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Dow plunges more than 950 points after China devalues its currency

124 points by azhenley 7y ago

blondie9x 7y ago
Just wish China government would agree to the demands on intellectual property and tech patents transfer. Getting to a deal could be really easy if China stops the intellectual property and transfer requirements. https://en.wikipedia.org/wiki/China–United_States_trade_war https://en.wikipedia.org/wiki/China–United_States_trade_war
- internet_user 7y ago
  Oh, they'll agree. They are even a member of the WTO, and even have laws on the books about IP. They just won't enforce anything, unless it's to their own benefit, been that way for decades.
  - kbrisso 7y ago
    i wonder if this is a cultural thing or a gov/business decision directed at foreign companies. do chinese business people rip other chinese business people off?
    - nativeimigrant 7y ago
      Heaps not racist lol
    - arcticbull 7y ago
      This is the PRC playing high-speed high-stakes catch-up to the rest of the world. China was nothing of any geopolitical significance prior to the cultural revolution. The colonial powers were clearly in charge of the world, with Portugal owning Macau from 1557, the British owning Hong Kong from 1841 and the French, German, American, British, Danish and Italians each owning sections of Shanghai in the 1800s. The French Concession being the best known. At the time of the HK handover in 1997, HK represented a whopping 18% of all of China's GDP. Today, HK represents only 3% of China's GDP. This happened in only 20 years. China is doing what I can imagine any other country in their position would do: take advantage of foreign companies using their discount labor pool to obtain the technologies necessary to first become self-sufficient and eventually to lead. We're at a juncture now, where for better or worse, the US is no longer willing to put up with the status quo because the myopic policies of the past, focused on self-enrichment, are coming home to roost. It's probably too late honestly, whether American companies withheld the last few years of advancements or not, the Chinese have developed sufficient domain expertise to catch up and lead on their own in short order. They do have 3X the US population after all, and appear much more motivated in their pursuit of science and technology than the US is. This point in history represents a number of long-term story arcs coming together at once. I'm not condoning it, there's lots of history here.
      - mobilefriendly 7y ago
        Hong Kong was created from scratch under British rule -- it was a sleepy village that the British identified as a terrific potential deep water port. This is important in understanding the current crisis there-- there's a degree of historical and cultural separation from "mainland" China in Hong Kong's roots.
        arcticbull 7y ago
        While true (and historically a place where people fled the mainland in general, AFAIK), it doesn't change the fact that allowing this settlement in the first place is indicative of a power imbalance at the time. For instance, if the Chinese wanted to set up a colony in the Channel Islands today (Jersey, Guernsey, Isle of Man, Isle of White), I'm pretty sure that wouldn't go over well. Nor would the UK attempting to set up shop today, say, in the South China Sea (in the Spratleys for instance). The balance of power has definitely tipped.
        cannonedhamster 7y ago
        China is doing exactly what you say with islands in the Pacific that they promised not to militarize and then moved in military bases. There balance of military power hasn't tipped at all, the western countries just stopped thinking it was okay to establish permanent settlements in other people's countries and then use that to claim we owned it. We still create best permanent military bases when we want to. If Britain or the US wanted we could destroy the Chinese Navy and Air Force without blinking. It's only when you get to ground forces that you see any kind of advantage in the Chinese military, because like the USSR in WW2 there are always more bodies.
        arcticbull 7y ago
        > There balance of military power hasn't tipped at all, the western countries just stopped thinking it was okay to establish permanent settlements in other people's countries and then use that to claim we owned it. Isn't that power? Power doesn't necessarily mean carrying out actual warfare, it means being able to do whatever you want without anyone stopping you. "We could stop them if we wanted to we just ... don't want to, yeah that's right..." rings pretty hollow. The fact that zero enforcement action has been taken means China is more powerful in the region. All the UK can do to enforce the handover agreement is write strongly worded memos that get sent right into the shredder in Beijing. Similarly with the islands in the South China Sea. The response is basically "what are you going to do about it?" Not what could you do about it.
    - cannonedhamster 7y ago
      It's cultural. There's a serious adherence to the phrase let the buyer beware, however it's almost impossible to solve locally because if you acknowledge a problem you're apparently responsible for fixing it or you can be disappeared if it makes the country look bad. China is a very unique country with interesting sets of values. The whole global recycling chain got upended because a movie in China showed how nasty and harmful the recycling process is for low end plastics and metals which embarrassed the country. I remember there was an official who got in trouble for smiling at an inappropriate time. Almost everything is about appearance, much like the US early in it's ascendancy. China will eventually change when it's in their best interest to protect other people, it's not as if the US doesn't do very similar things to some of it's allies. Just look at the chicken tax or Canadian business suits for example. It's just in our best interest to enforce IP law currently because we own some of the most valuable IP. We over protect a ton of it too. That's nothing compared to our blatantly excessive copyright laws. Simply put it massive rent seeking behavior on the part of the US. As far as devaluing their currency, it's one of the few cards they have to play but it will hurt them in the long run as it means their foreign investments will lose value unless it's in real estate.
  - qubex 7y ago
    As a macroeconomist, coming from a degree in applied mathematics, I can only emphatically ‘second’ this statement. There’s many ‘dynamics’ in macroeconomics but unlike physics there are few “conserved quantities” (even ‘wealth’ isn’t a conserved quantity) that might allow one to distinguish between plausible and implausible scenarios The end result is that prediction is basically a retroactive decision as to which axioms to adopt.
    - deleted 7y ago
      [deleted]
    - mlevental 7y ago
      op isn't making an economical prediction but a political one
      - qubex 7y ago
        My argument is that at suitable levels of power there is no distinction between the two.
    - defterGoose 7y ago
      Thanks for your honesty; I get really annoyed sometimes when economists are held up as the gold-standard of societal prediction. Some of the 'newer' ideas that have made their way to the core of economics study, like game theory, are still painfully simplistic models that fail to take into account more complicated dynamics that result in outsize error signals. Usually, in the physical sciences it's possible to justify throwing out some higher order terms, but when you start talking about "externalities", things can get unhealthily misrepresented quickly. Frankly, it's no wonder that our species hasn't achieved a higher level of self-reflection when human behavior itself is so complicated.
      - qubex 7y ago
