Baht-yuan exchange pact signed with China

[NeverSure]

I don’t pretend to fully understand it, but it’s all part of a growing trend where Nations are slowly but surely divorcing themselves from a dependency on the US Dollar. With the US Dollar as the world’s reserve currency there was always a guaranteed market for US Treasury Bonds. Thus, even with QE, these Bonds maintained value. But, as Nations and Pacts (BRICS etc) begin entering into bilateral arrangements for trading in their local currencies, that dependency on the US Dollar, and demand for its Bonds, is reduced.

In the twelve months between January and December 2014, the Russian Ruble lost 50% of its value against the US Dollar. It would be interesting to see at what point, if any, Russia off-loaded some of its US Dollar stockpile into the market.

Russia doesn't hold enough US dollars to cause a sniffle. It's Russia that's broke.

NEW YORK (CNNMoney)

"Russia and the United States have levers to pull in their diplomatic showdown over Ukraine, but the amount of U.S. debt held by Russia won't be one of them."

"For one, Russia owns a fairly modest amount of U.S. Treasuries -- and that figure is shrinking. So even if Russia dumped its holdings, it wouldn't have much of an impact.

Figures released Tuesday by the U.S. Treasury Department show Russia owned $132 billion worth of Treasuries at the end of January, down 5% from December."

[Tomtomtom69]

Is allowing Thai cars to enter China temporarily for tourism purposes with a tour/guide on the agenda? Currently Chinese cars can enter Thailand without a tour, but Thai cars need to go on a tour? <deleted>? Hopefully the PM can kindly point out this injustice so Thai cars can enter and travel around China without the need for a guide as early as next year.

[Robby nz]

For those that missed this bit :

Mr Prasarn said the new swap agreement will replace the old deal which expired on yesterday. He said it will be effective for three years.

This is not something new it is replacing an old deal that has been in place for some time (don't know how long) and was signed now because the old deal had just expired.

That's why the rush for whoever asked.

[orpheus454]

My doesn't he look "the business".

Reminds me of Mussolini in Berlin.

Some of those guards of honour look tasty though.

Ha ! I've only just noticed. Some of the soldiers have got their knees exposed, they're actually women wearing skirts !!

Brilliant, Holmes, simply brilliant!

[yankee99]

I dont really understand the implications of this particular agreement, but what i want to know is why the sudden rush to sign as many agreements with China in such a short a time as possible.

Agreements signed on Saturday in Bangkok, then over to China and sign four more on Monday. I sincerely hope that these agreements and the deals between the countries are being studied and thought out carefully. It all seems very rushed.

Perhaps the Chinese have come bearing gifts to big to turn down.

I would note that the yuan/thb agreement is part of a larger pattern of moving away from settling accounts via the US Dollar and doing direct currency exchanges. This means that there will be slightly less demand for the US dollar for conducting business between Thailand and China (buying and selling) as transactions can be settled directly. China is busy setting up similar agreements all around the world, as is Russia. This should result in lower transaction costs as the US clearing house won't be collecting it's percentage or be in a position to stop or delay the transaction if the US decides that it's politically desirable. FYI. This is just my understanding and I am far from an expert.

You nailed it.

This is an excellent move by Thailand. Less dependency on the USD is the way to go. Specially now that China is the #1 world economy. http://www.forbes.com/sites/timworstall/2014/12/07/chinas-now-the-world-number-one-economy-and-it-doesnt-matter-a-darn/

Other countries are following suit.

Good luck spending RMB anywhere but china might as well have rubles or pesos

[NeverSure]

From your link.

"For what determines how well people live (and yes, aiding people in living well is pretty much the point of this whole having an economy thing) is economic output per capita. That total economy divided by the number of people who get to consume the output.

Here the US is well ahead (north of $50,000 a year in the US, only just over $5,000 a year in China and yes, that is after adjusting for price differences) and China would need another three generations of breakneck growth to close that gap."

Yes but again using GDP as any indicator is not useful as it includes

Government Spending what they do not have. Especially so in the case of the USA

Are you saying that China doesn't have government spending? That's what's been holding their GDP up as exports fail to grow noticeably.

"As growth has slowed this year, China has rolled out a series of targeted fiscal and monetary stimulus measures, including stepped-up spending on railways, energy, public housing, expanded credit to farmers and private businesses and more relaxed rules for the housing sector." LINK

[mania]

Are you saying that China doesn't have government spending?

They sure did not have QE1-2-3-4 etc etc with its accompanying insane interest

Nor are they spending a fraction of what the Military Industrial Complex requires of the US

Edited December 23, 2014 by mania

[SinCityGr8One]

I dont really understand the implications of this particular agreement, but what i want to know is why the sudden rush to sign as many agreements with China in such a short a time as possible.

