5 ms·

So you're saying the yuan hasn't been pegged to the dollar all these years? This is revisionism.

kasey_junk 7y ago
The yuan is not pegged to the dollar in the traditional sense of the term. China is actually fairly opaque about how they set their rates but claim it’s against a basket of currencies. Here is a good discussion on it: https://www.cfr.org/blog/so-china-pegging-dollar-or-basket https://www.cfr.org/blog/so-china-pegging-dollar-or-basket
deleted 7y ago
[deleted]
Despegar 7y ago
It was pegged but they pegged it at a number that was stronger than it would otherwise be. China fears capital flight more than anything, and rich people in China would absolutely sell their yuan for dollars or euros in an instant if they could. Capital controls and the peg are why real estate in China is a bubble. There's no other place for people to put their savings. Rich people who know better don't trust the CCP.
- malandrew 7y ago
  What could the US do to assist in helping capital flight? I would imagine that just helping all the rich Chinese take their money out of China would go a long way to force Beijing's hand.
  - chaostheory 7y ago
    Allow paying for citizenship via investment.
    - ridewinter 7y ago
      Just become Swiss.
    - helloindia 7y ago
      "EB-5 program basically enabled Chinese investors to get their green cards through a $500,000 investment in a regional center project, or a $ 1 million direct investment in their own company." https://www.forbes.com/sites/andyjsemotiuk/2018/06/22/the-l-1-work-visa-the-best-option-for-chinese-investors-wanting-to-immigrate-to-the-usa/#34bd83b221d3 https://www.forbes.com/sites/andyjsemotiuk/2018/06/22/the-l-...
Spellman 7y ago
They did, but I believe GP is arguing they did it in the opposite direction as the recent movements. To make sure terms are correct, "Weak" currency means higher Yuan:USD conversion rate. Devaluing your currency makes exports more attractive to other countries and tends to create capital inflows (my 1 USD can buy a lot more Yuans, meaning cheaper to buy buildings/business!). "Strong" currency means lower Yuan:USD conversion. Flip above. Looking at the past, there's an odd floor that happens originally at 8.5 in the late 90s and 2000s. Many argued this was intentionally weak to help grow their export economy. Then the rate rose to 6.83 in the late 00s and 2010s. Some argued this was intentionally strong to prevent capital outflows. Since then the rate has been in the 6s and seems to float more naturally until the recent dive into the >7s, indicating a weakening of the Yuan. People always saw 7:1 Yuan:USD as the weakest point China was willing to let their currency fall. So, in the recent past, they're accused of artificially keeping the Yuan strong (esp in the global financial crisis) but now it seems like they're allowing it to devalue naturally. EDIT: for details/grammer

The yuan is not pegged to the dollar in the traditional sense of the term. China is actually fairly opaque about how they set their rates but claim it’s against a basket of currencies. Here is a good discussion on it: https://www.cfr.org/blog/so-china-pegging-dollar-or-basket https://www.cfr.org/blog/so-china-pegging-dollar-or-basket

deleted 7y ago

[deleted]

Despegar 7y ago

It was pegged but they pegged it at a number that was stronger than it would otherwise be. China fears capital flight more than anything, and rich people in China would absolutely sell their yuan for dollars or euros in an instant if they could. Capital controls and the peg are why real estate in China is a bubble. There's no other place for people to put their savings. Rich people who know better don't trust the CCP.

malandrew 7y ago
What could the US do to assist in helping capital flight? I would imagine that just helping all the rich Chinese take their money out of China would go a long way to force Beijing's hand.
- chaostheory 7y ago
  Allow paying for citizenship via investment.
  - ridewinter 7y ago
    Just become Swiss.
  - helloindia 7y ago
    "EB-5 program basically enabled Chinese investors to get their green cards through a $500,000 investment in a regional center project, or a $ 1 million direct investment in their own company." https://www.forbes.com/sites/andyjsemotiuk/2018/06/22/the-l-1-work-visa-the-best-option-for-chinese-investors-wanting-to-immigrate-to-the-usa/#34bd83b221d3 https://www.forbes.com/sites/andyjsemotiuk/2018/06/22/the-l-...

Spellman 7y ago

They did, but I believe GP is arguing they did it in the opposite direction as the recent movements. To make sure terms are correct, "Weak" currency means higher Yuan:USD conversion rate. Devaluing your currency makes exports more attractive to other countries and tends to create capital inflows (my 1 USD can buy a lot more Yuans, meaning cheaper to buy buildings/business!). "Strong" currency means lower Yuan:USD conversion. Flip above. Looking at the past, there's an odd floor that happens originally at 8.5 in the late 90s and 2000s. Many argued this was intentionally weak to help grow their export economy. Then the rate rose to 6.83 in the late 00s and 2010s. Some argued this was intentionally strong to prevent capital outflows. Since then the rate has been in the 6s and seems to float more naturally until the recent dive into the >7s, indicating a weakening of the Yuan. People always saw 7:1 Yuan:USD as the weakest point China was willing to let their currency fall. So, in the recent past, they're accused of artificially keeping the Yuan strong (esp in the global financial crisis) but now it seems like they're allowing it to devalue naturally. EDIT: for details/grammer