only because of artificial US dollar appreciation caused by Fed interest rate hikes
Chinese Economics Thread
- Thread starter Norfolk
- Start date
True，but unlike other countries，the USD is global reserve currency. That means the US can use it's currency to buy as much as goods and resources they want from other countries. So dollar appreciation is not meaningless，it can translate to wealth accumulation.
manqiangrexue
Brigadier
This is by nominal GDP, right? Yeah, America hiking the dollar.
It's not that special in this case. Any government can raise the values of their currencies to stay with the USD if they wanted to. But it depends on what the rest of the world does. If America does it alone and you follow, your exports become more expensive to the rest of the world but the same to the US market. If you follow the rest of the world and stay put, your exports are the same for the global market but cheaper and more competitive on the US market. The latter is what's happening.
dollar appreciation is transitory. even the fed knows this as rate cannot remain high due to debt ceiling.
hence meaningless long term.
Is that right？During Asian financial crisis，those countries who attempted to fix exchange rate of their currencies against USD ended up miserably
It is never a good idea to fight against market dynamics. Just raise the interest rate as a riposte and let the currency level fluctuate.
Russia learned their lesson with the Asial Financial Crisis, when they tried to keep up with the USD and lost a bundle of money, this time they just raised interest rates and instituted capital controls which worked much better.
Russia learned their lesson with the Asial Financial Crisis, when they tried to keep up with the USD and lost a bundle of money, this time they just raised interest rates and instituted capital controls which worked much better.
manqiangrexue
Brigadier
Oh, by pure market forces, that's right. But this is in essence a move to counter an American move; the US wants its currency value to go up in comparison so if you move yours up, it defeats America's move. For little countries, if they do that, they can expect to face two major forces: America bullying them and their currency values appreciating in relation to currencies that don't follow suit. Finally, they were already in trouble so there's no isolated effect to determine whether their failures reflected the currency manipulation or the other factors that were already there that they could not rectify.
In today's case, nobody's increasing their currency value except for the US so China would obviously stay where it is to increase its exports and export competitiveness in relation to the US instead of doing the opposite with the rest of the world. And when the US needs to bring its currency value back down to normal, suddenly the news is gonna say China's nominal GDP grew up by more than the total GDP of Canada again (which is what they said the first time something like this happened).
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Raise interest rate is not an option when you want to boost the property market
Boosting property market imo is less important than boosting the consumer markets. It is more sustainable in the long term. Boosting property market in time of Covid does not make much sense for me imo, unless the government is still addicted by "easy" tax from selling real estates. The property market still not going down as much as it should.
I agree，in long term transform the economy into consumption driven rather than production driven is important. The property market has sucked too much wealth from Chinese people，no money left for consumption. But for local government，abandon their largest revenue source is hard choice