5 ms·

Chinese Yuan’s Ascent to Global Reserve Status: A Timeline

60 points by eth0up 10y ago

rtpg 10y ago
My impression up until recently is that actually holding onto Yuan outside of China is near-impossible, is this no longer the case?
- neximo64 10y ago
  Not yet, but eventually that is supposed to be the goal.
  - mgkimsal 10y ago
    the goal is supposed to be holding yuan outside china is impossible? or possible?
epx 10y ago
And the Chinese know better and are buying real estate in Canada.
- personjerry 10y ago
  The Chinese are also buying a ton of real estate in China. It just happens that a lot of Chinese have immigrated to Canada, especially Vancouver, and so tell their relatives about the place, and many of them have fairly wealthy relatives who are all too eager to snatch up the rapidly rising real estate.
  - neximo64 10y ago
    Its also just recycling their trade deficit back in. It is infact Canadian funds being used to buy those homes, the savings which came from the excess of imports to Canada to exports to China. A solution to the structural issue is to export more to China so there aren't so many savings stored in real estate.
    - pooper 10y ago
      Whenever Canadians complain about Chinese speculation in real estate, I wonder why they don't try to create more inventory. It is probably naive to think this way but AFAIK Canada has a lot of land and a housing boom can help extend and modernize urban infrastructure.
      - kogepathic 10y ago
        > I wonder why they don't try to create more inventory. They can't exactly conjure up more undeveloped land in the middle of Vancouver, Toronto, or Montreal. > AFAIK Canada has a lot of land Yeah, where almost no one wants to live. 90% of the Canadian population lives within 100km of the US-Canada border. If you ask people abroad about major Canadian cities, everyone knows of Vancouver and Toronto. Some people also mention Montreal and Ottawa, but after that very few people can name other cities (e.g. Calgary, Quebec City, Winnipeg) > and a housing boom Many people are now warning that Canada has a housing bubble. Given the country's history of policies, I wouldn't trust them to handle it well. The mortgage and banking industry are not as powerful as they are in America, but they have influence. I grew up in Canada but am currently living abroad, so I get to talk to a lot of foreigners on their opinion/knowledge of Canada.
    - cylinder 10y ago
      I buy a car from you for $5000. You then buy my shoes for $100. The money you used to buy my shoes used to be mine! So what?
      - neximo64 10y ago
        > So what? Uninvested trade surplus increasing the value of homes outside the surplus country, making it unaffordable for people who live there. Perhaps ask these to yourself, amongst owning your shows. - Do you own a home? - Do you earn little to no interest at your bank?
Aldo_MX 10y ago
Ok, this is really interesting, the Yuan (CNY) has officially become one of the 5 mayor reserve currencies (USD, EUR, CNY, JPY & GBP), since the IMF added it to the SDR basket today. The following month will be the American elections and I expect the Brexit effect to repeat with the US Dollar after the result gets announced, since the average Joe will certainly vote for the candidate who proposed the less global-friendly economic policies. Will the Yuan have a chance to benefit from the post-election speculative chaos?
- Kenji 10y ago
  Both the Brexit effect and the speculative chaos you propose are very short term. The fluctuations do not correspond in any way to the performance of the state and economy backing these currencies. Therefore, I think that if it benefits CNY, then only for a short timespan. However, if the US really tightens the screws on international trade, it will suffer longterm and so will its currency. (And yes, I find the prospect of closed markets, increased tariffs and the like dreadful. There is no reason for the US to do that. This is different from Brexit though, since the EU conditions free movement of people and huge bodies of law on the trade agreements. A post-Brexit Britain may have more free trade than ever before since it can do its own agreements with any country - like any sovereign nation should.)
  - tonyedgecombe 10y ago
    I don't see British trade expanding post brexit, we will almost certainly loose a substantial portion of our financial services and over time car manufacturing, the only trade likely to increase is tourism.
- ting_bu_dung 10y ago
  Actually, because of brexit, Europe will get rid of pro-China England, and will be able to impose alot of anti-dumping restrictions to China.
- mark_l_watson 10y ago
  Another possible source of speculative chaos might be any fallout if Deutsche Bank collapses. I have seen some really negative news articles about DB lately.
ting_bu_dung 10y ago
This is pretty much a non-event. China's more likely to suffer hyperinflation first, than become a currency that other countries use/store. 1.) Yuan is being printed massively (it hit a credit-to-gdp ratio of 30 to 1 http://www.bbc.com/news/business-37403363 http://www.bbc.com/news/business-37403363) 2.) it is a non-fully-convertible currency 3.) there are severe restrictions for yuan to move out of the country due to capital controls. max $50/year. also, $15k/year withdraw restrictions (http://money.cnn.com/2015/09/30/news/china-overseas-atm-cash-limits/ http://money.cnn.com/2015/09/30/news/china-overseas-atm-cash...) 4.) no one is required to use yuan for trade. 5.) nobody wants yuan outside China. people in China are desperate to exchange yuan for other things inside China. All the conditions are there for hyperinflation to occur. Might happen early next year when europe and China both likely reject China's market economy status, and starts imposing tariff on Chinese imports heavily.
- Qianlitp 10y ago
  It seems you know a lot about the Chinese.Maybe it's smear.
  - mmkx 10y ago
    It's a smear because they are knowledgeable? Please elaborate, account which was created 25 minutes ago. Your pathetic attempts to control opinion make me want to short your market even more.
    - deleted 10y ago
      [deleted]
- fspeech 10y ago
  This is basically a copy and paste of your previous post https://news.ycombinator.com/threads?id=ting_bu_dung https://news.ycombinator.com/threads?id=ting_bu_dung without even bothering to correct the most glaring error pointed out by others. I say this is pretty disrespectful to users who are interested in real discussions.
fitzwatermellow 10y ago
More from the Working Group on USD Yuan trading: https://www.rmbusawg.com/ https://www.rmbusawg.com/ Bit of a Catch-22. Can't invest directly in Chinese markets until the Yuan is convertible. And closed markets affect the Yuan's stability. But foreign demand, it's in the trillions: China’s debt markets start to stir foreign appetite https://www.ft.com/content/7c6708f6-8627-11e6-8897-2359a58ac7a5 https://www.ft.com/content/7c6708f6-8627-11e6-8897-2359a58ac...
deleted 10y ago
[deleted]

