#yuan

  • Trump inaugure son approche « business » avec #Shinzo_Abe
    https://www.mediapart.fr/journal/economie/130217/trump-inaugure-son-approche-business-avec-shinzo-abe

    Le président des États-Unis a inauguré avec le premier ministre japonais son approche affairiste des relations internationales et de la diplomatie commerciale. Des « deals » négociés sur les parcours de #golf. Résultats attendus plus qu’incertains.

    #Economie #accord_du_Plaza #Asie #Automobile #Chine #défense #Donald_Trump #Hiro_Honma #Japan_bashing #Nobosuke_Kishi #protectionnisme #yen/dollar #yuan


  • Transcript: Zhou Xiaochuan Interview
    http://english.caixin.com/2016-02-15/100909181.html

    aixin: The central bank convened its system-wide annual work conference in January. We learned that before the Spring Festival, the branch offices were studying the decisions adopted at the conference and discussing ways to implement them. Can you briefly describe the major agenda items of the annual work conference?
    Zhou Xiaochuan: In the PBOC’s annual work meetings, we usually discuss and analyze the economic situation and financial market developments in China and beyond, and follow up on our tasks to implement the decisions of the Central Economic Work Conference and to advance financial sector reform. This year, we also discussed at length subjects including the foreign exchange market, the exchange rate, macro-prudential assessment, the central bank’s digital money and Internet banking, etc.
    At present, market participants have different views on the outlook for China’s economic growth, which also affects their assessment of the yuan exchange rate. What is your view on this issue?
    There are indeed differences in the views of the economic situation and financial market developments. It is necessary to analyze the current state of China’s economy in a comprehensive and objective way. Overall, the performance of the economy remains within a reasonably strong range. Against the backdrop of a slowing world economy and global trade, and heightened fluctuations in the international financial markets, China maintained a growth rate of 6.9 percent in 2015, still relatively high compared with other countries.
    The change in China’s growth rate can be attributed in part to weak performance of the global economy. It also reflects the structural adjustment policies adopted by the Chinese government. Such a change is conducive to the ongoing efforts in China to pursue more sustainable and quality growth and is beneficial to the rebalancing of the global economy. Going forward, China will strengthen structural reform, especially supply-side reform, in order to strike a better balance among economic growth, structural adjustment and risk prevention, and to achieve sustainable and steady development.
    In your view, what will be the major driving forces for growth in China?
    China’s savings rate remains quite high and will continue to be translated into high investment. Though part of this investment will be outward investment, its proportion will be very small compared with domestic investment. This will not lead to a moderation of investment gains and a reduction of investment opportunities in China. There is a good basis to keep domestic investment at reasonably high levels.
    Despite the change of comparative advantages in trade, China’s manufacturing industry has enormous advantages in upgrading and transformation, by moving up to the middle and high-end of the value chain. The manufacturing industry is going through short-term adjustments, partly due to environmental requirements, to cut expansion into highly polluting industries that consume lots of energy and resources. In 2015, the service sector as a share of GDP increased from 43 percent to more than 50 percent. The space for further expansion is large. In addition, measures have been taken to ease market access for private capitals. Problems are being solved step by step. The scope for mass entrepreneurship is vast.
    There are widespread concerns about the fall of the GDP growth rate. After remaining in double digits for many years, the growth rate has declined consistently, and fell to 6.9 percent in 2015. This has given rise to pessimistic sentiments.
    Among the views expressed on China’s growth, two factors are worth mentioning. First, China contributed enormously to the global GDP growth in 2009 and 2010. With a population that was 20 percent of the world total and GDP less than 10 percent of the world total, China’s contribution of the global GDP growth was over 50 percent. We must recognize the special circumstances and the sharp contrast between China and other economies at that time. While the advanced economies in Europe and North America were responding to the shocks of the financial crisis, China adopted a stimulus package. This situation is not to be regarded as a norm. For China, 50 percent is not a sustainable level of contribution to global growth. At present, China contributes around 25 percent to the world GDP growth, and this is relatively close to normal. This is not a hand landing at all.
    Another factor is that in the past China put a lot of emphasis on GDP. In fact, looking at worldwide experience, there is not a direct correlation between GDP and the exchange rate, especially the growth of GDP and exchange rate movements. For example, overly rapid GDP growth sometimes causes overheating and high inflation, putting downward pressure on the currency. Some misguided views have been expressed in the debates around the world. In fact, the exchange rate of a currency is related to the international competitiveness and health of the economy of the issuing country.
    When we take a closer look at economic theory and international experience, we see that the current account balance, among all the economic fundamentals, is the most related to exchange rate. In 2015, China’s current account surplus remains massive. In particular, the surplus in the trade of goods reached a historic high of US$ 598.1 billion. There is another fundamental, i.e. movements of real effective exchange rate, or the relative movements of inflation, that affects exchange rate. The inflation target of the United States, Japan and Europe is 2 percent. At the end of 2015, China’s CPI was 1.4 percent, a relatively low level for China. Low inflation is conducive to the stable value of a currency.

