There is no other target.
Chinese Economics Thread
- Thread starter Norfolk
- Start date
Real estate is a bad idea yes.
It is difficult to sell, plus rents go down and are in the local currency.
But remember that China buys Dollars with RMB.
And that the supply of RMB is theoretically only limited by how much China prints.
So any dollar losses (or lack of gains) that China absorbs are just paper losses.
But in the event of a dollar crash, the initial losses suffered by China will be offset by the longer-term economic gains to the RMB.
Yes, it difficult to diversify out of the dollar, but it will probably have to happen at some point.
But it will still be some years or decades in the future.
20% is within the bounds of normal currency fluctuations.
Just look at a 10 year graph of the Japanese Yen or British Pound for example.
But a 20% devaluation isn't enough to correct the imbalances we see in terms of the Balance of Payments or Net international Investment Position for the USD.
So yes, it's going to be worse for the USD.
This USD devaluation even at 30 to 40 per cent may not be enough for the OPEC to switch to other currencies for oil. I wonder what could be the trigger point for them to accept other currencies.
But it has been shown those who attempted to sell oil other than usd end up in a ditch like Libya's Gaddafi or Iraq Sadam Hussien. So there is a good chance Saudi needs freedom and democracy once it dumps USD.
But it has been shown those who attempted to sell oil other than usd end up in a ditch like Libya's Gaddafi or Iraq Sadam Hussien. So there is a good chance Saudi needs freedom and democracy once it dumps USD.
In4ser
Junior Member
China could be using its dollar holdings it has towards the $200 Billion phase I trade agreement. This will allow it to exchange the depreciating currency for material goods like barley, beef, and other produce it needs while simultaneously giving the finger to Australia and pushing back Sino-US trade war escalations.
Well technically yes. But most of the dollar are not purchased as in open market transaction. Most of these are earned via exporting enterprises receiving payments in dollars and then exchange them for RMB with banks. Which is why China store them in US T bills and other debt instruments. If it decide to release them on the open market in exchange for RMB. It will see the dollar slides and RMB appreciate.
I never said 20% is not the norm. I was just saying because the dollars' unique privilege position as the world currency will allow it to move further (possibly consuderably) than 20% before it snap. But of course the further it goes before snapping, the more painful is going to be.
It's not as simple as that. They could but it's really pointless because as soon as they use up the $200b reserve to pay the U.S., China's export enterprises would have earned $300b with US and rest of the world.