        I came to macroeconomics by way of game theory. I'm going to step in because it's actually a far more sophisticated discipline than one would at first imagine given the (admittedly extremely pedagogical, verging on the puerile) examples one is likely to encounter when not studying it in depth (Prisoner's Dilemma, I'm looking at you). Combinatorial Game Theory has been fundamental in addressing “artificial intelligence challenges” such as defeating human Chess grandmasters and more recently, despite the hype about neural network self-training, Go. Bayesian Game Theory deals with how a rational agent starts off in a situation whereby it knows little of what it is competing against and gradually refines that knowledge whilst also getting the best results given the imperfect information available. Differential Game Theory de-discretises time and is useful, for example, in programming both the manoeuvres to be executed by a surface-to-air missile as the target attempts evasion and in modelling a financial market. Algorithmic Game Theory is concerned with measuring the computational complexity of various strategies, and ensuring that they are in fact computable. Taken overall, it is a very complete and compelling field of knowledge. The problem is that we game theorists tend to assume that because we found an optimal solution by some advanced analytical technique, it should/will be observed to be the norm “in the wild”; sometimes this turns out to be the case, perhaps because there are cumulative or incremental adaptive paths to arriving at it, oftentimes it does not (typically because it's of the “bolt from the blue” variety). Most game theory research publicised is often of the “so simplified it doesn’t obviously apply” (even the most banal thought-experiment, that of the one-shot Prisoner's Dilemma, involves somebody in police custody essentially making a decision whether to spend their life in jail or being fried on the electric chair, a pretty extreme decision to be making on the spur of the moment and all the assumptions made regarding this scenario, including the iron-clad case against them by the investigators and knowledge that the co-conspirator is also in police custody, are fairly unrealistic). There's a lot of things game theory is very good at and has contributed to. It isn’t represented very well in publicly-accessible material and what is expressed comes across as markedly simplified to the point of irrelevance (which the examples are). But it’s a very powerful tool, actually.
- sod 7y ago
  Why would China ever want to allow that U.S. companies to sue the living crap out of local businesses because of copyright? Is there anything that China can win here? I always thought the chinese governments strategy was to grow local businesses. Global copyright enforcement would stomp that.
  - internet_user 7y ago
    I'm still amazed how they are not under sanctions for wholesale IP theft. They must have thousands of key decision makers in the West in their pocket.
    - mempko 7y ago
      Western companies have been happy to hand over IP. It's part of the deal. If they didn't like the deal, they wouldn't have gone to China. It can't be called 'theft' when it was willingly given.
      - internet_user 7y ago
        Pretty certain that wholesale theft was not part of the "voluntary deal". Can you point to exact language in agreements that granted them absolute rights to any IP? However, the western executives that signed those deals, have long made their massive bonuses, it's all been paid out and some of those execs probably even retired. What do they care? Such a great way to raid the company you manage at the expense of shareholders/employees.
        yorwba 7y ago
        > Can you point to exact language in agreements that granted them absolute rights to any IP? Those agreements between private entities are almost certainly not public. However, I found a press release by Siemens AG [1] that says "Part of the contractual terms and conditions involves support and technology transfer in connection with production of the trains." In another press release [2], a Siemens VP is quite chipper about this: "Siemens is even more confident to support the development and modernization of Chinese railways and transfer highly advanced and proven technology of international standard to China" I don't think you can speak of "wholesale theft" in this case of a voluntary deal. [1] https://www.siemens.com/press/en/pr_cc/2005/11_nov/tstr20051106_(china)_1328506.htm https://www.siemens.com/press/en/pr_cc/2005/11_nov/tstr20051... [2] https://www.siemens.com/press/en/pr_cc/2006/04_apr/tstk20060519_1373993.htm https://www.siemens.com/press/en/pr_cc/2006/04_apr/tstk20060...
- ttul 7y ago
  Beijing has an extremely long time horizon. They will endure the Trump administration and wait for a successor government to be more pliant to their needs.
  - internet_user 7y ago
    Kyle Bass would disagree.
  - thechao 7y ago
    The USA has an extremely long time horizon. They endured the Qing dynasty, the PRC, the troubled times under Mao, and now bide their time patiently, waiting for a successor government more pliant to their needs. I’m not fond of this whole “Eastern mysticism”/100-year-horizon crap; that sort of thinking is just soft-soled racism—along the same lines as the Noble Savage trope.
    - jayd16 7y ago
      I hadn't thought of it that way and its an interesting point but in terms of racism I think its only something people think about the Chinese government. I don't think anyone attributes the same characteristic to American born Chinese.
    - adventured 7y ago
      It's the exact same thing that was said about Japan during its boom phase in fact. It was universally proclaimed that Japan was different because they had a very long time horizon and the West was short-term obsessed. It obviously plays into the eastern mysticism you reference. It's why Masayoshi Son has any credibility when he talks about having a 300 year plan for the Internet. Back in reality, you can find countless examples of China behaving with rather absurd short-term obsession and making foolish mistakes due to that short-term thinking. They're doing it right now with Hong Kong. Or for example, in the way they've been willing to become the most leveraged nation in world history at record speed merely in order to buy a few more minutes of faster short-term 'growth' before they have to accept slower real growth in the system. That's long-term destruction in exchange for a short-term prop-up, something that is counter to the fantasy projection about China's long-term magical behavior. It also happens to be exactly what Japan did, exchanging long-term damage (resulting in long-term stagnation as the extreme debt robbed their economy of all of its dynamism) for a short-term propping up of the economy.
- Arrezz 7y ago
  When did China originally start disrespecting intellectual property? Or is it the case that they've never respected it? Do you know of a good resource to learn about the history of this topic?
  - resters 7y ago
    Developing nations (as the US was in the past) typically do not care much about IP. Read "The Lever of Riches" for a history of economic growth and IP law.
  - jhbadger 7y ago
    Traditionally nations only started respecting foreign intellectual property when they started to generate more IP that they wanted others to respect than they used from outside. For example, in the 19th century, the USA didn't respect British copyright. Charles Dickens was a very popular author in the USA, but he didn't get a cent from the sales of his books there. So he came over to the US a couple of times to give lectures in large auditoriums in major cities -- sort of like a rock star making money from touring rather than from album sales.
  - xster 7y ago
