shuttler
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GDP: China + Pakistan >>>>>> india + vietcong
and half of india is sahara-ranked country ( I dont know if that is 4th or 5th or unranked world!)
China Economy Forum
- Thread starter EagleEyes
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GDP: China + Pakistan >>>>>> india + vietcong
and half of india is sahara-ranked country ( I dont know if that is 4th or 5th or unranked world!)
How China's Renminbi Went From Overpriced Certificates To Major International Currency
China is the world's second largest economy, yet it exercises tremendous capital control including restrictions on its currency, the renminbi.
Chinese officials have previously said that they want to make the currency fully convertible by 2015.
Some, like Deutsche Bank's Alan Cloete, have made bolder claims. He expects the renminbi to become a major reserve currency in the next decade and that it could begin to threaten the greenback. And Berkley economist Barry Eichengreen has said it could account for 15 percent of global currency reserve holdings around the end of the decade.
More conservative estimates say full convertibility is at least 10 – 15 years away. But China's currency has come a long way in the last two decades.
The Use of FECs
People screaming for the internationalization of the renminbi often forget that until the mid-1990s, foreigners in China could only purchase goods and services with foreign exchange certificates (FECs). These were denominated in yuan but sold at a premium and, as expected, led to a thriving black market.
FECs were phased out in 1995 as Beijing began to open up.
Once FEC's were phased out, China could open up its current account and use the renminbi to settle trade. "This opened the door for China to make the Renminbi convertible for current account (i.e., trade) transactions the following year," wrote Patrick Chovanec, professor at Tsinghua University.
But China continued to exercise strict capital controls establishing 'B shares' that were denominated in U.S. dollars in Shanghai and Hong Kong dollars in Shenzhen, and that only foreigners could invest in until 2001. "In effect, the inability to freely buy and sell Renminbi was used as a firewall to insulate China’s financial markets from the outside world," writes Chovanec.
Three ways to think of the Renminbi
The country has come a long way since then. In understanding a currency's role in the global monetary system, Lei (Sandy) Ye, a PhD candidate in Economics at Cornell University, and Cornell professor Eswar Prasad say we have to look to three aspects of the currency.
In a paper titled "The Renminbi's Role in the Global Monetary System," they say we need to consider:
1.Internationalization, i.e. its use in settling cross-border trade and its use as an international medium of change.
2.Capital account convertibility, or the capital controls in place to restrict the flow of capital (assets like cash).
3.Reserve currency, i.e. is the renminbi held by other central banks.
China took a significant step in internationalizing its currency when it allowed companies all over the world to settle trade in renminbi early last year. But the renminbi is clearly underutilized as seen in this chart from SWIFT:
Beijing has also signed bilateral currency swap agreements with countries that it imports commodities from like the UAE, Malaysia, Turkey and Australia.
The development of the offshore renminbi market was also a significant step in that direction — more on that later.
In terms of its capital account, China has been rolling out reforms since the 18th Party Congress. These include expanding the Renminbi Qualified Foreign Institutional Investor scheme (RQFII) which allows qualified investors to channel offshore yuan into bonds and mainland stock, or the Renminbi Qualified Foreign Limited Partner Program (RQFLP), which allow offshore yuan to be invested in private equity. It also allowed more renminbi-based IPOs in Hong Kong.
And countries like Chile, Tanzania, and Nigeria have diversified their foreign reserves to include the renminbi.
But this isn't enough. "Chinese policymakers don't appear willing to open up the capital account fully," Diana Choyleva of Lombard Street Research told Business Insider.
"The process of renminbi internationalization has as its main aim to establish the framework for increased Chinese borrowing from abroad, as the ability of the state to use the banks as an ATM has been exhausted. No wonder that under the schemes introduced so far, the emphasis has been on increasing capital inflows, not capital outflows.
The Offshore and Onshore Renminbi Market
As China began to open up, it wanted its currency used in the international market to settle trade and financial transactions, without, however, fully opening up its capital account.
Hong Kong, which has served as an international hub for mainland China, naturally happened to be a great place for an offshore renminbi (CNH) market. Singapore, Taiwan, and London have since developed their own offshore renminbi markets.
It began with the development of personal renminbi banking business in 2004 when renminbi deposits were allowed in Hong Kong, according to Vanessa Rossi and William Jackson at Chatham House.
Bank of China (Hong Kong) was designated as the sole offshore renminbi clearing bank sometime in 2004. Renminbi deposits continued to climb, especially once the bond market was established in 2007. Bonds issued in renminbi outside the mainland were dubbed dim sum bonds. In 2010, McDonald's became the first foreign (non-financial) company to issue a dim sum bond.