    #Chine #Yuan #Banque_centrale


  • Le triangle de la géopolitique économique : énergie, #dollar, politique monétaire
    https://www.mediapart.fr/journal/economie/291215/le-triangle-de-la-geopolitique-economique-energie-dollar-politique-monetai

    Après quarante ans d’interruption, le Congrès des États-Unis vient d’autoriser à nouveau l’exportation de #pétrole à partir du territoire américain. Une décision hautement symbolique, illustrant la mutation en cours dans les grands équilibres de la géopolitique économique. Analyse, en collaboration avec #Kenneth_Courtis.

    #Economie #Abenomics #Chine #Crise #Etats-Unis #Fed #Janet_Yellen #Partenariat_Transpacifique #Russie #yuan


  • IMF Move on Yuan Shows That Excluding China Is a Losing Bet
    http://www.worldpoliticsreview.com/articles/17368/imf-move-on-yuan-shows-that-excluding-china-is-a-losing-bet

    On Monday, the Executive Board of the International Monetary Fund (IMF) voted to add China’s currency, the yuan or renminbi, to a very short list of elite global reserve currencies. Next fall, the yuan will officially be added to the IMF’s Special Drawing Rights (SDR) basket of currencies, which presently includes just the dollar, euro, yen and pound sterling. In part, the decision reflects the undeniable reality of China’s economic rise. However, the decision is also a pragmatic, perhaps even savvy, move by the IMF and the United States to further incorporate China into an international financial order that largely reflects Western economic ideas and interests.

    The SDR is sometimes referred to as a “synthetic currency.” Its value changes daily and is based on a weighted combination of the four—soon to be five—currencies that make up the basket. From a practical standpoint, SDRs do not really matter very much. Their most prominent role is as a unit of account for the IMF. For example, the IMF officially reports its own assets and liabilities in SDR terms.

    Despite that, inclusion in the SDR basket has symbolic value. It can be thought of as the IMF’s official endorsement of the yuan as a global investment and trade settlement currency. Central bankers as well as asset managers of private investment funds take the IMF’s opinion on such matters seriously. One major global bank predicts that the currency’s new status will generate $1 trillion in new investments in China over the next year. That could increase to $3 trillion over five years.

    Yet, by some accounts, the yuan is not yet deserving of its new lofty status. One key requirement for inclusion in the SDR basket is what the IMF calls the freely usable standard. As recently as this spring, U.S. Treasury Secretary Jack Lew publicly stated that the yuan did not yet belong in the basket because “further liberalization and reform” was necessary to meet that IMF standard. Implicitly, Lew was pointing to two complaints the U.S. regularly makes about China’s currency policy. First, Beijing still tightly manages the yuan’s exchange rate, rather than allowing the market to drive its value. Second, the yuan is not a so-called fully convertible currency, as Beijing limits how much cash can move both in and out of its domestic financial markets.
    Why did the U.S. change its position from opposing the yuan’s inclusion in the spring to supporting it by the fall?
    However, earlier this year, the IMF issued a report that noted that “freely useable” simply means a currency is widely used to make payments for international transactions and widely traded in foreign exchange markets. On these standards, the yuan scores relatively well.

    In recent years, the yuan has surged to become the second most popular currency in international trade financing deals and, overall, is now the fourth most widely used currency in international payments of all types. Nevertheless, the yuan still does not rank as a top five currency in global debt markets, currency trading or foreign exchange reserves.

    In short, the yuan had a solid economic case for IMF inclusion—but not an overwhelmingly strong one. So, why did the U.S. change its position from opposing the yuan’s inclusion in the spring to supporting it by the fall? The answer comes down to politics. 

    Since at least 2009, China’s top central banker, Zhou Xiaochuan, has made getting his country’s currency in the SDR basket something of a personal crusade. Zhou is an economic reformer. In his tenure as governor of the People’s Bank of China (PBC), he has overseen a long list of policy changes that have opened China’s financial markets up to the world—albeit slowly and incrementally.