    I think the reverse question is probably more appropriate. That derivative civilizations from the mediterranean maritime trading cultures have a higher geography driven disposition to sanctifying contractual agreements since that's how they subsisted life. This is not the case for self-sufficient continental cultures like agrarian China where equality of all men isn't how you get flood control and irrigation projects done and creativity and disrupting how seeds are planted isn't what keeps you alive.
- cdumler 7y ago
  Why? They're sovereign. They want a leg up in their economy. They're doing the same thing the U.S. did to England to get ahead [1]. [1] https://www.realclearmarkets.com/articles/2018/07/30/ip_theft_is_what_once_helped_make_america_great_103367.html# https://www.realclearmarkets.com/articles/2018/07/30/ip_thef...!
  - throwaway3627 7y ago
    Yeap. Copying tech is a common pattern developing countries use to grow faster. Pot, meet kettle.
rdtwo 7y ago
China just let its currency float more it was more pegged to the dollar before. Also isn’t this a good thing for US consumers as it cancels out some of the trade war stupidity
- pkaye 7y ago
  Does that mean their currency was overvalued before?
  - addicted 7y ago
    Contrary to what you hear in the US, China has not been trying to devalue their currency for the past few years. In fact, they’ve been trying to strengthen it as they’ve been trying to build their domestic market and present the Remnibi as a dollar alternative. Admittedly China did indeed artificially weaken their currency to help exports in the past but this hasn’t been true for quite some time.
    - internet_user 7y ago
      Wrong. Yuan has been devalued by close to 10% since this April.
      - addicted 7y ago
        Well yeah since the tariff wars started. This article has a good explanation of what they have been doing. https://thefederalist.com/2017/07/03/china-secretly-manipulating-currency-make-yuan-stronger/ https://thefederalist.com/2017/07/03/china-secretly-manipula... China was keen on strengthening the yuan and were doing that for a couple of years, but the trade wars have shifted their calculations. The earlier strengthening gives them some additional leeway. I think the reason for this drop in the exchanges is because letting the yuan drop is China’s way of saying they’re in for a fight. A stable yuan was basically a precondition for trade talks, and this coming right after the last round means the hope for a resolution seems remote at best. I still don’t understand how China expects to win the trade war. The US has a lot more firepower. But I guess leadership incentives are not aligned with the country and it’s peoples incentives (which is true in the US as well).
Kyragem 7y ago
Tradewars are easy to win! ....NOT
std_throwaway 7y ago
750 points sounded much scarier when the DOW was below 10000. Now it's just 3%.
- rdtwo 7y ago
  Good point to keep in mind
- sixothree 7y ago
  I don't want to think about the dollar value I've "lost" today. But yeah, 3% here, 1% there. Meh. It's all a wash. /s
  - std_throwaway 7y ago
    Stock valuation is not money. You get money if you sell. The stock is a virtual valuation. You need to sell to make it real. You only lost imagined money.
    - leroy_masochist 7y ago
      Stock valuation is an up-to-the-second price for a highly liquid asset that is fungible to cash; a good comparison would be the exchange rate affecting the value of the "cash" in your checking account, which is not actual cash, but rather an IOU for cash. "Imagined money" is not a good way to describe stock valuation.
      - deleted 7y ago
        [deleted]
    - Smithalicious 7y ago
      As many a person who bought bitcoin at 20k will tell you... Then again, last time I checked bitcoin was on the up trend again.
- j7ake 7y ago
  At current interest rates, 3% is nearly a year of interest gone.
Fjolsvith 7y ago
Can someone tell me how this affects only the US Dollar and not every other currency in the world?
- nugget 7y ago
  RMB devaluation impacts all countries that import into China since it makes those imports more expensive for Chinese consumers.
- throwaway5752 7y ago
  It doesn't affect just the dollar, but because of the nature of trade between the US and China, the current US administration's trade goals and strategies for achieving those (tariffs) it's particularly relevant to USD/RMB.
- jonknee 7y ago
  It has? EUR/USD is +.75%, AUD/US is -.55%, USD/JPY is +.5%.
  - Fjolsvith 7y ago
    Quoting the CNN article: "Asian markets all fell more than 1.6% Monday, and Hong Kong's Hang Seng closed down 2.9% as protests continue in the region. In Europe, London's FTSE 100 finished down 2.5%. Germany's DAX and France' Cac 40 closed 1.8% and 2.2% lower, respectively."
disconnected 7y ago
Ok, I'm confused. As of my posting, the HN submission title is: > Dow plunges 750 points after China devalues its currency The article title: > Dow plunges 800 points after China devalues its currency And the first paragraph of the article is: > The Dow tumbled more than 830 points [...] So... which is it? Edit to add: ok, the article's contets are apparently dynamically generated (or are being updated manually). I didn't know they did that. You can disregard this comment.
- rdtwo 7y ago
  2pm margin call?
- everdrive 7y ago
  First one, and then the other.
- bena 7y ago
  I think it's being updated as it tumbles. Right now, it says 875
  - meddlin 7y ago
    wow...950 now. As of comment, latest article update: 3:21 PM EST
- shultays 7y ago
  Heh, and the poor mods keep trying to keep thread title up to date
pbhjpbhj 7y ago
"plunges" 3% ... me sobs in Brexit. We've lost just under 20% off GBP vs USD since the vote went to Leave from the anticipated Remain. China's an export economy, no? So, devaluing helps to buoy production for export, keeping people in work. Seems to be how China does things: I'm thinking of all those ghost cities they build.
- internet_user 7y ago
  Dow crashed because China is more competitive with cheaper yuan, and they are unafraid to use one of their most potent trade weapons: currency manipulation.
  - addicted 7y ago
    I suspect it’s because people take this as a sign that there is no hope of a trade deal. And the longer the trade wars continue the worse off everyone is.
    - resters 7y ago
      Exactly. Trump claimed that he was some kind of expert negotiator who would walk in and teach the Chinese government a lesson and improve trade policy on behalf of American firms. But instead he's made a fool of himself and of the US, and shown the world that China is more formidable than anyone realized.
- tedsanders 7y ago
  China is not an export economy. They have a very balanced current account, < 1% of GDP. https://www.themoneyillusion.com/things-that-smart-people-dont-know/?fbclid=IwAR3j5L_WxachUW1zoEoV50Jg1-_DycRvXeEgdEOgqGnl6AUAVIwsOuVpZWo https://www.themoneyillusion.com/things-that-smart-people-do... The justification that the Trump administration gives is that if you look at the subset current account that is trade, then further subset down to goods only (not services) and then futher subset down to bilateral goods trade with the USA then indeed China has a big surplus.
voodooranger 7y ago
so if there’s a chinese product that i like and it costs 100 yuan before devaluation, and say 1 dollar == 100 yuan. after devaluation, the product might cost 150 yuan but now 1 dollar == 150 yuan. so my dollar still buys the same amount of goods. what am i missing?
- dsalso 7y ago
  Not exactly, it depends on the particular good. The price in yuan could stay 100 or not move as much. In that case your purchasing power has increased
  - jermaustin1 7y ago
    So its a great thing for the US if we want to import more stuff? So its basically saying: I see your 10% Tariff and raise you a 10% discount!
    - internet_user 7y ago
      great for consumers, devastating for the whatever hobbled manufacturing base left in the US.
    - skybrian 7y ago
      Pretty much, although with more revenue for the US government.
    - jeremy_wiebe 7y ago