60 points by eth0up 10y ago

rtpg 10y ago

My impression up until recently is that actually holding onto Yuan outside of China is near-impossible, is this no longer the case?

neximo64 10y ago
Not yet, but eventually that is supposed to be the goal.
- mgkimsal 10y ago
  the goal is supposed to be holding yuan outside china is impossible? or possible?

epx 10y ago

And the Chinese know better and are buying real estate in Canada.

personjerry 10y ago
The Chinese are also buying a ton of real estate in China. It just happens that a lot of Chinese have immigrated to Canada, especially Vancouver, and so tell their relatives about the place, and many of them have fairly wealthy relatives who are all too eager to snatch up the rapidly rising real estate.
- neximo64 10y ago
  Its also just recycling their trade deficit back in. It is infact Canadian funds being used to buy those homes, the savings which came from the excess of imports to Canada to exports to China. A solution to the structural issue is to export more to China so there aren't so many savings stored in real estate.
  - pooper 10y ago
    Whenever Canadians complain about Chinese speculation in real estate, I wonder why they don't try to create more inventory. It is probably naive to think this way but AFAIK Canada has a lot of land and a housing boom can help extend and modernize urban infrastructure.
    - kogepathic 10y ago
      > I wonder why they don't try to create more inventory. They can't exactly conjure up more undeveloped land in the middle of Vancouver, Toronto, or Montreal. > AFAIK Canada has a lot of land Yeah, where almost no one wants to live. 90% of the Canadian population lives within 100km of the US-Canada border. If you ask people abroad about major Canadian cities, everyone knows of Vancouver and Toronto. Some people also mention Montreal and Ottawa, but after that very few people can name other cities (e.g. Calgary, Quebec City, Winnipeg) > and a housing boom Many people are now warning that Canada has a housing bubble. Given the country's history of policies, I wouldn't trust them to handle it well. The mortgage and banking industry are not as powerful as they are in America, but they have influence. I grew up in Canada but am currently living abroad, so I get to talk to a lot of foreigners on their opinion/knowledge of Canada.
  - cylinder 10y ago
    I buy a car from you for $5000. You then buy my shoes for $100. The money you used to buy my shoes used to be mine! So what?
    - neximo64 10y ago
      > So what? Uninvested trade surplus increasing the value of homes outside the surplus country, making it unaffordable for people who live there. Perhaps ask these to yourself, amongst owning your shows. - Do you own a home? - Do you earn little to no interest at your bank?