Renminbi deposits continued to pick up with the launch of the trade settlement scheme in 2009 – 2010.
The crucial thing about the offshore renminbi (referred to as CNH here on), is that it doesn't fluctuate within a tight band like the onshore renminbi (CNY) and is free of Beijing's control in that regard.
In settling trade in renminbi, many companies accept CNY payments from Chinese importers and change that into dollars at the more attractive offshore rate. And borrowing costs are much cheaper in the CNH bond market than in China. From the Financial Times:
"Fervent demand for renminbi from international investors has driven down rates in Hong Kong and thereby created incentives for companies considering using the renminbi for trade or financing.
Foreign exporters have cottoned on to the fact that the renminbi-dollar exchange rate is at a premium in Hong Kong compared with the mainland. To arbitrage the two markets, these companies accept renminbi as payment from Chinese importers, then swap the cash into dollars at the more attractive offshore exchange rate."
The expectation that the renminbi would appreciate has been a key factor driving demand for CNH. But Chinese state media has warned that a sharp renminbi appreciation is unlikely in 2013. Moreover, the gap between the CNH and CNY has narrowed.
How does the internationalization of the renminbi help companies?
In a paper titled "The Curious Case Of RMB Internationalization," Oliver Meng Rui and Andy Bodrog point out that Chinese companies, and companies that trade with China, can both benefit from the internationalization of the renminbi.
Should China liberalize?
But China still has a way to go before its currency is fully convertible. To start with, it needs to do more of the same: i.e. use it to settle trade and invoicing and get foreign central banks to add it to their reserves.
The currency would also have to be used in transactions that aren't directly related to China for it to be considered a truly global currency.
It needs to improve its "financial infrastructure," according to Meng Rui and Bodrog, by "installing more advanced payment systems and adopting international standards such as SWIFT, which allows inter-bank messaging in a transparent and reliable international system."
Of course the biggest problem is getting China used to the idea of an internationalized renminbi. "There are many segments in China (such as the Ministry of Commerce, who represent manufacturers, and so on) who may like an internationalized renminbi in principle but oppose its effects (such as a more volatile and probably stronger currency)," Moody's Alastair Chan told Business Insider.
While investors like Jim Rogers have said the biggest mistake on the part of Chinese policymakers is maintaining a non-convertible currency, there is something to be said about the caution Beijing is exercising.
Liberalizing the capital account too quickly risks causing large capital outflows. Liberalizing interest rates to limit such risks, would raise borrowing costs for its state-owned enterprises (SOEs) that still contribute a significant amount to GDP. A fully-convertible currency would also be exposed to exchange rate shocks.
"It's probably prudent to be careful in this as there are many cases of financial crises after capital account liberalization," warns Moody's Chan.
http://finance.yahoo.com/news/china...ates-022540194.html?desktop_view_default=true
China is the world's second largest economy, yet it exercises tremendous capital control including restrictions on its currency, the renminbi.
Chinese officials have previously said that they want to make the currency fully convertible by 2015.
Some, like Deutsche Bank's Alan Cloete, have made bolder claims. He expects the renminbi to become a major reserve currency in the next decade and that it could begin to threaten the greenback. And Berkley economist Barry Eichengreen has said it could account for 15 percent of global currency reserve holdings around the end of the decade.
More conservative estimates say full convertibility is at least 10 – 15 years away. But China's currency has come a long way in the last two decades.
The Use of FECs
People screaming for the internationalization of the renminbi often forget that until the mid-1990s, foreigners in China could only purchase goods and services with foreign exchange certificates (FECs). These were denominated in yuan but sold at a premium and, as expected, led to a thriving black market.
FECs were phased out in 1995 as Beijing began to open up.
Once FEC's were phased out, China could open up its current account and use the renminbi to settle trade. "This opened the door for China to make the Renminbi convertible for current account (i.e., trade) transactions the following year," wrote Patrick Chovanec, professor at Tsinghua University.
But China continued to exercise strict capital controls establishing 'B shares' that were denominated in U.S. dollars in Shanghai and Hong Kong dollars in Shenzhen, and that only foreigners could invest in until 2001. "In effect, the inability to freely buy and sell Renminbi was used as a firewall to insulate China’s financial markets from the outside world," writes Chovanec.