      But doesn’t that also raise Chinese import costs the same amount? Or is that where Chinese tariffs in the things they import come into play (like Canadian canola, etc)? This feels like a sort of race to the bottom.
  - voodooranger 7y ago
    in the aggregate if you devalue a currency so that it’s worth half of what it was, won’t prices in that currency double?
- 7y ago
mars4rp 7y ago
Great, now US can print more money and get even more stuff out of china for cheap. US will be more prospect and chines would be employed. win win?
b_tterc_p 7y ago
Say you (as the US) wanted to keep the same level of trade between the US and China- and the tariffs rose and the yuan fell in such a ratio that this remains true. The net outcome is good right? The US gets slightly more tax (larger % of a smaller number), Chinese economy has to deal with loss of currency value?
easymovet 7y ago
Genius, if they are using it to buy gold or bitcoin.
- luma 7y ago
  Are you seriously suggesting that China's angle here is to purchase economically-significant quantities of Bitcoin?
tunesmith 7y ago
Does anyone know of any nice interactive models to play with that demonstrate trade, tariffs, and currency levels? I just don't have an intuitive sense for this yet.
- notathing 7y ago
  Today's financial world is sooo complicated, that there is no simple model. Remember that anything remotely predictable will generate arbitrage flows.
- ryacko 7y ago
  Common economics as described by the news is entirely incorrect. Trade is dependent more on environmental policy than currency ratios. Tariffs reduce profitability of imports making them less viable for firms to use. China’s success largely depends on low interest rates caused by the printing of money, not by a devalued currency which would be temporary as prices would adjust because as notathing says, there is international arbitrage in everything.
- resters 7y ago
  What we saw is the market responding both to the economics of it and also to the knowledge that China has started adjusting its currency to combat Trump's tariffs. I think many expected this to happen, but what is interesting is that it happened today, so long before the election. China is effectively signaling that it can do a LOT more of this leading up to the election. Imagine a lager currency adjustment that sent the Dow down 3K points. A lot of people are imagining that today who were not thinking about it before. So this puts a lot more pressure on Trump to pull back on the tariffs. But Trump won't want to do that yet, so China has a bit of time to illustrate that Trump is not in control of things the way he claims to be. As someone who does not want the US Government meddling in the economy, I'll be very pleased if China manages to force Trump to repeal the tariffs, regardless of whether China continues its own backward trade policies.
  - tunesmith 7y ago
    Given this administration's thinking pattern, wouldn't they see the potential damage to US manufacturers and try to increase tariffs further, vicious-circle style? Who gets constrained first? If that doesn't cease, couldn't that eventually obliterate trade relationships entirely and make war more likely?
deleted 7y ago
[deleted]
Leary 7y ago
Funny how trump calls this "currency manipulation" when in fact they are stopping propping up their currency.
nostromo 7y ago
Trump puts 10% tariffs on Chinese imports bringing billions into the treasury, China devalues currency to compensate... net effect: Americans pay the same price but get billions in free tax money. Thanks, I guess?
- kickopotomus 7y ago
  A couple of things: 1) The tariffs are not getting paid by China. That money is coming from American businesses that buy from China. The tariffs just force those companies to look for cheaper alternatives. 2) The devaluation now makes China that cheaper alternative again even with the tariffs because now the USD goes further. End result now is it makes the tariffs more useless and China continues to disallow American imports.
  - nostromo 7y ago
    Before the devaluing the US consumer was paying the tariffs. But they devalued to compensate for the tariffs. In effect, the tax is now being covered by China’s central bank.
    - cromwellian 7y ago
      US exports are also down 12%, the Chinese government embargoed all purchases of US Agricultural goods by State owned Enterprises (SOEs), which constitute about 1/3rd of China's GDP. Thus, the US trade deficit has been made worse, the US will continue to import from China. China's central bank owns a huge chunk of US debt, so in effect, this is being covered by the US government over the long term, i.e. see the _Twin Deficits Hypothesis_ that federal deficits and trade deficits are related. Also, the central bank in China didn't do anything to devalue the yuan, it was propping it up. A tariff decreases demand, ergo, it decreases demand for RMB vs USD, ergo, exchange rates drop and the yuan becomes cheaper from lower demand. There's a "symmetry theorem" in economics that predicts this outcome to restore equilibrium (trade deficits offset by currency adjustment). So let's stop trying to cook up more excuses for Trump's trade policy. His own economic advisers disagree with it, and the fiction that "mexico" or "china" will pay for these tariff actions he's taking is a straight up lie to the citizens of the country.
musicale 7y ago
My first reaction was: since when does the Dow have its own currency?
FourScore 7y ago
Anyone who hasn't realized that this is about more than economics is deluding themselves. This is about a struggle for global supremacy between two nations with wildly different views about reality. The CCP does not believe in the rights of the individual and holds an iron grip on China. It is instituting policies straight out of an Orwellian dystopia and wants to export its model around the world. The most powerful nation sets the world agenda, whether we like that or not. The United States cannot allow China to set the agenda.
- resters 7y ago
  Not true at all, both nations have the following: - Orwellian social credit systems - Content censorship "great firewall" - Widespread imprisonment of minorities - Concentration camps for especially undesirable minorities In some ways each nation is better, and in some ways worse. But the important point is that both are using the same playbook to determine their domestic policies. China had previously been "worse" for its own trade protectionism, but Trump decided to increase the US use of trade protectionism (a handout to exporters at the expense of importers and consumers as a whole). To get a sense of the magnitude of the similarity between the two nations, consider the constant stream of stories in the US media about Chinese human rights abuses, etc., while the conditions in US prisons is largely ignored. The US has absolutely no moral high ground over China, and it must be very amusing to Chinese people to observe the level of indignation that Americans feel about Chinese practices.
  - FourScore 7y ago
    Completely false on all points. If you want to equate prisons for lawbreakers with concentration camps for political prisoners there's no further discussion we can have.
SubiculumCode 7y ago
So now is the time to buy buy buy?
didip 7y ago
I am confused about 1 thing. China can't possibly keep doing this at a rapid pace, right? If they keep doing this, then their own people's savings is rapidly disappearing. And since their people have a hard time buying US real estate anymore, won't the people get angry?
- internet_user 7y ago
  There is a very healthy industry based around evading Chinese capital controls.
mytailorisrich 7y ago
From what I understand they haven't devalued anything. They withdrew some support and let the free market do the rest, which is exactly what the US have been demanding. Of course they did that at a time when they knew the result would suit them... It looks like a message to the US.

