'large' 200 gram bars, maybe large depending on the bank). Also have US dollars and have tried to use them 'in the street' to pay for goods and so far not a single person has wanted US dollars. They want local currency.... or..... i did mention payment in gold to one person and they said they would accept that. Even Chinaman knows gold, not dollars, is good for payment.
NOTE: this IS NOT a scientific survey, am just a guy travelling through China for a few weeks and seeing how the general public reacts to various forms of exchange. Kinda like ZeroHedge's guy trying to sell a 1 ounce Maple Leaf coin for $50 in the Republik Of Kalifornia and no one wanted to buy it at that price. Same thing here, except Chinaman wants gold an not dollars. So ask yourself who is the smarter consumer/population.
on Tue, 11/24/2009 - 17:17
#141102
It boils down to this: do they want war? Civil, trade, nuclear, or otherwise?
on Tue, 11/24/2009 - 17:21
#141116
it boils down to that? hmm
on Tue, 11/24/2009 - 17:23
#141121
or rather, does the US want it?
on Tue, 11/24/2009 - 20:11
#141353
r u kidding me ball? we can't even catch osama and have not won a war since WWII, certainly not in vietnam, afgahn, black hawk, tehran, now u want us to gight a billion chinks? we fought them in korea remember when only us have the nukes? or is your peanut brain all screwed up by the neo-cons. ZH is getting to the point of Mussolini's class, go vote for hitler brain-dead!
on Tue, 11/24/2009 - 17:29
#141129
Huh, just like the Marina District in San Francisco, now we're all living in a Liquefaction Zone.
on Tue, 11/24/2009 - 17:38
#141141
...on the ground floor, with exits locked.
on Tue, 11/24/2009 - 17:43
#141149
A better question would be why nations trade with a country that pegs its currency. If China's goal is to keep forex reserves increasing, then there is no way they can expect to get paid back without other countries having to just print. They could try and spend the money, but no one wants to sell hard, in their own country assets to China. It's not like the US could buy resources, land, or anything in China. Heck, companies can't even be in China without being dually owned and run with a Chinese national company for the most part.
on Tue, 11/24/2009 - 18:22
#141204
How will China devalue its yuan?
on Tue, 11/24/2009 - 19:24
#141294
Ben will telework for them.
on Tue, 11/24/2009 - 19:25
#141295
Ben will telework for them.
on Tue, 11/24/2009 - 19:09
#141273
When will you stop kissing China's a$$? Who is the smarter? Who's the biggest douchebag.
on Tue, 11/24/2009 - 19:29
#141300
The goldbugs have also anticipated this eventuality, and have discussed it to death. We call it "The Race to the Bottom." It is like Death Race 2000 except without Carradine. Any extreme debt overhang will be met by deliberate depreciation of the debtor's currency in an attempt to inflate away the debt and to boost exports in order to earn foreign exchange. The other policy choice also usually chosen (and this time is no exception) is protectionism, then war (an increasing likelihood). If nothing else, goldbugs love history.
on Tue, 11/24/2009 - 19:50
#141322
"This is Romeo Foxtrot, Shall We Dance..."
Apocalypse Now..Ride Of The Valkyries
http://www.youtube.com/watch?v=Gz3Cc7wlfkI
on Wed, 11/25/2009 - 05:10
#141701
It is simple. All those dollars from exporting to the US need to be invested somewhere. Let's hope they will keep coming into US Treasuries.
admin
http://invetrics.com
on Wed, 11/25/2009 - 07:37
#141755
Yes they will keep comming into treasuries because the best place you can park your dollars is getting 3.3 pct in ten years while loosing 15-20 a year on the currency,... what do you think?
Either we are stupid, or we think the chineese are!