Three ways to think of the Renminbi
The country has come a long way since then. In understanding a currency's role in the global monetary system, Lei (Sandy) Ye, a PhD candidate in Economics at Cornell University, and Cornell professor Eswar Prasad say we have to look to three aspects of the currency.
In a paper titled "The Renminbi's Role in the Global Monetary System," they say we need to consider:
1.Internationalization, i.e. its use in settling cross-border trade and its use as an international medium of change.
2.Capital account convertibility, or the capital controls in place to restrict the flow of capital (assets like cash).
3.Reserve currency, i.e. is the renminbi held by other central banks.
China took a significant step in internationalizing its currency when it allowed companies all over the world to settle trade in renminbi early last year. But the renminbi is clearly underutilized as seen in this chart from SWIFT:
Beijing has also signed bilateral currency swap agreements with countries that it imports commodities from like the UAE, Malaysia, Turkey and Australia.
The development of the offshore renminbi market was also a significant step in that direction — more on that later.
In terms of its capital account, China has been rolling out reforms since the 18th Party Congress. These include expanding the Renminbi Qualified Foreign Institutional Investor scheme (RQFII) which allows qualified investors to channel offshore yuan into bonds and mainland stock, or the Renminbi Qualified Foreign Limited Partner Program (RQFLP), which allow offshore yuan to be invested in private equity. It also allowed more renminbi-based IPOs in Hong Kong.
And countries like Chile, Tanzania, and Nigeria have diversified their foreign reserves to include the renminbi.
But this isn't enough. "Chinese policymakers don't appear willing to open up the capital account fully," Diana Choyleva of Lombard Street Research told Business Insider.
"The process of renminbi internationalization has as its main aim to establish the framework for increased Chinese borrowing from abroad, as the ability of the state to use the banks as an ATM has been exhausted. No wonder that under the schemes introduced so far, the emphasis has been on increasing capital inflows, not capital outflows.
The Offshore and Onshore Renminbi Market
As China began to open up, it wanted its currency used in the international market to settle trade and financial transactions, without, however, fully opening up its capital account.
Hong Kong, which has served as an international hub for mainland China, naturally happened to be a great place for an offshore renminbi (CNH) market. Singapore, Taiwan, and London have since developed their own offshore renminbi markets.
It began with the development of personal renminbi banking business in 2004 when renminbi deposits were allowed in Hong Kong, according to Vanessa Rossi and William Jackson at Chatham House.
Bank of China (Hong Kong) was designated as the sole offshore renminbi clearing bank sometime in 2004. Renminbi deposits continued to climb, especially once the bond market was established in 2007. Bonds issued in renminbi outside the mainland were dubbed dim sum bonds. In 2010, McDonald's became the first foreign (non-financial) company to issue a dim sum bond.
Renminbi deposits continued to pick up with the launch of the trade settlement scheme in 2009 – 2010.
The crucial thing about the offshore renminbi (referred to as CNH here on), is that it doesn't fluctuate within a tight band like the onshore renminbi (CNY) and is free of Beijing's control in that regard.
In settling trade in renminbi, many companies accept CNY payments from Chinese importers and change that into dollars at the more attractive offshore rate. And borrowing costs are much cheaper in the CNH bond market than in China. From the Financial Times:
"Fervent demand for renminbi from international investors has driven down rates in Hong Kong and thereby created incentives for companies considering using the renminbi for trade or financing.
Foreign exporters have cottoned on to the fact that the renminbi-dollar exchange rate is at a premium in Hong Kong compared with the mainland. To arbitrage the two markets, these companies accept renminbi as payment from Chinese importers, then swap the cash into dollars at the more attractive offshore exchange rate."
The expectation that the renminbi would appreciate has been a key factor driving demand for CNH. But Chinese state media has warned that a sharp renminbi appreciation is unlikely in 2013. Moreover, the gap between the CNH and CNY has narrowed.
How does the internationalization of the renminbi help companies?
In a paper titled "The Curious Case Of RMB Internationalization," Oliver Meng Rui and Andy Bodrog point out that Chinese companies, and companies that trade with China, can both benefit from the internationalization of the renminbi.
Should China liberalize?
But China still has a way to go before its currency is fully convertible. To start with, it needs to do more of the same: i.e. use it to settle trade and invoicing and get foreign central banks to add it to their reserves.
The currency would also have to be used in transactions that aren't directly related to China for it to be considered a truly global currency.
It needs to improve its "financial infrastructure," according to Meng Rui and Bodrog, by "installing more advanced payment systems and adopting international standards such as SWIFT, which allows inter-bank messaging in a transparent and reliable international system."
