The rally in the Yuan from January through mid-March has mostly been erased.
If the yuan continues to sink, protectionists in the US will howl.
Included in the protectionist group are Donald Trump, president Obama, Hillary Clinton, and Bernie Sanders, to varying degrees. Trump is the leader of the protectionist group.
Yuan Falls Most in Two Months
Bloomberg reports Yuan Falls Most in Two Months as Trading Resumes After Holidays.
The yuan headed for its biggest loss in two months as the currency traded for the first time since Wednesday.
The yuan lost 0.4 percent to 6.5879 at 10:04 a.m. in Shanghai, approaching a five-year low against the dollar. A gauge of the greenback’s strength climbed 1.1 percent when mainland markets were closed for holidays. The central bank set the reference rate 0.3 percent weaker.
“There is a high chance the yuan will break the January low,” said Wang Ju, senior foreign-exchange strategist at HSBC Holdings Plc. “The fundamentals for the yuan are weak: the economy is slowing and capital is flowing out of China.”
Yuan vs. US Dollar
The yuan is down about 8.5% since 2014.
With the exception of countries whose currencies are in trouble such as Brazil, Venezuela, Russia, and now China (the latter to stop capital flight), it’s difficult to find countries that believe a rising currency is a good thing.
Trump is seriously wrong when it comes to free trade, but that issue may very well win him the election.
Mike “Mish” Shedlock
Mish – I have noticed a gaping hole between what Trump says about trade, and what the media reports. Its not that media reports are completely wrong (they are not, they sometimes include snippets of Trump himself talking). But in the admittedly few cases I investigated further, the media snippets are half truths.
Trump says he wants to cut off Chinese imports (true so far) — in order to force China to accept more US exports (the part the media usually leaves out).
I admit I have not investigated every speech Trump made, but the few cases where I did I saw the second part of his idea was omitted.
Free trade is supposed to be both ways, so conceptually there is nothing wrong with saying Trump wants to use the threat of no trade to force China to accept more US exports — I am not sure the tactic, if employed would actually work. Given that so many products have pieces made in one place, partially assembled someplace else, and final assembly in yet another place — I am not sure the idea is even practical.
But saying that free trade, benefiting both countries, is needed — that is not the same thing as being protectionist. And given the stunningly low quality media outlets we have in the USA, and their obvious bias against Trump — it seems we might be hearing only half of his idea.
Have you heard his speeches unedited by media outlets? Has anyone challenged him on the feasibility of the his “two ways or not at all” ideas? What a politician promises, what the media claims he/she promises, and what actually gets implemented (or attempted) are often three different things…
It seems like both China and the US would benefit from truly free trade. Both governments (and the lobbyists that “influence” them) have an interest in making trade only one way.
there is free trade. Trump is an idiot and he is wrong. China has also opened doors for american goods like nike, Pepsi ( crap sugar water) , coke, apple, microsoft, ford, GM and the list is endless. therefore US-china trade is not one way street.
(1) you didn’t answer my question, you just screamed some insults and decreed like a media pundit that you don’t like Trump.
(2) While China has a trade deficit with many raw material countries, it has a significant trade surplus with the USA. And for US political debates, it is the second fact that matters.
If China buys $10 of US goods (“crap sugar water” as you put it), and the US buys $400 of Chinese goods (machine tools and iPhones) — that is not a two way street. There is a trade deficit whether you want to admit it or not.
You didn’t mention that the biggest US export to China is soybeans. Your “crap sugar water” is political slight, not a well researched argument.
I don’t know if Trump’s negotiation tactics would work in an international trade setting. Two real estate moguls might make concessions to get a deal done (sometimes) if one side threatens to walk away from the table.
But negotiating with people who make emotional outbursts about “crap sugar water” is not the same thing. Trump would see your emotional outburst as a sign of weakness, you might see his stubborn position as a sign of arrogance — it would be much more difficult to complete a deal.
“US-china trade is not one way street.”
Close to it.
Per US trade numbers for goods and services.
Trade with China for 2015.
Exported $116.701 billion
Imported $484.118 billion
Deficit $367.417 billion … for one year
2010 numbers: China’s number one export to the U.S. is computer equipment (nearly $50 billion) while our number one export to them is waste paper and scrap metal (approximately $8 billion).
Nike, Pepsi, Coke, Apple, Microsoft, Ford, GM are brand names of American origin. China is not buying Nike shoes made in the US! If not in China, they are made elsewhere – Vietnam, Malaysia etc. Pepsi, Coke etc. are usually produced wherever they are consumed. Apple iphones etc. are made in China. Only some aspects of the design and software (also in case of Microsoft) are produced by people living in the US. Ford, GM etc. cars are often made in Mexico and elsewhere.
People in China have been ditching the Yuan and buying Bitcoin for the last 48 hours or so. Bitcoin is up to around $680. It was at $440 about 3 weeks ago. This is a HUGE story the mainstream media is not talking about.
Every one got this wrong. when China agreed to open doors to trade with the West in the eighties. There was condition that was set. That every Western company that had products manufactured in China the Companies would be allowed to import goods in to the China market if , China was allowed to export 40 percent of the goods they manufactured for them to the world market.
The Western companies thought they would have access to a huge consumer China market to offset the minimum loss of their existing market. So they signed on to the Forty Percent agreement. They Taught and provided the necessary resources to the suppliers to made and market their products.
The Chinese leaned and uncut the west and became the “Tail wagging the dog “.
What the West didn’t know is this Export program was set up by the Chinese Government with all companies in China. This is called the “Five Year Plan ” the whole country has always been run this way.” Top down ” The West didn’t understand the China culture it is not built on A want base but, a need base. When the Average Chinese citizens have what they need to live they are content. West created thier own competition for thier own markets
So who knows what is been written in the new Five Year plan but get ready we are about to Find out.
I Think , Trump understands and knows what is coming and will start a “New Deal ” putting the nation to work rebuilding the infrastructure relying on internal resources. To support twenty second technology. Based on need not want. The want has been supersede and totally replaced by Technology. Three forth of the careers of today will be a program. Embrace, the Future its here Now.
“When the Average Chinese citizens have what they need to live they are content. West created thier own competition for thier own markets”
Entitlements
“capitalist” US has them. “communinist” China doesn’t.
Americans (as a whole) have always spent more than they earn (see steady increase in household debt) as they know at the end of the line they have social security / medicare to fall back on. The Chinese need to save for their retirement as no government backstop.
Rich with irony a “conservative” US president (George W. Bush while in Australia in 2006) gave a speech imploring the Chinese government to set up entitlements for their citizens (so they would buy more Western produced goods).