Chinese Economics Thread
- Thread starter Norfolk
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Hi localizer,
I think the CCP is following your advise
, Its perfect timing , lessen trade fiction, cheaper import, less inflation and boost consumption. Export will be less affected, since most of the countries are in partial lockdown and need to import more from China. So there is time to gradually adjust. As you said before the Chinese masses need to enjoy the fruit of 40 plus years of hard endeavor, for what ever fault Trump has, we had to thank him for forcing the hand of CCP to finally shift its attention locally.
manqiangrexue
Brigadier
China Semiconductor Threat Sparked a $100 Billion Chip Rout
(Bloomberg) -- Stocks sellers didn’t show much discretion Thursday as the major indexes tumbled. But the outsize chipmaker rout may have had its origin in a move by China.
The Philadelphia Semiconductor Index fell 5.7% Thursday, its worst session since mid-June, following news that China is planning a sweeping set of new government policies to develop its domestic semiconductor industry and counter recent Trump administration restrictions. The decline shaved off about $100 billion in value for the gauge.
Major chipmakers posted one of their worst days in months. Shares of Nvidia Corp. tumbled 9.3%, the most since March 16. Broadcom Inc. fell 6.1%, Qualcomm Inc. dropped 5.5% and Intel Corp. declined 3.6%.
“If you were to ask me right now what my biggest fear had been for most of the month of August, it was the growing tensions between the U.S. and China,” said Arthur Hogan, chief market strategist at National Securities Corp. “It’s not around the alleged phase-one trade talks and China buying more of our agricultural products, but it’s much more around what we’re actually doing in real life -- we’re starting a technologic cold war.”
Semiconductors are key to Beijing’s technology objectives. So the government is preparing broad support to develop so-called third-generation semiconductors for the five years through 2025, Bloomberg News reported. The move comes as the Trump administration threatens to cut off China’s supplies from abroad.
The U.S. government has blacklisted dozens of China’s tech firms to prevent them from buying American parts. It has also instituted bans on ByteDance Ltd.’s TikTok and Tencent Holdings Ltd.’s WeChat and has sanctioned Huawei Technologies Co.
Following these restrictions, China’s reaction is no surprise, Hogan said.
When the two largest economies in the world go head-to-head, he said, “it’s hard to rationalize what good comes from this.”
(Bloomberg) -- Stocks sellers didn’t show much discretion Thursday as the major indexes tumbled. But the outsize chipmaker rout may have had its origin in a move by China.
The Philadelphia Semiconductor Index fell 5.7% Thursday, its worst session since mid-June, following news that China is planning a sweeping set of new government policies to develop its domestic semiconductor industry and counter recent Trump administration restrictions. The decline shaved off about $100 billion in value for the gauge.
Major chipmakers posted one of their worst days in months. Shares of Nvidia Corp. tumbled 9.3%, the most since March 16. Broadcom Inc. fell 6.1%, Qualcomm Inc. dropped 5.5% and Intel Corp. declined 3.6%.
“If you were to ask me right now what my biggest fear had been for most of the month of August, it was the growing tensions between the U.S. and China,” said Arthur Hogan, chief market strategist at National Securities Corp. “It’s not around the alleged phase-one trade talks and China buying more of our agricultural products, but it’s much more around what we’re actually doing in real life -- we’re starting a technologic cold war.”
Semiconductors are key to Beijing’s technology objectives. So the government is preparing broad support to develop so-called third-generation semiconductors for the five years through 2025, Bloomberg News reported. The move comes as the Trump administration threatens to cut off China’s supplies from abroad.
The U.S. government has blacklisted dozens of China’s tech firms to prevent them from buying American parts. It has also instituted bans on ByteDance Ltd.’s TikTok and Tencent Holdings Ltd.’s WeChat and has sanctioned Huawei Technologies Co.
Following these restrictions, China’s reaction is no surprise, Hogan said.
When the two largest economies in the world go head-to-head, he said, “it’s hard to rationalize what good comes from this.”
Chinese firms need to avoid dollar denominated debt. The reason for reserves is to avoid a sudden depreciation. But I suppose reserves in other currencies could be converted into dollars if necessary for that purpose. There may not be a need to hold dollar reserves in the long run.
If the USD is declining, then it is a good idea to borrow in USD owing US debts because then the Chinese firm will be paying it back with cheaper dollars.
If the USD is appreciating, then for USD loans the Chinese companies had borrowed, it would cost more to pay back US debts.
(Note, the converse is true if someone buys US bonds. Bonds are an asset and US bonds are priced in US Dollars. If the USD goes down, then your US Dollar assets go down.)
Technically, everything China owns is an assets including debts. But Bonds are usually known as debt instruments not assets.
You are forgetting one thing. It's generally not smart for firms to take currency risk. That is the equivalent of gambling.
The main reason why countries are forced to hold dollar reserves is to avoid a suddenly uncontrollable depreciation of the currency. During the 1990's Thailand had higher interest rates than the US, just like China today. As a result, companies borrowed in USD to finance domestic expansion. But when the Thai baht came under speculative attack, it suddenly sank, and Thailand did not have enough USD reserves to prevent it. As a result, all the Thai companies could not pay off their debt and went bankrupt.
Thus, if Chinese companies avoid dollar denominated debt (except those that can afford to gamble), then China does not need to hold as many reserves.
In general, the less entities hold dollar debt, the more we move away from a dollar basted international system.
I do not understand your point of view, unless you're just talking about technical details of a word/instrument.
GM is Government Motors. They have a stock traded on an exchange, and we probably can go buy their bonds too, Government Motors bonds.
Both are assets. Same old story about stocks and bonds. You own them. If you own something, that is an asset.