Agreements signed on Saturday in Bangkok, then over to China and sign four more on Monday. I sincerely hope that these agreements and the deals between the countries are being studied and thought out carefully. It all seems very rushed.

Perhaps the Chinese have come bearing gifts to big to turn down.

I would note that the yuan/thb agreement is part of a larger pattern of moving away from settling accounts via the US Dollar and doing direct currency exchanges. This means that there will be slightly less demand for the US dollar for conducting business between Thailand and China (buying and selling) as transactions can be settled directly. China is busy setting up similar agreements all around the world, as is Russia. This should result in lower transaction costs as the US clearing house won't be collecting it's percentage or be in a position to stop or delay the transaction if the US decides that it's politically desirable. FYI. This is just my understanding and I am far from an expert.

You nailed it.

This is an excellent move by Thailand. Less dependency on the USD is the way to go. Specially now that China is the #1 world economy. http://www.forbes.com/sites/timworstall/2014/12/07/chinas-now-the-world-number-one-economy-and-it-doesnt-matter-a-darn/

Other countries are following suit.

Before you go out shooing off fireworks and popping the corks of Champagne Bottles celebrating China as the #1 Economy by surpassing the USA by $200 Billion, did you read the entire article and understand it? That total economy divided by the number of people who get to consume the output. Here the US is well ahead (north of $50,000 a year in the US, only just over $5,000 a year in China and yes, that is after adjusting for price differences) and China would need another three generations of breakneck growth to close that gap. And that is called PPP or Purchasing Power Parity. Three

generations is around another 50+ years. So, put the fireworks and Champagne away for your Great-Grandchildren to celebrate. The most interesting part of the $500 Billion Yearly trade between the USA and the PRC, is that the PRC is only too HAPPY to receive it's payments in US Dollars and continues to buy US Treasuries. Also, wealthy Chinese are buying second Homes in the USA because they view it as a safe haven. Plus, they don't haggle on the sales price, and pay the List Price in US Dollars. Those FACT's says more than the entire article. In regards to Thailand however, it might be a good move because Thailand is in Beijing's sphere of influence. In reality, the Thai Baht is pretty much useless outside of the ASEAN community, so it's a good political move between Thailand and the PRC for now. As far as the US Dollar getting knocked out of it's position as the Global Reserve Currency, I don't see that happening anytime this Century. IMHO.

[VegasVic]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

From your link.

"For what determines how well people live (and yes, aiding people in living well is pretty much the point of this whole having an economy thing) is economic output per capita. That total economy divided by the number of people who get to consume the output.

Here the US is well ahead (north of $50,000 a year in the US, only just over $5,000 a year in China and yes, that is after adjusting for price differences) and China would need another three generations of breakneck growth to close that gap."

Yes but again using GDP as any indicator is not useful as it includes
Government Spending what they do not have. Especially so in the case of the USA

Are you saying that China doesn't have government spending? That's what's been holding their GDP up as exports fail to grow noticeably.

"As growth has slowed this year, China has rolled out a series of targeted fiscal and monetary stimulus measures, including stepped-up spending on railways, energy, public housing, expanded credit to farmers and private businesses and more relaxed rules for the housing sector." LINK

The government is also the only thing keeping the real estate sector from a complete collapse

[lovetotravel]

Are you saying that China doesn't have government spending?

They sure did not have QE1-2-3-4 etc etc with its accompanying insane interest

Nor are they spending a fraction of what the Military Industrial Complex requires of the US

Impossible to know exactly what's going on with the Chinese economy. The numbers are not to be trusted.

http://online.barrons.com/articles/anne-stevenson-yang-why-xi-jinpings-troubles-and-chinas-could-get-worse-1417846773?tesla=y

People are crazy if they believe any government statistics, which, of course, are largely fabricated. In China, the Heisenberg uncertainty principle of physics holds sway, whereby the mere observation of economic numbers changes their behavior. For a time we started to look at numbers like electric-power production and freight traffic to get a line on actual economic growth because no one believed the gross- domestic-product figures. It didn’t take long for Beijing to figure this out and start doctoring those numbers, too.

I put much stock in estimates by various economists, including some at the Conference Board, that actual Chinese GDP is probably a third lower than is officially reported. And as for the recent International Monetary Fund report calling China the world’s biggest economy on a purchasing-power-parity basis, how silly was that? China is a cheap place to live if one is willing to eat rice, cabbage, and pork, but it’s expensive as all get out once you factor in the cost of decent housing, a car, and health care.