Of course the biggest problem is getting China used to the idea of an internationalized renminbi. "There are many segments in China (such as the Ministry of Commerce, who represent manufacturers, and so on) who may like an internationalized renminbi in principle but oppose its effects (such as a more volatile and probably stronger currency)," Moody's Alastair Chan told Business Insider.
While investors like Jim Rogers have said the biggest mistake on the part of Chinese policymakers is maintaining a non-convertible currency, there is something to be said about the caution Beijing is exercising.
Liberalizing the capital account too quickly risks causing large capital outflows. Liberalizing interest rates to limit such risks, would raise borrowing costs for its state-owned enterprises (SOEs) that still contribute a significant amount to GDP. A fully-convertible currency would also be exposed to exchange rate shocks.
"It's probably prudent to be careful in this as there are many cases of financial crises after capital account liberalization," warns Moody's Chan.
http://finance.yahoo.com/news/china...ates-022540194.html?desktop_view_default=true
sweetgrape
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Your comments let me can't help laughing, I guess you are the one just listen to Viet government propaganda, hehe.We can lend money from Japan-Russia to save our economy,and if war happen,we also got Russia support,so we won't fall before you.
U r alone,none of ur poor ally can support u a single dime. So ur collapse if war happen is ineviable
And you should first mirror yourself before mocking others, Do you think you are richer than PAk? and stronger than she? do you have NUKE and can design and manufacture long-distance missile and JF by yourself?
And, you we need foreign help to take Viet down? you raise yourself or take down China, hehe, and you should let your government tell you how much USSR help you in 1979~1989 war.
He is smug, hehe!
Yes, So you think China is in the same level with you? Maybe as you logical, Luxembourg Can crush all developing countries.
shuttler
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Hong Kong, China Unveils HK$33 Billion Relief Measures in Budget Amid Hefty Surplus
https://www.adr.com
1:39 AM ET on Wednesday, February 27, 2013
By Chester Yung
HONG KONG--Hong Kong's finance minister on Wednesday pledged modest income tax breaks and waivers on property rates despite the government's ballooning fiscal reserves, in a warning against drawing heavily on the city's coffers in a weak economy.
In his sixth annual budget address, Financial Secretary John Tsang announced 33 billion Hong Kong dollars (US$4.26 billion) worth of relief measures to boost the economy, down sharply from the HK$80 billion worth of measures he introduced last year.
This reduction comes despite his forecast of a HK$64.9 billion budget surplus for the current fiscal year ending March 31, a sharp upward revision from the government's original forecast of a HK$3.4 billion deficit, due to higher income from land sales and property transaction taxes. This year's surplus would help push the city's total fiscal reserves to HK$734 billion.
Mr. Tsang on Wednesday said he expects the city's gross domestic product to grow 1.5%-3.5% this year, faster than the 1.4% growth posted last year.
Measures Mr. Tsang announced in his address include a one-off reduction in personal income tax for the current fiscal year, to be capped at HK$10,000 per person, down from a HK$12,000 tax break last year.
The government is also waiving property rates--a form of property tax collected quarterly--in the fiscal year starting April 1, subject to a ceiling of HK$1,500 per quarter for each property. Mr. Tsang also announced subsidies on electricity charges.
Write to Chester Yung at chester.yung@wsj.com
(END) Dow Jones Newswires
https://www.adr.com
1:39 AM ET on Wednesday, February 27, 2013
By Chester Yung
HONG KONG--Hong Kong's finance minister on Wednesday pledged modest income tax breaks and waivers on property rates despite the government's ballooning fiscal reserves, in a warning against drawing heavily on the city's coffers in a weak economy.
In his sixth annual budget address, Financial Secretary John Tsang announced 33 billion Hong Kong dollars (US$4.26 billion) worth of relief measures to boost the economy, down sharply from the HK$80 billion worth of measures he introduced last year.
This reduction comes despite his forecast of a HK$64.9 billion budget surplus for the current fiscal year ending March 31, a sharp upward revision from the government's original forecast of a HK$3.4 billion deficit, due to higher income from land sales and property transaction taxes. This year's surplus would help push the city's total fiscal reserves to HK$734 billion.
Mr. Tsang on Wednesday said he expects the city's gross domestic product to grow 1.5%-3.5% this year, faster than the 1.4% growth posted last year.
Measures Mr. Tsang announced in his address include a one-off reduction in personal income tax for the current fiscal year, to be capped at HK$10,000 per person, down from a HK$12,000 tax break last year.