124 points by azhenley 7y ago

Just wish China government would agree to the demands on intellectual property and tech patents transfer. Getting to a deal could be really easy if China stops the intellectual property and transfer requirements. https://en.wikipedia.org/wiki/China–United_States_trade_war https://en.wikipedia.org/wiki/China–United_States_trade_war

internet_user 7y ago
Oh, they'll agree. They are even a member of the WTO, and even have laws on the books about IP. They just won't enforce anything, unless it's to their own benefit, been that way for decades.
- kbrisso 7y ago
  i wonder if this is a cultural thing or a gov/business decision directed at foreign companies. do chinese business people rip other chinese business people off?
  - nativeimigrant 7y ago
    Heaps not racist lol
  - arcticbull 7y ago
    This is the PRC playing high-speed high-stakes catch-up to the rest of the world. China was nothing of any geopolitical significance prior to the cultural revolution. The colonial powers were clearly in charge of the world, with Portugal owning Macau from 1557, the British owning Hong Kong from 1841 and the French, German, American, British, Danish and Italians each owning sections of Shanghai in the 1800s. The French Concession being the best known. At the time of the HK handover in 1997, HK represented a whopping 18% of all of China's GDP. Today, HK represents only 3% of China's GDP. This happened in only 20 years. China is doing what I can imagine any other country in their position would do: take advantage of foreign companies using their discount labor pool to obtain the technologies necessary to first become self-sufficient and eventually to lead. We're at a juncture now, where for better or worse, the US is no longer willing to put up with the status quo because the myopic policies of the past, focused on self-enrichment, are coming home to roost. It's probably too late honestly, whether American companies withheld the last few years of advancements or not, the Chinese have developed sufficient domain expertise to catch up and lead on their own in short order. They do have 3X the US population after all, and appear much more motivated in their pursuit of science and technology than the US is. This point in history represents a number of long-term story arcs coming together at once. I'm not condoning it, there's lots of history here.
    - mobilefriendly 7y ago
      Hong Kong was created from scratch under British rule -- it was a sleepy village that the British identified as a terrific potential deep water port. This is important in understanding the current crisis there-- there's a degree of historical and cultural separation from "mainland" China in Hong Kong's roots.
      - arcticbull 7y ago
        While true (and historically a place where people fled the mainland in general, AFAIK), it doesn't change the fact that allowing this settlement in the first place is indicative of a power imbalance at the time. For instance, if the Chinese wanted to set up a colony in the Channel Islands today (Jersey, Guernsey, Isle of Man, Isle of White), I'm pretty sure that wouldn't go over well. Nor would the UK attempting to set up shop today, say, in the South China Sea (in the Spratleys for instance). The balance of power has definitely tipped.
        cannonedhamster 7y ago
        China is doing exactly what you say with islands in the Pacific that they promised not to militarize and then moved in military bases. There balance of military power hasn't tipped at all, the western countries just stopped thinking it was okay to establish permanent settlements in other people's countries and then use that to claim we owned it. We still create best permanent military bases when we want to. If Britain or the US wanted we could destroy the Chinese Navy and Air Force without blinking. It's only when you get to ground forces that you see any kind of advantage in the Chinese military, because like the USSR in WW2 there are always more bodies.
        arcticbull 7y ago
        > There balance of military power hasn't tipped at all, the western countries just stopped thinking it was okay to establish permanent settlements in other people's countries and then use that to claim we owned it. Isn't that power? Power doesn't necessarily mean carrying out actual warfare, it means being able to do whatever you want without anyone stopping you. "We could stop them if we wanted to we just ... don't want to, yeah that's right..." rings pretty hollow. The fact that zero enforcement action has been taken means China is more powerful in the region. All the UK can do to enforce the handover agreement is write strongly worded memos that get sent right into the shredder in Beijing. Similarly with the islands in the South China Sea. The response is basically "what are you going to do about it?" Not what could you do about it.
  - cannonedhamster 7y ago
    It's cultural. There's a serious adherence to the phrase let the buyer beware, however it's almost impossible to solve locally because if you acknowledge a problem you're apparently responsible for fixing it or you can be disappeared if it makes the country look bad. China is a very unique country with interesting sets of values. The whole global recycling chain got upended because a movie in China showed how nasty and harmful the recycling process is for low end plastics and metals which embarrassed the country. I remember there was an official who got in trouble for smiling at an inappropriate time. Almost everything is about appearance, much like the US early in it's ascendancy. China will eventually change when it's in their best interest to protect other people, it's not as if the US doesn't do very similar things to some of it's allies. Just look at the chicken tax or Canadian business suits for example. It's just in our best interest to enforce IP law currently because we own some of the most valuable IP. We over protect a ton of it too. That's nothing compared to our blatantly excessive copyright laws. Simply put it massive rent seeking behavior on the part of the US. As far as devaluing their currency, it's one of the few cards they have to play but it will hurt them in the long run as it means their foreign investments will lose value unless it's in real estate.
- qubex 7y ago
  As a macroeconomist, coming from a degree in applied mathematics, I can only emphatically ‘second’ this statement. There’s many ‘dynamics’ in macroeconomics but unlike physics there are few “conserved quantities” (even ‘wealth’ isn’t a conserved quantity) that might allow one to distinguish between plausible and implausible scenarios The end result is that prediction is basically a retroactive decision as to which axioms to adopt.
  - deleted 7y ago
    [deleted]
  - mlevental 7y ago
    op isn't making an economical prediction but a political one
    - qubex 7y ago
      My argument is that at suitable levels of power there is no distinction between the two.
  - defterGoose 7y ago
    Thanks for your honesty; I get really annoyed sometimes when economists are held up as the gold-standard of societal prediction. Some of the 'newer' ideas that have made their way to the core of economics study, like game theory, are still painfully simplistic models that fail to take into account more complicated dynamics that result in outsize error signals. Usually, in the physical sciences it's possible to justify throwing out some higher order terms, but when you start talking about "externalities", things can get unhealthily misrepresented quickly. Frankly, it's no wonder that our species hasn't achieved a higher level of self-reflection when human behavior itself is so complicated.
    - qubex 7y ago