I’d be shocked if China is currently growing at a rate above, say, 4%, and any growth at all is coming from financial services, which ultimately depend on sustained growth in the rest of the economy. Think about it: Property sales are in decline, steel production is falling, commercial long-and short-haul vehicle sales are continuing to implode, and much of the growth in GDP is coming from huge rises in inventories across the economy. We track the 400 Chinese consumer companies listed on the Shanghai and Shenzhen stock markets, and in the third quarter, their gross revenues fell 4% from a year ago. This is hardly a vibrant economy.

[MaxLee]

So in other words eyes closed on CERTAIN bad tourist behaviors and CERTAIN business men of China, who treat their counterpart human beings like a piece of trash and get Face saving away with any sort of serious offenses..... that is the future of Thailand's International relations....

[NeverSure]

Are you saying that China doesn't have government spending?

They sure did not have QE1-2-3-4 etc etc with its accompanying insane interest

Nor are they spending a fraction of what the Military Industrial Complex requires of the US

China is a communist country and is responsible to feed its people. All 1.4 billion of them.

The US is a capitalist country and the people not only feed themselves, but they create 10X the income per person that China does. See link above.

As the article above said, China would need three generations of high economic growth to reach parity with the US's per capita income.

[mania]

China is a communist country and is responsible to feed its people. All 1.4 billion of them.

The US is a capitalist country and the people not only feed themselves, but they create 10X the income per person that China does. See link above.

As the article above said, China would need three generations of high economic growth to reach parity with the US's per capita income.

Oh come now...something like 50 million/20% US population on food stamps? Do they feed themselves or does the government?

35+% on welfare etc etc

Income etc is all relative to how they live etc. but my main contention was the measuring stick is tainted anyway.

But all aside & pretty much drifting OT now

Thailand made a currency exchange pact with China...no problem & not different than many others

doing something similar amongst themselves.

The whole World Reserve Currency Status is due for some change IMO

Of course folks always say well who is better than USD who can step up?

But that is not the question...why repair a mistake with yet another mistake?

It is the system that needs changing itself as allowing any country to be the WRC affords too much

leeway/room for problems

Perhaps instead someday they will think of a basket of currencies or even something else....Dont know

But it cannot rely on any single country

Edited December 23, 2014 by mania

[elgordo38]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

I dont really understand the implications of this particular agreement, but what i want to know is why the sudden rush to sign as many agreements with China in such a short a time as possible.

Agreements signed on Saturday in Bangkok, then over to China and sign four more on Monday. I sincerely hope that these agreements and the deals between the countries are being studied and thought out carefully. It all seems very rushed.

Perhaps the Chinese have come bearing gifts to big to turn down.

The really laughable part is that the Thais think they can con the Chinese the same way they do the falang.

I don't think the Falang is being taken for a ride , every Falang knows what it's all about, it is when the rosters come home to rest that's when Thailand will discover who was <deleted> who.

I hope this old rooster is around long enough to see this happen. One thing I agree with is that exports should settle in the currencies of the trading countries not American dollars. The practice of converting into American dollars and then back to the currency of the other country is a sham. It is just goosing the American dollar and giving them access to cheap money

[yellowboat]

I know it's easy to go to China for help, but why not try to strengthen the core ASEAN?

Because ASEAN does not have all that much motivation to do anything. China is hightly motivated.

[umbanda]

I often wondered how long it would be before China starts buying countries at will.

Already are buying the US.....

[umbanda]

I often wondered how long it would be before China starts buying countries at w

Edited December 23, 2014 by umbanda

[rickirs]

"The details of the MoUs were not revealed."

Why not? What happened to the Junta's mantra of government transparency? The Junta doesn't want the news media to speculate when it doesn't have all the facts yet it denies the public any details of such with these major agreements with China. And if any news media attempts any serious investigative journalism, reporters face potential reprimand, "attitude adjustment," and defamation lawsuits by the military.

Why the secrecy?

[wabothai]

Generals need to lead armies, not countries.

[thailand49]

I dont really understand the implications of this particular agreement, but what i want to know is why the sudden rush to sign as many agreements with China in such a short a time as possible.

Agreements signed on Saturday in Bangkok, then over to China and sign four more on Monday. I sincerely hope that these agreements and the deals between the countries are being studied and thought out carefully. It all seems very rushed.

Perhaps the Chinese have come bearing gifts to big to turn down.