    Financial liberalization poses some risks for key interest groups in China, not least of which are major export-oriented industries. Despite these risks, Zhou was able to push forward, in part, by dangling the prestige of SDR membership in front of the country’s leadership. Had the IMF thumbed its nose at the yuan—as it did in 2010—Zhou’s reform strategy, as well as his leadership at the PBC, may have been questioned in Beijing. Rejection would have been a blow to the financial reform movement in China and may have brought about backsliding. That was an outcome that the U.S. and IMF leadership wanted to avoid.

    On the other hand, voting to include the yuan in the SDR basket hands a clear victory to Zhou and his vision of a more open Chinese financial system. It encourages continued incremental liberalization by demonstrating that the U.S.-dominated institution is willing to give China more power, so long as Beijing makes an effort to meet the IMF’s standards. This point bears repeating: Demonstrating that the IMF can serve China’s interests as well as America’s is vital for both the IMF itself and the international financial order that it presides over.

    #Chine, #yuan, #FMI


  • China’s new foreign exchange regime brings volatility and value to its financial system | CER
    http://www.chinaeconomicreview.com/node/67678
    (...)

    The size of the yuan’s initial drop this week seems to have overshadowed its cause, perhaps understandably: The currency’s trading-band fall of nearly 2% against the US dollar on Tuesday hit many unsuspecting investors, analysts and journalists square on the jaw like a hard left hook.

    But heading into the third day of the new and largely unproven currency regime that made the drop possible, it is worth scrutinizing what exactly the new scheme entails and why the old one was dropped, as well as the implications for systemic risk in China as it embarks on what could prove to be a significant step in a long-promised campaign of financial reform. 

    On the mainland and increasingly abroad, everything from gold to property to equities to cabbage is bought with the yuan. Put simply, there is no nexus so central to China as its currency. And now the central bank has cranked the coin of the realm’s volatility up to unprecedented levels.

    Fresh ink, new rules

    Thus far, the People’s Bank of China (PBOC) has played by the new foreign exchange rules it laid out Tuesday morning: Previously the central bank would, without regard for market sentiment, set a midpoint for the yuan’s dollar exchange rate from which the currency could float up or down by a maximum of 2%. The new mechanism has the PBOC still setting the midpoint, but is supposedly based on the market movements of the previous day.

    That has remained technically true, though on late Wednesday afternoon news broke that the PBOC had ordered state-owned banks to sell dollars in the last 15 minutes of trading. Thus, after nearing its bottom limit of 2% devaluation, the yuan’s dollar value swooped back up by about 1% to set a less drastic midpoint for the start of Thursday trading.

    Chen Long, China economist at research firm Gavekal Dragonomics, said he suspected this policy combination could continue: The bank can allow the yuan’s fixing price to follow from the spot market closing price, protecting its credibility; but it can also intervene in the spot market as needed to prevent the currency from falling by 2% every day.

    “Therefore the PBOC avoids a massive depreciation that can potentially harm financial stability, and soon we will see real money starting to buy RMB again,” Chen said. 

    Financial fallout 

    The new foreign exchange regime - assuming it holds through the rest of this week - could be the most substantial move so far under President Xi Jinping’s administration to follow through on promises to give the market a greater role in China’s economy. Just not too great.

    “It appears that in the first two days of this [scheme] that what they’re trying to do is let the market play a greater role in determining the exchange rate, but not let it play too big a role,” said Christopher Balding, associate professor at the HSBC School of Business at Peking University.

    Balding suggested the downward pressure on the yuan’s value was largely a happy coincidence, and was skeptical that any resulting impact on China’s exports could be extricated from regular business cycle changes. 

    Speaking shortly before the PBOC intervened in the spot market, he said the bank would likely move to halt downward movement it considered too sudden. “My sense is they’re content to let the RMB glide down a little bit,” Balding said. If that means increased capital outflows from China’s financial sector, so be it. Balding also suggested keeping an eye trained on interest rates: “If maintaining the [exchange rate] peg is less of an issue, that does give the PBOC the freedom to lower interest rates and potentially help out Chinese businesses.”