      I came to macroeconomics by way of game theory. I'm going to step in because it's actually a far more sophisticated discipline than one would at first imagine given the (admittedly extremely pedagogical, verging on the puerile) examples one is likely to encounter when not studying it in depth (Prisoner's Dilemma, I'm looking at you). Combinatorial Game Theory has been fundamental in addressing “artificial intelligence challenges” such as defeating human Chess grandmasters and more recently, despite the hype about neural network self-training, Go. Bayesian Game Theory deals with how a rational agent starts off in a situation whereby it knows little of what it is competing against and gradually refines that knowledge whilst also getting the best results given the imperfect information available. Differential Game Theory de-discretises time and is useful, for example, in programming both the manoeuvres to be executed by a surface-to-air missile as the target attempts evasion and in modelling a financial market. Algorithmic Game Theory is concerned with measuring the computational complexity of various strategies, and ensuring that they are in fact computable. Taken overall, it is a very complete and compelling field of knowledge. The problem is that we game theorists tend to assume that because we found an optimal solution by some advanced analytical technique, it should/will be observed to be the norm “in the wild”; sometimes this turns out to be the case, perhaps because there are cumulative or incremental adaptive paths to arriving at it, oftentimes it does not (typically because it's of the “bolt from the blue” variety). Most game theory research publicised is often of the “so simplified it doesn’t obviously apply” (even the most banal thought-experiment, that of the one-shot Prisoner's Dilemma, involves somebody in police custody essentially making a decision whether to spend their life in jail or being fried on the electric chair, a pretty extreme decision to be making on the spur of the moment and all the assumptions made regarding this scenario, including the iron-clad case against them by the investigators and knowledge that the co-conspirator is also in police custody, are fairly unrealistic). There's a lot of things game theory is very good at and has contributed to. It isn’t represented very well in publicly-accessible material and what is expressed comes across as markedly simplified to the point of irrelevance (which the examples are). But it’s a very powerful tool, actually.
sod 7y ago
Why would China ever want to allow that U.S. companies to sue the living crap out of local businesses because of copyright? Is there anything that China can win here? I always thought the chinese governments strategy was to grow local businesses. Global copyright enforcement would stomp that.
- internet_user 7y ago
  I'm still amazed how they are not under sanctions for wholesale IP theft. They must have thousands of key decision makers in the West in their pocket.
  - mempko 7y ago
    Western companies have been happy to hand over IP. It's part of the deal. If they didn't like the deal, they wouldn't have gone to China. It can't be called 'theft' when it was willingly given.
    - internet_user 7y ago
      Pretty certain that wholesale theft was not part of the "voluntary deal". Can you point to exact language in agreements that granted them absolute rights to any IP? However, the western executives that signed those deals, have long made their massive bonuses, it's all been paid out and some of those execs probably even retired. What do they care? Such a great way to raid the company you manage at the expense of shareholders/employees.
      - yorwba 7y ago
        > Can you point to exact language in agreements that granted them absolute rights to any IP? Those agreements between private entities are almost certainly not public. However, I found a press release by Siemens AG [1] that says "Part of the contractual terms and conditions involves support and technology transfer in connection with production of the trains." In another press release [2], a Siemens VP is quite chipper about this: "Siemens is even more confident to support the development and modernization of Chinese railways and transfer highly advanced and proven technology of international standard to China" I don't think you can speak of "wholesale theft" in this case of a voluntary deal. [1] https://www.siemens.com/press/en/pr_cc/2005/11_nov/tstr20051106_(china)_1328506.htm https://www.siemens.com/press/en/pr_cc/2005/11_nov/tstr20051... [2] https://www.siemens.com/press/en/pr_cc/2006/04_apr/tstk20060519_1373993.htm https://www.siemens.com/press/en/pr_cc/2006/04_apr/tstk20060...
ttul 7y ago
Beijing has an extremely long time horizon. They will endure the Trump administration and wait for a successor government to be more pliant to their needs.
- internet_user 7y ago
  Kyle Bass would disagree.
- thechao 7y ago
  The USA has an extremely long time horizon. They endured the Qing dynasty, the PRC, the troubled times under Mao, and now bide their time patiently, waiting for a successor government more pliant to their needs. I’m not fond of this whole “Eastern mysticism”/100-year-horizon crap; that sort of thinking is just soft-soled racism—along the same lines as the Noble Savage trope.
  - jayd16 7y ago
    I hadn't thought of it that way and its an interesting point but in terms of racism I think its only something people think about the Chinese government. I don't think anyone attributes the same characteristic to American born Chinese.
  - adventured 7y ago
    It's the exact same thing that was said about Japan during its boom phase in fact. It was universally proclaimed that Japan was different because they had a very long time horizon and the West was short-term obsessed. It obviously plays into the eastern mysticism you reference. It's why Masayoshi Son has any credibility when he talks about having a 300 year plan for the Internet. Back in reality, you can find countless examples of China behaving with rather absurd short-term obsession and making foolish mistakes due to that short-term thinking. They're doing it right now with Hong Kong. Or for example, in the way they've been willing to become the most leveraged nation in world history at record speed merely in order to buy a few more minutes of faster short-term 'growth' before they have to accept slower real growth in the system. That's long-term destruction in exchange for a short-term prop-up, something that is counter to the fantasy projection about China's long-term magical behavior. It also happens to be exactly what Japan did, exchanging long-term damage (resulting in long-term stagnation as the extreme debt robbed their economy of all of its dynamism) for a short-term propping up of the economy.
Arrezz 7y ago
When did China originally start disrespecting intellectual property? Or is it the case that they've never respected it? Do you know of a good resource to learn about the history of this topic?
- resters 7y ago
  Developing nations (as the US was in the past) typically do not care much about IP. Read "The Lever of Riches" for a history of economic growth and IP law.
- jhbadger 7y ago
  Traditionally nations only started respecting foreign intellectual property when they started to generate more IP that they wanted others to respect than they used from outside. For example, in the 19th century, the USA didn't respect British copyright. Charles Dickens was a very popular author in the USA, but he didn't get a cent from the sales of his books there. So he came over to the US a couple of times to give lectures in large auditoriums in major cities -- sort of like a rock star making money from touring rather than from album sales.
- xster 7y ago
  I think the reverse question is probably more appropriate. That derivative civilizations from the mediterranean maritime trading cultures have a higher geography driven disposition to sanctifying contractual agreements since that's how they subsisted life. This is not the case for self-sufficient continental cultures like agrarian China where equality of all men isn't how you get flood control and irrigation projects done and creativity and disrupting how seeds are planted isn't what keeps you alive.
cdumler 7y ago
Why? They're sovereign. They want a leg up in their economy. They're doing the same thing the U.S. did to England to get ahead [1]. [1] https://www.realclearmarkets.com/articles/2018/07/30/ip_theft_is_what_once_helped_make_america_great_103367.html# https://www.realclearmarkets.com/articles/2018/07/30/ip_thef...!
- throwaway3627 7y ago
  Yeap. Copying tech is a common pattern developing countries use to grow faster. Pot, meet kettle.

