China Ready For Currency War, Central Bank Official Says

[webfact]

China ready for currency war, central bank official says

BEIJING: -- A top central banking official announced that China is "fully prepared for a looming currency war," state media reported on Saturday.

The conflict could be avoided if major countries observe the consensus reached at a recent G20 meeting to focus monetary policy primarily on the domestic economy, Yi Gang, deputy governor of the People’s Bank of China, was quoted as saying by Xinhua news agency.

G20 members "had shown no signs of scaling back monetary easing that has injected a flood of cash into global markets," the report said, highlighting a 2o-per-cent devaluation of the yen against the US dollar under Japanese Prime Minister Shinzo Abe.

"China is fully prepared," Yi told Xinhua. "In terms of both monetary policies and other mechanism arrangements, China will take into full account the quantitative easing policies implemented by central banks of foreign countries."

Chinese manufacturing grew at its weakest rate in five months in February according to data released by the National Bureau of Statistics and the China Federation of Logistics and Purchasing on Friday.

The Purchasing Managers’ Index in the manufacturing sector fell to 50.10 in February from 50.40 the previous month, indicating recovery had slumped to its slowest rate since September.


-- The Nation 2013-03-02

[ExpatOilWorker]

Not much China can do about it, other than seeing that their trillion $ foreign reserve holdings are getting diluter every time QE is pumping more money into the system.

[mccw]

Not much China can do about it, other than seeing that their trillion $ foreign reserve holdings are getting diluter every time QE is pumping more money into the system.

They could print up some more of their own currency to devalued as well. But Chinese have less disposable income to accept the resulting inflation of essentials that the wests populations can/are.

[lemoncake]

Interesting article about China.

Might sound foolish at first, but then again....

A Surprising Threat to China's Economy

Despite recent economic data that somehow keeps surprising to the upside, there are numerous concerns about the sustainability of China's economy.

Some of the major ones include the excessive growth of credit over the past five years, staggering levels of overcapacity in several key industries, heavily indebted local governments,wasteful state-owned enterprises that continue to siphon money away from savers, and the threat of social instability if economic growth were to slow sharply.

http://www.fool.com/investing/general/2013/02/26/a-surprising-threat-to-chinas-economy.aspx

[ExpatOilWorker]

Not much China can do about it, other than seeing that their trillion $ foreign reserve holdings are getting diluter every time QE is pumping more money into the system.

They could print up some more of their own currency to devalued as well. But Chinese have less disposable income to accept the resulting inflation of essentials that the wests populations can/are.

I also have a feel, whatever is coming next in this long drawn out financial crises will hit China. The Chinese exponential demand for energy is just not sustainable forever.

[draftvader]

Speaking with a friend who has been working as an Operations Manager for a major shoe manufacturer in Thailand about his reasons to moving jobs to work in Vietnam and he spoke of Thailand's inability to keep up with its economic growth. Simple truths that can't be ignored.

The staff are not getting any more educated yet they cost more.
The infrastructure is not getting any better yet it costs more to use it.

Basically put Thailand's "value for money" statement is not really so true any more. In sales as long as you can deliver value then you are charging the right price. Same applies for a country as a commercial entity.

Lets not forget the classic gap between reality and accounting that is endemic in Asia and we can see a number of reasons not to believe everything you read. After all we are told about all sorts of wonderous things that Thailand can do, that it obviously can't, by the wonderous leaders here. Where does Thailand get its political/economic model from?

Reading lemoncake's articles on the Motley Fool I found myself easily being able to substitute the word "China" with the word "Thailand". It pans perfectly!

[Naam]

Not much China can do about it, other than seeing that their trillion $ foreign reserve holdings are getting diluter every time QE is pumping more money into the system.

They could print up some more of their own currency to devalued as well. But Chinese have less disposable income to accept the resulting inflation of essentials that the wests populations can/are.

China doesn't have to print a single Yuan to devalue CNY. it's all done by the same method that worked since years, namely by the authorities in power setting the rate. that this might backfire by countries importing Chinese goods slapping protectionist duties on these is a different story.

[Locationthailand]

If China's currency free-floats the cost of Chinese goods against the worlds failing currencies would make her uncompetitive. But right now - China's backing is really from it's tonnes of gold reserves and capital and the fact that China owns a lot of other countries debts - most of whom cannot trade out. By their continued printing of funds (insanity) the west is pushing their countries further to the brink of collapse By their defaults this would do damage but as China controls its exchange rate means it can well afford a trading war if push comes to shove.

[chainarong]

One word , doubtful.

[yoshiwara]

If China's currency free-floats the cost of Chinese goods against the worlds failing currencies would make her uncompetitive. But right now - China's backing is really from it's tonnes of gold reserves and capital and the fact that China owns a lot of other countries debts - most of whom cannot trade out. By their continued printing of funds (insanity) the west is pushing their countries further to the brink of collapse By their defaults this would do damage but as China controls its exchange rate means it can well afford a trading war if push comes to shove.

On the contrary it is the gold bugs going bonkers because their prediction/craving for collapse keeps getting postponed.

[chainarong]

This news is old hat at least two weeks old, there 's no currency war , only currency problems.