4 ms·

Paying Chinese companies in RMB isn’t the issue. If I sell something and a Chinese company pays me in RMB, I can’t really do anything with a billion yuan. Can’t

Paying Chinese companies in RMB isn’t the issue. If I sell something and a Chinese company pays me in RMB, I can’t really do anything with a billion yuan. Can’t buy a company (limitations on foreign ownership), can’t buy property (99-year lease that can be canceled on the whims of the government at any time), can’t buy Chinese debt (terrible yields, very small foreign market access, incredibly opaque laws and accounting), and nobody else in the world wants it so I have no choice but to sell it back to China in exchange for a real currency at whatever horseshit exchange rate they’ve concocted. It’s worthless money and I don’t see anything out of china that would cause that to change.

mullingitover 9mo ago
> Can’t buy a company (limitations on foreign ownership) This is quickly going away[1]. [1] https://www.nortonrosefulbright.com/en/knowledge/publications/ac881831/china-eliminates-all-access-restrictions-to-foreign-investors-in-the-manufacturing-sector https://www.nortonrosefulbright.com/en/knowledge/publication...
jama211 9mo ago
I mean, you can buy goods and services within china, and you can sell those goods and services. The “horseshit” exchange rate can’t deviate too far from the real value or it incentivises laundering too much. The exchange rate isn’t _that_ bad as a result.
throw310822 9mo ago
I guess this is naive, but can't you use it to buy (or sell it to people who want to buy) Chinese products? It's not like China doesn't have an enormous amount and range of products on offer.
KaiserPro 9mo ago
Thats a feature not a bug. The Chinese government spend a lot of money keeping the value of the RMB low.
- irishcoffee 9mo ago
  This is actually an interesting point. Wouldn't it be bad for China if the US isn't the reserve currency/the RMB gains a lot more in value relative to the USD? It would proportionally, negatively, affect their export profits, no?
  - qwytw 9mo ago
    Germany did relatively fine though? Despite the German mark being the second largest reserve currency and their economy being heavily reliant on exports.
    - irishcoffee 9mo ago
      Mostly it’s just what I’ve read, I don’t know if it’s true, which is why I asked. If you get less yuan-people-hours per dollar (and materials cost increase for the same reason), you would get less per dollar than previously, I think? Eventually you hit an inflection point where it’s cheaper to manufacture elsewhere. Which is why China is working Africa, huh? Interesting stuff, in a vacuum.
  - KaiserPro 9mo ago
    It would make Chinese manufacturing more expensive for both home and abroad. china's whole deal is to be the world's manufacturing and science plus it would make Chinese debt more expensive as well.
HWR_14 9mo ago
What about buying rare earth metals or containers of electronics or purses? It's a bit more work, but it's not impossible to solve the problem. Also, it's not like a 99-year lease has no value. That's your entire lifetime+.
- woodruffw 9mo ago
  I think OP's point is that a "99 year lease" isn't worth very much without a firm guarantee that the least in fact lasts that long. I don't really have an opinion on land leases in the PRC, but it doesn't seem facially unreasonable to suspect that a foreign lease holder's land value wouldn't be a priority for China's leadership during an economic crisis.
  - XorNot 9mo ago
    This is on full display with the US's Venezuela problem: no one believes the US will hold it, so oil companies don't want to invest because last time exactly this happened - they had everything seized. Imagine if you'd invested in lithium mining in Afghanistan 15 years ago: you'd likely have paid a lot, made little money, lost employees and then lost it to the Taliban.
- terminalshort 9mo ago
  Because if I am running a business I just want to be paid in money that I can pay my bills in. I don't want to have the additional task of managing rare earths and electronics inventory. That's not "a bit more work." It's running an entirely different business that I don't know how to run.

mullingitover 9mo ago

> Can’t buy a company (limitations on foreign ownership) This is quickly going away[1]. [1] https://www.nortonrosefulbright.com/en/knowledge/publications/ac881831/china-eliminates-all-access-restrictions-to-foreign-investors-in-the-manufacturing-sector https://www.nortonrosefulbright.com/en/knowledge/publication...

jama211 9mo ago

I mean, you can buy goods and services within china, and you can sell those goods and services. The “horseshit” exchange rate can’t deviate too far from the real value or it incentivises laundering too much. The exchange rate isn’t _that_ bad as a result.

throw310822 9mo ago

I guess this is naive, but can't you use it to buy (or sell it to people who want to buy) Chinese products? It's not like China doesn't have an enormous amount and range of products on offer.

KaiserPro 9mo ago

Thats a feature not a bug. The Chinese government spend a lot of money keeping the value of the RMB low.

irishcoffee 9mo ago
This is actually an interesting point. Wouldn't it be bad for China if the US isn't the reserve currency/the RMB gains a lot more in value relative to the USD? It would proportionally, negatively, affect their export profits, no?
- qwytw 9mo ago
  Germany did relatively fine though? Despite the German mark being the second largest reserve currency and their economy being heavily reliant on exports.
  - irishcoffee 9mo ago
    Mostly it’s just what I’ve read, I don’t know if it’s true, which is why I asked. If you get less yuan-people-hours per dollar (and materials cost increase for the same reason), you would get less per dollar than previously, I think? Eventually you hit an inflection point where it’s cheaper to manufacture elsewhere. Which is why China is working Africa, huh? Interesting stuff, in a vacuum.
- KaiserPro 9mo ago
  It would make Chinese manufacturing more expensive for both home and abroad. china's whole deal is to be the world's manufacturing and science plus it would make Chinese debt more expensive as well.

HWR_14 9mo ago

What about buying rare earth metals or containers of electronics or purses? It's a bit more work, but it's not impossible to solve the problem. Also, it's not like a 99-year lease has no value. That's your entire lifetime+.

woodruffw 9mo ago
I think OP's point is that a "99 year lease" isn't worth very much without a firm guarantee that the least in fact lasts that long. I don't really have an opinion on land leases in the PRC, but it doesn't seem facially unreasonable to suspect that a foreign lease holder's land value wouldn't be a priority for China's leadership during an economic crisis.
- XorNot 9mo ago
  This is on full display with the US's Venezuela problem: no one believes the US will hold it, so oil companies don't want to invest because last time exactly this happened - they had everything seized. Imagine if you'd invested in lithium mining in Afghanistan 15 years ago: you'd likely have paid a lot, made little money, lost employees and then lost it to the Taliban.
terminalshort 9mo ago
Because if I am running a business I just want to be paid in money that I can pay my bills in. I don't want to have the additional task of managing rare earths and electronics inventory. That's not "a bit more work." It's running an entirely different business that I don't know how to run.