rdtwo 7y ago

China just let its currency float more it was more pegged to the dollar before. Also isn’t this a good thing for US consumers as it cancels out some of the trade war stupidity

pkaye 7y ago
Does that mean their currency was overvalued before?
- addicted 7y ago
  Contrary to what you hear in the US, China has not been trying to devalue their currency for the past few years. In fact, they’ve been trying to strengthen it as they’ve been trying to build their domestic market and present the Remnibi as a dollar alternative. Admittedly China did indeed artificially weaken their currency to help exports in the past but this hasn’t been true for quite some time.
  - internet_user 7y ago
    Wrong. Yuan has been devalued by close to 10% since this April.
    - addicted 7y ago
      Well yeah since the tariff wars started. This article has a good explanation of what they have been doing. https://thefederalist.com/2017/07/03/china-secretly-manipulating-currency-make-yuan-stronger/ https://thefederalist.com/2017/07/03/china-secretly-manipula... China was keen on strengthening the yuan and were doing that for a couple of years, but the trade wars have shifted their calculations. The earlier strengthening gives them some additional leeway. I think the reason for this drop in the exchanges is because letting the yuan drop is China’s way of saying they’re in for a fight. A stable yuan was basically a precondition for trade talks, and this coming right after the last round means the hope for a resolution seems remote at best. I still don’t understand how China expects to win the trade war. The US has a lot more firepower. But I guess leadership incentives are not aligned with the country and it’s peoples incentives (which is true in the US as well).

Kyragem 7y ago

Tradewars are easy to win! ....NOT

std_throwaway 7y ago

750 points sounded much scarier when the DOW was below 10000. Now it's just 3%.

rdtwo 7y ago
Good point to keep in mind
sixothree 7y ago
I don't want to think about the dollar value I've "lost" today. But yeah, 3% here, 1% there. Meh. It's all a wash. /s
- std_throwaway 7y ago
  Stock valuation is not money. You get money if you sell. The stock is a virtual valuation. You need to sell to make it real. You only lost imagined money.
  - leroy_masochist 7y ago
    Stock valuation is an up-to-the-second price for a highly liquid asset that is fungible to cash; a good comparison would be the exchange rate affecting the value of the "cash" in your checking account, which is not actual cash, but rather an IOU for cash. "Imagined money" is not a good way to describe stock valuation.
    - deleted 7y ago
      [deleted]
  - Smithalicious 7y ago
    As many a person who bought bitcoin at 20k will tell you... Then again, last time I checked bitcoin was on the up trend again.
j7ake 7y ago
At current interest rates, 3% is nearly a year of interest gone.

Fjolsvith 7y ago

Can someone tell me how this affects only the US Dollar and not every other currency in the world?

nugget 7y ago
RMB devaluation impacts all countries that import into China since it makes those imports more expensive for Chinese consumers.
throwaway5752 7y ago
It doesn't affect just the dollar, but because of the nature of trade between the US and China, the current US administration's trade goals and strategies for achieving those (tariffs) it's particularly relevant to USD/RMB.
jonknee 7y ago
It has? EUR/USD is +.75%, AUD/US is -.55%, USD/JPY is +.5%.
- Fjolsvith 7y ago
  Quoting the CNN article: "Asian markets all fell more than 1.6% Monday, and Hong Kong's Hang Seng closed down 2.9% as protests continue in the region. In Europe, London's FTSE 100 finished down 2.5%. Germany's DAX and France' Cac 40 closed 1.8% and 2.2% lower, respectively."

disconnected 7y ago

Ok, I'm confused. As of my posting, the HN submission title is: > Dow plunges 750 points after China devalues its currency The article title: > Dow plunges 800 points after China devalues its currency And the first paragraph of the article is: > The Dow tumbled more than 830 points [...] So... which is it? Edit to add: ok, the article's contets are apparently dynamically generated (or are being updated manually). I didn't know they did that. You can disregard this comment.

rdtwo 7y ago
2pm margin call?
everdrive 7y ago
First one, and then the other.
bena 7y ago
I think it's being updated as it tumbles. Right now, it says 875
- meddlin 7y ago
  wow...950 now. As of comment, latest article update: 3:21 PM EST
shultays 7y ago
Heh, and the poor mods keep trying to keep thread title up to date

pbhjpbhj 7y ago

"plunges" 3% ... me sobs in Brexit. We've lost just under 20% off GBP vs USD since the vote went to Leave from the anticipated Remain. China's an export economy, no? So, devaluing helps to buoy production for export, keeping people in work. Seems to be how China does things: I'm thinking of all those ghost cities they build.

internet_user 7y ago
Dow crashed because China is more competitive with cheaper yuan, and they are unafraid to use one of their most potent trade weapons: currency manipulation.
- addicted 7y ago
  I suspect it’s because people take this as a sign that there is no hope of a trade deal. And the longer the trade wars continue the worse off everyone is.
  - resters 7y ago
    Exactly. Trump claimed that he was some kind of expert negotiator who would walk in and teach the Chinese government a lesson and improve trade policy on behalf of American firms. But instead he's made a fool of himself and of the US, and shown the world that China is more formidable than anyone realized.
tedsanders 7y ago
China is not an export economy. They have a very balanced current account, < 1% of GDP. https://www.themoneyillusion.com/things-that-smart-people-dont-know/?fbclid=IwAR3j5L_WxachUW1zoEoV50Jg1-_DycRvXeEgdEOgqGnl6AUAVIwsOuVpZWo https://www.themoneyillusion.com/things-that-smart-people-do... The justification that the Trump administration gives is that if you look at the subset current account that is trade, then further subset down to goods only (not services) and then futher subset down to bilateral goods trade with the USA then indeed China has a big surplus.

voodooranger 7y ago

so if there’s a chinese product that i like and it costs 100 yuan before devaluation, and say 1 dollar == 100 yuan. after devaluation, the product might cost 150 yuan but now 1 dollar == 150 yuan. so my dollar still buys the same amount of goods. what am i missing?