    #Chine, #Yuan,#réforme_financière


  • The People’s Bank of China is magnificently right | Asia Times
    http://atimes.com/2015/08/the-peoples-bank-of-china-is-magnificently-right
    http://atimes.com/wp-content/uploads/2015/08/dxyoil.png

    The People’s Bank of China is magnificently right

    BY ASIA UNHEDGED on AUGUST 12, 2015 in ASIA UNHEDGED, CHINA
    After Franklin Roosevelt devalued the dollar against gold in the midst of a global deflationary spiral, the economist John Maynard Keynes declared in the Daily Mail, “President Roosevelt is Magnificently Right.” So is the People’s Bank of China. The soaring US dollar rose 25% on a trade-weighted basis between June 2014 and March 2015, for two reasons: The US Federal Reserve declared its intention to raise interest rates while the economy weakened, and China’s central bank allowed the RMB to rise in lockstep with the dollar. After the RMB devaluation, the trade-weighted US dollar index DXY fell from a high of 98.3 on August 5 to 96.2 as of 10:00 a.m. EST Wednesday. Gold has risen from $1,085 to $1,117. Oil is down slightly, but that’s probably more supply-related than currency-driven. Inflation expectations as registered by the bond market (“breakeven inflation”) are unchanged at the 5-year level. What’s bad about that? The flight to safety in equity and bond markets seems wrong-headed.

    We would have preferred, to be sure, a clear statement from the PBoC announcing a general adjustment of monetary policy, including a reduction of interest rates. With China’s PPI at -5.4% YOY and CPI at +1.6%, most Chinese businesses and consumers are paying much higher real rates than their Western or Japanese counterparts. The PBoC’s penchant for doing things piecemeal appears to have confused the market. That doesn’t change the fact that it did the right thing.

    Deflation, by definition, is an increase in the value of a currency against goods (and, relatively speaking, other currencies). During the year to date, the rise and fall in the oil price has tracked (inversely) the rise and fall of the trade-weighted dollar.

    #CHine #YUan


  • Yuan, Bourse...La Chine découvre la volatilité des marchés
    China’s new foreign exchange regime brings volatility and value to its financial system | CER
    http://www.chinaeconomicreview.com/chinas-new-forex-regime-brings-volatility-value-its-financial-s

    On the mainland and increasingly abroad, everything from gold to property to equities to cabbage is bought with the yuan. Put simply, there is no nexus so central to China as its currency. And now the central bank has cranked the coin of the realm’s volatility up to unprecedented levels.

    Fresh ink, new rules

    Thus far, the People’s Bank of China (PBOC) has played by the new foreign exchange rules it laid out Tuesday morning: Previously the central bank would, without regard for market sentiment, set a midpoint for the yuan’s dollar exchange rate from which the currency could float up or down by a maximum of 2%. The new mechanism has the PBOC still setting the midpoint, but is supposedly based on the market movements of the previous day.

    That has remained technically true, though on late Wednesday afternoon news broke that the PBOC had ordered state-owned banks to sell dollars in the last 15 minutes of trading. Thus, after nearing its bottom limit of 2% devaluation, the yuan’s dollar value swooped back up by about 1% to set a less drastic midpoint for the start of Thursday trading.

    Chen Long, China economist at research firm Gavekal Dragonomics, said he suspected this policy combination could continue: The bank can allow the yuan’s fixing price to follow from the spot market closing price, protecting its credibility; but it can also intervene in the spot market as needed to prevent the currency from falling by 2% every day.

    “Therefore the PBOC avoids a massive depreciation that can potentially harm financial stability, and soon we will see real money starting to buy RMB again,” Chen said. 

    Financial fallout 

    The new foreign exchange regime - assuming it holds through the rest of this week - could be the most substantial move so far under President Xi Jinping’s administration to follow through on promises to give the market a greater role in China’s economy. Just not too great.

    “It appears that in the first two days of this [scheme] that what they’re trying to do is let the market play a greater role in determining the exchange rate, but not let it play too big a role,” said Christopher Balding, associate professor at the HSBC School of Business at Peking University.

    Balding suggested the downward pressure on the yuan’s value was largely a happy coincidence, and was skeptical that any resulting impact on China’s exports could be extricated from regular business cycle changes. 

    Speaking shortly before the PBOC intervened in the spot market, he said the bank would likely move to halt downward movement it considered too sudden. “My sense is they’re content to let the RMB glide down a little bit,” Balding said. If that means increased capital outflows from China’s financial sector, so be it. Balding also suggested keeping an eye trained on interest rates: “If maintaining the [exchange rate] peg is less of an issue, that does give the PBOC the freedom to lower interest rates and potentially help out Chinese businesses.”

    There could be enormous strain on public and private actors with dollar-denominated debt such as property developers and some local governments, but Balding said that this was unlikely to influence the central bank’s decision making, due to its relatively small portion of total debt.

    Straightening priorities

    That is not to say China’s financial system is heading into the new exchange regime risk-free. While Beijing’s crackdown on short-selling and other bullish activity in the mainland stock market has ratcheted down volatility in recent weeks, other, larger systemic issues have remained largely unaddressed.

    #Chine #Yuan