The government is also waiving property rates--a form of property tax collected quarterly--in the fiscal year starting April 1, subject to a ceiling of HK$1,500 per quarter for each property. Mr. Tsang also announced subsidies on electricity charges.
Write to Chester Yung at chester.yung@wsj.com
(END) Dow Jones Newswires
shuttler
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The combined Foreign Exchange Reserve of Greater China as at end of Dec. 2012 ( billion of USD):
China $3,311
Taiwan $403
HK $ 300
Macau $17
Grand total: US$4,031 billion.
Macao's forex reserves reach 16.6 bln USD in Dec. - Xinhua | English.news.cn
List of countries by foreign-exchange reserves - Wikipedia, the free encyclopedia
China $3,311
Taiwan $403
HK $ 300
Macau $17
Grand total: US$4,031 billion.
Macao's forex reserves reach 16.6 bln USD in Dec. - Xinhua | English.news.cn
List of countries by foreign-exchange reserves - Wikipedia, the free encyclopedia
SenLin
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China becomes world’s top oil importer
China has overtaken the US as the world’s largest net importer of oil, in a generational shift that will shake up the geopolitics of natural resources.
Full Text:
China becomes world’s top oil importer - FT.com
China has overtaken the US as the world’s largest net importer of oil, in a generational shift that will shake up the geopolitics of natural resources.
Full Text:
China becomes world’s top oil importer - FT.com
OrionHunter
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Beijing: Chinas new leader Xi Jinping and his team are gearing up for a grim battle against inflation while setting for themselves an easy target 7.5% of gross domestic product for the current year.
Outgoing premier Wen Jiabao, in his speech opening the national legislatures annual session, dourly listed problems being left behind: sluggish growth; pollution; yawning iniquity and rampant corruption.
e-paper Sign-in
Speeches are terribly boring stuff. For the delegates, it was a tough task enduring outgoing PM Wen Jiabaos 29-page work report!
So much for the seriousness displayed by members of the CPC!
Outgoing premier Wen Jiabao, in his speech opening the national legislatures annual session, dourly listed problems being left behind: sluggish growth; pollution; yawning iniquity and rampant corruption.
e-paper Sign-in
Speeches are terribly boring stuff. For the delegates, it was a tough task enduring outgoing PM Wen Jiabaos 29-page work report!
So much for the seriousness displayed by members of the CPC!
Chinese-Dragon
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If 7.5% is so easy, then why doesn't everyone do it?
Why don't you do it?And our base economy is $8.3 trillion now, so it is becoming harder to have high percentage growth. We have to add an enormous amount of GDP every year to account for real growth rate + inflation + currency movement.
In 2011 our GDP was 7.3 trillion, in 2012 it is 8.3 trillion. We added 1 trillion in one year, that is not easy, even if don't account for the contribution of inflation and appreciation of the Yuan.
OrionHunter
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Agreed! But then you guys had better watch out as the housing bubble is on the verge of bursting! Chinese shares fell the most in two years last Monday as the Shanghai stock exchange’s property index tumbled 9.25 percent. Late on Friday, China’s State Council had announced a new set of policies designed to cool down the housing market.If 7.5% is so easy, then why doesn't everyone do it?
And our base economy is $8.3 trillion now, so it is becoming harder to have high percentage growth. We have to add an enormous amount of GDP every year to account for real growth rate + inflation + currency movement.
In 2011 our GDP was 7.3 trillion, in 2012 it is 8.3 trillion. We added 1 trillion in one year, that is not easy.
The new rules include a 20 percent tax on gains from a sale, higher down payments and mortgage rates, and requirements that cities set annual price easing targets. The real estate market in China is already quite distorted, and these repeated rounds of repressive policies may be just layering on more distortions.
However, we should perhaps give China’s leaders some credit for acknowledging potential bubbles and taking steps to rein them in.
Chinese-Dragon
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I've been hearing about this supposed real estate bubble collapsing for years now. In fact it was the first thing I saw when I joined this forum 3 years ago.
The bottom line is that property prices in large developing countries will always be distorted in the big cities.
Echo_419
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Are yaar kyu trolling karte ho itne
yusheng
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hi，buddy，
the following website may help you find something you want:
GovHK: Economic Report & Business Statistics
http://www.hkeconomy.gov.hk/en/reports/index.htm
http://www.hkeconomy.gov.hk/en/topics/index.htm
if you tell me your email, i can send you a ppt of "economic history of HongKong" (ppt file,size:15m)
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