dsalso 7y ago
Not exactly, it depends on the particular good. The price in yuan could stay 100 or not move as much. In that case your purchasing power has increased
- jermaustin1 7y ago
  So its a great thing for the US if we want to import more stuff? So its basically saying: I see your 10% Tariff and raise you a 10% discount!
  - internet_user 7y ago
    great for consumers, devastating for the whatever hobbled manufacturing base left in the US.
  - skybrian 7y ago
    Pretty much, although with more revenue for the US government.
  - jeremy_wiebe 7y ago
    But doesn’t that also raise Chinese import costs the same amount? Or is that where Chinese tariffs in the things they import come into play (like Canadian canola, etc)? This feels like a sort of race to the bottom.
- voodooranger 7y ago
  in the aggregate if you devalue a currency so that it’s worth half of what it was, won’t prices in that currency double?
7y ago

mars4rp 7y ago

Great, now US can print more money and get even more stuff out of china for cheap. US will be more prospect and chines would be employed. win win?

b_tterc_p 7y ago

Say you (as the US) wanted to keep the same level of trade between the US and China- and the tariffs rose and the yuan fell in such a ratio that this remains true. The net outcome is good right? The US gets slightly more tax (larger % of a smaller number), Chinese economy has to deal with loss of currency value?

easymovet 7y ago

Genius, if they are using it to buy gold or bitcoin.

luma 7y ago
Are you seriously suggesting that China's angle here is to purchase economically-significant quantities of Bitcoin?

tunesmith 7y ago

Does anyone know of any nice interactive models to play with that demonstrate trade, tariffs, and currency levels? I just don't have an intuitive sense for this yet.

notathing 7y ago
Today's financial world is sooo complicated, that there is no simple model. Remember that anything remotely predictable will generate arbitrage flows.
ryacko 7y ago
Common economics as described by the news is entirely incorrect. Trade is dependent more on environmental policy than currency ratios. Tariffs reduce profitability of imports making them less viable for firms to use. China’s success largely depends on low interest rates caused by the printing of money, not by a devalued currency which would be temporary as prices would adjust because as notathing says, there is international arbitrage in everything.
resters 7y ago
What we saw is the market responding both to the economics of it and also to the knowledge that China has started adjusting its currency to combat Trump's tariffs. I think many expected this to happen, but what is interesting is that it happened today, so long before the election. China is effectively signaling that it can do a LOT more of this leading up to the election. Imagine a lager currency adjustment that sent the Dow down 3K points. A lot of people are imagining that today who were not thinking about it before. So this puts a lot more pressure on Trump to pull back on the tariffs. But Trump won't want to do that yet, so China has a bit of time to illustrate that Trump is not in control of things the way he claims to be. As someone who does not want the US Government meddling in the economy, I'll be very pleased if China manages to force Trump to repeal the tariffs, regardless of whether China continues its own backward trade policies.
- tunesmith 7y ago
  Given this administration's thinking pattern, wouldn't they see the potential damage to US manufacturers and try to increase tariffs further, vicious-circle style? Who gets constrained first? If that doesn't cease, couldn't that eventually obliterate trade relationships entirely and make war more likely?

deleted 7y ago

[deleted]

Leary 7y ago

Funny how trump calls this "currency manipulation" when in fact they are stopping propping up their currency.

nostromo 7y ago

Trump puts 10% tariffs on Chinese imports bringing billions into the treasury, China devalues currency to compensate... net effect: Americans pay the same price but get billions in free tax money. Thanks, I guess?

kickopotomus 7y ago
A couple of things: 1) The tariffs are not getting paid by China. That money is coming from American businesses that buy from China. The tariffs just force those companies to look for cheaper alternatives. 2) The devaluation now makes China that cheaper alternative again even with the tariffs because now the USD goes further. End result now is it makes the tariffs more useless and China continues to disallow American imports.
- nostromo 7y ago
  Before the devaluing the US consumer was paying the tariffs. But they devalued to compensate for the tariffs. In effect, the tax is now being covered by China’s central bank.
  - cromwellian 7y ago
    US exports are also down 12%, the Chinese government embargoed all purchases of US Agricultural goods by State owned Enterprises (SOEs), which constitute about 1/3rd of China's GDP. Thus, the US trade deficit has been made worse, the US will continue to import from China. China's central bank owns a huge chunk of US debt, so in effect, this is being covered by the US government over the long term, i.e. see the _Twin Deficits Hypothesis_ that federal deficits and trade deficits are related. Also, the central bank in China didn't do anything to devalue the yuan, it was propping it up. A tariff decreases demand, ergo, it decreases demand for RMB vs USD, ergo, exchange rates drop and the yuan becomes cheaper from lower demand. There's a "symmetry theorem" in economics that predicts this outcome to restore equilibrium (trade deficits offset by currency adjustment). So let's stop trying to cook up more excuses for Trump's trade policy. His own economic advisers disagree with it, and the fiction that "mexico" or "china" will pay for these tariff actions he's taking is a straight up lie to the citizens of the country.

musicale 7y ago

My first reaction was: since when does the Dow have its own currency?

FourScore 7y ago

Anyone who hasn't realized that this is about more than economics is deluding themselves. This is about a struggle for global supremacy between two nations with wildly different views about reality. The CCP does not believe in the rights of the individual and holds an iron grip on China. It is instituting policies straight out of an Orwellian dystopia and wants to export its model around the world. The most powerful nation sets the world agenda, whether we like that or not. The United States cannot allow China to set the agenda.

resters 7y ago
Not true at all, both nations have the following: - Orwellian social credit systems - Content censorship "great firewall" - Widespread imprisonment of minorities - Concentration camps for especially undesirable minorities In some ways each nation is better, and in some ways worse. But the important point is that both are using the same playbook to determine their domestic policies. China had previously been "worse" for its own trade protectionism, but Trump decided to increase the US use of trade protectionism (a handout to exporters at the expense of importers and consumers as a whole). To get a sense of the magnitude of the similarity between the two nations, consider the constant stream of stories in the US media about Chinese human rights abuses, etc., while the conditions in US prisons is largely ignored. The US has absolutely no moral high ground over China, and it must be very amusing to Chinese people to observe the level of indignation that Americans feel about Chinese practices.
- FourScore 7y ago
  Completely false on all points. If you want to equate prisons for lawbreakers with concentration camps for political prisoners there's no further discussion we can have.

SubiculumCode 7y ago

So now is the time to buy buy buy?

didip 7y ago

I am confused about 1 thing. China can't possibly keep doing this at a rapid pace, right? If they keep doing this, then their own people's savings is rapidly disappearing. And since their people have a hard time buying US real estate anymore, won't the people get angry?

internet_user 7y ago
There is a very healthy industry based around evading Chinese capital controls.

mytailorisrich 7y ago

From what I understand they haven't devalued anything. They withdrew some support and let the free market do the rest, which is exactly what the US have been demanding. Of course they did that at a time when they knew the result would suit them... It looks like a message to the US.