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That the Chinese government likely over-estimates GDP is widely known (some indicators are reported magnitudes faster than any other country). The increased deb
by huac 11y ago
That the Chinese government likely over-estimates GDP is widely known (some indicators are reported magnitudes faster than any other country). The increased debt and factory exodus are probably uniformly bad.
On the other hand, a decrease in cash reserves is almost certainly in China's favor. The government has been struggling for years to get rid of its enormous US currency holdings. Especially as we start to see the yuan strengthening and the Fed raise interest rates, it's important for China to extract as much value out of the USD as soon as possible.
- sharetea 11y ago1.) Dollar is strengthening. Janet Yellen said she'll raise rates by the end of the year. Most emerging market currencies have crashed 25-40% this year. 2.) Yuan is weakening. Otherwise Chinese corporate dollar-denominated debts, which is around 1 trillion, will crush the economy right away when the fed raises rates. Plus the government already signaled it is willing to guide yuan lower a month ago. 3.) That's kinda like saying 'well, my 3 houses in the hamptons are burning down, but at least wood structure is the strongest right now!'
- huac 11y agoHmm. Haven't followed the econ beat in the last couple months, my bad. I don't follow your 3rd point though. What do you mean?