Aldo_MX 10y ago

Ok, this is really interesting, the Yuan (CNY) has officially become one of the 5 mayor reserve currencies (USD, EUR, CNY, JPY & GBP), since the IMF added it to the SDR basket today. The following month will be the American elections and I expect the Brexit effect to repeat with the US Dollar after the result gets announced, since the average Joe will certainly vote for the candidate who proposed the less global-friendly economic policies. Will the Yuan have a chance to benefit from the post-election speculative chaos?

Kenji 10y ago
Both the Brexit effect and the speculative chaos you propose are very short term. The fluctuations do not correspond in any way to the performance of the state and economy backing these currencies. Therefore, I think that if it benefits CNY, then only for a short timespan. However, if the US really tightens the screws on international trade, it will suffer longterm and so will its currency. (And yes, I find the prospect of closed markets, increased tariffs and the like dreadful. There is no reason for the US to do that. This is different from Brexit though, since the EU conditions free movement of people and huge bodies of law on the trade agreements. A post-Brexit Britain may have more free trade than ever before since it can do its own agreements with any country - like any sovereign nation should.)
- tonyedgecombe 10y ago
  I don't see British trade expanding post brexit, we will almost certainly loose a substantial portion of our financial services and over time car manufacturing, the only trade likely to increase is tourism.
ting_bu_dung 10y ago
Actually, because of brexit, Europe will get rid of pro-China England, and will be able to impose alot of anti-dumping restrictions to China.
mark_l_watson 10y ago
Another possible source of speculative chaos might be any fallout if Deutsche Bank collapses. I have seen some really negative news articles about DB lately.

ting_bu_dung 10y ago

This is pretty much a non-event. China's more likely to suffer hyperinflation first, than become a currency that other countries use/store. 1.) Yuan is being printed massively (it hit a credit-to-gdp ratio of 30 to 1 http://www.bbc.com/news/business-37403363 http://www.bbc.com/news/business-37403363) 2.) it is a non-fully-convertible currency 3.) there are severe restrictions for yuan to move out of the country due to capital controls. max $50/year. also, $15k/year withdraw restrictions (http://money.cnn.com/2015/09/30/news/china-overseas-atm-cash-limits/ http://money.cnn.com/2015/09/30/news/china-overseas-atm-cash...) 4.) no one is required to use yuan for trade. 5.) nobody wants yuan outside China. people in China are desperate to exchange yuan for other things inside China. All the conditions are there for hyperinflation to occur. Might happen early next year when europe and China both likely reject China's market economy status, and starts imposing tariff on Chinese imports heavily.

Qianlitp 10y ago
It seems you know a lot about the Chinese.Maybe it's smear.
- mmkx 10y ago
  It's a smear because they are knowledgeable? Please elaborate, account which was created 25 minutes ago. Your pathetic attempts to control opinion make me want to short your market even more.
  - deleted 10y ago
    [deleted]
fspeech 10y ago
This is basically a copy and paste of your previous post https://news.ycombinator.com/threads?id=ting_bu_dung https://news.ycombinator.com/threads?id=ting_bu_dung without even bothering to correct the most glaring error pointed out by others. I say this is pretty disrespectful to users who are interested in real discussions.

fitzwatermellow 10y ago

More from the Working Group on USD Yuan trading: https://www.rmbusawg.com/ https://www.rmbusawg.com/ Bit of a Catch-22. Can't invest directly in Chinese markets until the Yuan is convertible. And closed markets affect the Yuan's stability. But foreign demand, it's in the trillions: China’s debt markets start to stir foreign appetite https://www.ft.com/content/7c6708f6-8627-11e6-8897-2359a58ac7a5 https://www.ft.com/content/7c6708f6-8627-11e6-8897-2359a58ac...

deleted 10y ago

[deleted]