I would note that the yuan/thb agreement is part of a larger pattern of moving away from settling accounts via the US Dollar and doing direct currency exchanges. This means that there will be slightly less demand for the US dollar for conducting business between Thailand and China (buying and selling) as transactions can be settled directly. China is busy setting up similar agreements all around the world, as is Russia. This should result in lower transaction costs as the US clearing house won't be collecting it's percentage or be in a position to stop or delay the transaction if the US decides that it's politically desirable. FYI. This is just my understanding and I am far from an expert.

You nailed it.

This is an excellent move by Thailand. Less dependency on the USD is the way to go. Specially now that China is the #1 world economy. http://www.forbes.com/sites/timworstall/2014/12/07/chinas-now-the-world-number-one-economy-and-it-doesnt-matter-a-darn/

Other countries are following suit.

Before you go out shooing off fireworks and popping the corks of Champagne Bottles celebrating China as the #1 Economy by surpassing the USA by $200 Billion, did you read the entire article and understand it? That total economy divided by the number of people who get to consume the output. Here the US is well ahead (north of $50,000 a year in the US, only just over $5,000 a year in China and yes, that is after adjusting for price differences) and China would need another three generations of breakneck growth to close that gap. And that is called PPP or Purchasing Power Parity. Three

generations is around another 50+ years. So, put the fireworks and Champagne away for your Great-Grandchildren to celebrate. The most interesting part of the $500 Billion Yearly trade between the USA and the PRC, is that the PRC is only too HAPPY to receive it's payments in US Dollars and continues to buy US Treasuries. Also, wealthy Chinese are buying second Homes in the USA because they view it as a safe haven. Plus, they don't haggle on the sales price, and pay the List Price in US Dollars. Those FACT's says more than the entire article. In regards to Thailand however, it might be a good move because Thailand is in Beijing's sphere of influence. In reality, the Thai Baht is pretty much useless outside of the ASEAN community, so it's a good political move between Thailand and the PRC for now. As far as the US Dollar getting knocked out of it's position as the Global Reserve Currency, I don't see that happening anytime this Century. IMHO.

China does nothing for anyone one or country unless there is a 200 plus % return to them. They and anyone who wants China or Russia to be the leaders in the world for anything including economy go ahead and rah rah all you want. But remember when the shit hits the fan and there are problems in the world like what happen years ago to Phuket, do us Americans a favor " don't ask for help or have your hands out " or even think about kissing our ass! Just look it up how much they contribute? Next time " Who you going to call? "

[h90]

I dont really understand the implications of this particular agreement, but what i want to know is why the sudden rush to sign as many agreements with China in such a short a time as possible.

Agreements signed on Saturday in Bangkok, then over to China and sign four more on Monday. I sincerely hope that these agreements and the deals between the countries are being studied and thought out carefully. It all seems very rushed.

Perhaps the Chinese have come bearing gifts to big to turn down.

I would note that the yuan/thb agreement is part of a larger pattern of moving away from settling accounts via the US Dollar and doing direct currency exchanges. This means that there will be slightly less demand for the US dollar for conducting business between Thailand and China (buying and selling) as transactions can be settled directly. China is busy setting up similar agreements all around the world, as is Russia. This should result in lower transaction costs as the US clearing house won't be collecting it's percentage or be in a position to stop or delay the transaction if the US decides that it's politically desirable. FYI. This is just my understanding and I am far from an expert.

Yes it saves a lot bank fees.

When I transfer money to China from Thailand and the invoice is in USD or Euro there are a lot fees from a bank in USA or Europe (+the fees in Thailand and in China).

That cuts out the European or US fees. A real advantage for Thailand and China companies.

[Whyamiandwhatamidoinghere]

I dont really understand the implications of this particular agreement, but what i want to know is why the sudden rush to sign as many agreements with China in such a short a time as possible.

Agreements signed on Saturday in Bangkok, then over to China and sign four more on Monday. I sincerely hope that these agreements and the deals between the countries are being studied and thought out carefully. It all seems very rushed.

Perhaps the Chinese have come bearing gifts to big to turn down.

I would note that the yuan/thb agreement is part of a larger pattern of moving away from settling accounts via the US Dollar and doing direct currency exchanges. This means that there will be slightly less demand for the US dollar for conducting business between Thailand and China (buying and selling) as transactions can be settled directly. China is busy setting up similar agreements all around the world, as is Russia. This should result in lower transaction costs as the US clearing house won't be collecting it's percentage or be in a position to stop or delay the transaction if the US decides that it's politically desirable. FYI. This is just my understanding and I am far from an expert.

You don't have to be an expert with the obvious. China wants the yuan to be the reserve currency but that would never happen since it owns trillions of

US debt. So the next best thing is to get all of the Aesean community to trade in yuan. Of course everyone will rush to do this but there are unseen consequences that only the Devil knows.