4 ms·

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).
- TheBranca18 7y ago
  What is winning the war mean in this case? Because the producers in the US, such as soy bean farmers, are not winning anything. Consumers and producers generally don't seem to win trade wars. Especially when tariffs come into play.
  - internet_user 7y ago
    The final prize in this war is who gets to write the rules of the world order, who gets to become/remain the hegemony. Economics/trade is just one battleground of many. Soybeans are so inconsequential to this, in the larger picture of things. Sure, it sucks for farmers. Would you rather have rich soybean farmers and a social credit score assigned to you personally for posting your opinions openly?
    - TheBranca18 7y ago
      I feel like you're offering a false choice. The point of the tariffs is to punish China for a trade deficit and make companies produce things more in the United States according to this administration. Companies aren't changing things as a result of these tariffs as far as I can tell. So currently, consumers and producers are being punished and the administration isn't getting what it wants either. I just struggle to see the point. Personally I think it's more of an anti-globalist segment of the administration, as a trade deficit isn't necessarily a bad thing.
  - addicted 7y ago
    Good point. There is no winning in this war. I’d say I’m definining “winning” at this point as preventing further damage.
yfzhou 7y ago
China is doing less propping-up of Yuan than before because its currency reserve was draining for years. The market rate should be even lower if China lets it float.

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).

TheBranca18 7y ago
What is winning the war mean in this case? Because the producers in the US, such as soy bean farmers, are not winning anything. Consumers and producers generally don't seem to win trade wars. Especially when tariffs come into play.
- internet_user 7y ago
  The final prize in this war is who gets to write the rules of the world order, who gets to become/remain the hegemony. Economics/trade is just one battleground of many. Soybeans are so inconsequential to this, in the larger picture of things. Sure, it sucks for farmers. Would you rather have rich soybean farmers and a social credit score assigned to you personally for posting your opinions openly?
  - TheBranca18 7y ago
    I feel like you're offering a false choice. The point of the tariffs is to punish China for a trade deficit and make companies produce things more in the United States according to this administration. Companies aren't changing things as a result of these tariffs as far as I can tell. So currently, consumers and producers are being punished and the administration isn't getting what it wants either. I just struggle to see the point. Personally I think it's more of an anti-globalist segment of the administration, as a trade deficit isn't necessarily a bad thing.
- addicted 7y ago
  Good point. There is no winning in this war. I’d say I’m definining “winning” at this point as preventing further damage.

yfzhou 7y ago

China is doing less propping-up of Yuan than before because its currency reserve was draining for years. The market rate should be even lower if China lets it float.