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More And More RMB Hot Money, China'S Exchange Rate Firewall Cited Concerns

2014/2/9 14:54:00 46

RMB Exchange Rate Deflation International Settlement Currency Arbitrage Trading The Federal Reserve

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 < a > href= > http://sjfzxm.com/news/index_s.asp > > the Federal Reserve < /a > (Fed), the emerging market turbulence triggered by the quantitative easing measures is still going on. Then what is China's resistance? Because China has implemented the RMB exchange rate pegged to the US dollar exchange rate system and has not yet opened its capital account, the market generally thinks that this has built a firewall that can resist capital outflow. 
 but the Chinese people set up this a href= "http://sjfzxm.com/news/index_s.asp" > exchange rate < /a > firewall also brings other problems. Compared with a large number of depreciating emerging market currencies, the renminbi is obviously strong, which means that China has to cope with the influx of excessive hot money and the appreciation of the renminbi against the US dollar, which has also brought other troubles, such as inflation, real estate bubbles and the competitiveness of the domestic industry in the case of high exchange rate of RMB. 
 Shutterstock/Dmitry Kalinovsky 
 with the increasing influx of hot money, which uses renminbi to carry out "a href=" http://sjfzxm.com/news/index_s.asp "arbitrage trading > /a", other weaknesses of China's economy are also exposed. 
 first of all, this means that China's economic and financial system now relies on volatile foreign currency with potential instability, and China's closed financial system is used to guard against such short-term foreign capital. Such capital is hard to quantify, but the size of these structured products that chase earnings can be estimated from the claims of Hongkong's banking sector on mainland China. As of October last year, the claim reached a record HK $2 trillion and 300 billion (US $295 billion), an increase of 53% over the end of 2012. 
 there are signs that this has led to the explosive growth of the recent financial products, and also helped the real estate boom. Recent data show that in December of last year, prices in some Chinese cities such as Beijing rose by 20% over the same period last year. 
 capital inflows to China are based on two assumptions. First, the Chinese government will not allow large-scale financial products to default. Last week's aid to a $500 million shadow bank trust loan shows that this belief is still correct, but it will cause moral hazard one day. Second, in the case of the real depreciation of many emerging market currencies, the Chinese government can continue to allow the RMB exchange rate to remain at the current level. 
 the market generally believes that in order to achieve the goal of RMB becoming "a href=" http://sjfzxm.com/news/index_s.asp "international settlement currency < /a >, Chinese leaders will not let the RMB depreciate. 
 but if China's economy is on the rocks, the determination of Chinese leaders will be tested. The new signs of weakness have scared investors. According to recent figures, China's economy has stumbled into the new year. In January, the growth of service industry dropped to a five year low, and manufacturing output value is actually shrinking. 
 this means that China's export industry will further weaken, and China's export growth has dropped to 4% in December last year. 
The day of China's use of RMB weakness to stimulate exports seems to be gone for ever P. In fact, recent reports show that the cost of producing Airbus (Airbus) A320 in Tianjin is 10% higher than that in Toulouse, France (Toulouse), due to China's rising pay and declining productivity. 
 once RMB a href= "http://sjfzxm.com/news/index_s.asp" > RMB exchange rate < /a > changes reflect the deterioration of China's balance of payments situation, the value of RMB will suddenly become the focus of attention. So far, although China's export growth has slowed down, this scene has not yet appeared. 
 in addition, the overvaluation of money will also drag down economic growth in other ways. One justification for the appreciation of the renminbi is that the appreciation of the renminbi will accelerate the rebalancing of China's economy, as Chinese consumers will increase their spending as imports become cheaper. 
 but this does not seem to be the way China's economy operates. On the contrary, because of the high inflation and high tax burden in China over the years, and in addition to the large number of RMB a href= "http://sjfzxm.com/news/index_s.asp" > /a > in many countries, the Chinese seem to be replacing domestic consumption with overseas consumption. 
Last year, Chinese tourists became the most generous overseas tourists in the world. This is one of the most popular investment themes nowadays. 
 Hongkong is expected to receive 8 million tourists during the seven days of the Spring Festival, most of which are mainly Chinese tourists. Macao is expected to receive 2 million 700 thousand tourists, almost five times the local population of Macao. 
 in recent weeks, it has been warned that the number of tourists in Hongkong will double to 100 million in 10 years, and most of them will come from mainland China. 
Less than P, how many of these people will go to Hongkong to compete for the sake of RMB overvaluation? 
Less than P, this extravagance and spending behavior coinciding with China's domestic tightening spending. 
Credit Suisse said that in the three tier city of Zhuzhou, Hunan, people complain that it is difficult to set new year's Eve dinner because many restaurants are not open because of insufficient orders. In cities such as Beijing and Shanghai, although restaurants have no rest during the new year, the volume of traffic is not large. 
 this may be an isolated phenomenon, but it is part of the overall picture of China's economy which seems increasingly unsustainable. 
P, China's real estate market is full of bubbles at the moment, and its foreign exchange policy seems to be very fragile. China's price level not only makes people unable to afford housing, makes the manufacturing industry less competitive, but also spanfers consumer spending overseas. 
 now it seems that China's < a href= "http://sjfzxm.com/news/index_s.asp" > price < /a > will inevitably undergo a major adjustment at a certain stage. The question is whether the adjustment is in fact a change in the RMB exchange rate, or is there a serious deflation in China?