China has 2nd largest consumer market in the world

[jhungary]

If a Canadian importer wants to buy a cargo of mobile phones from China. He has to go raise USD with CAD to buy those phones because China doesn't accept CAD. Then when the Chinese manufacturer recieves those USD he has to convert them into Yuans because its the only legal tender in China. So that he can pay his employees and other bills. Equally if a Chinese importer wants to buy Canadian oil or timber he has to raise USD to pay for it. And the Canadian exporter on the otherside has to convert those USD into CAD to pay his employees and other bills.

As trade arounde the world increases so does the demand for USD. And where does one raise more USD ? Of course in America. And the Americans are charging a commission for those USD. Like a bank charges you a commission when you exchange foreign currency with them. The more the world does business in USD the more commissions the US can charge. It gives a whole new meaning to the words license to print money. And because the demande for USD in the world increases it helps to strengthen the US currency.

However if you can cut out the middle man (in this case the US) then you get rid of the commissions. And you also get rid of a layer of dealings to do business.

UPDATE 4-Chinese, Canadian central banks agree to 200 bln yuan currency swap| Reuters

China is trying to move away from the export model and rely more on domestic demands and as China's economy is becoming more services oriented exports becomes less important. In 2007 exports was 35% of GDP last year it was only 25% of GDP and this year it will fall even further. And a strong currency helps to stimulate domestic demand.

You cannot use random unrelated point to back up your statement just because it suit you....

Currency Swap is different then Currency Pegging and the stuff we are talking about.- Promoting Yuan to international Currency.

Do you know how Currency Swap work?? IT's not like You give me 1 RMB and I give you 1 CAD back, you swap your currency to a pre-determined third party exchange rate, The current rate is 1 CAD : 4.9661 RMB and do you know how this exchange rate established? It is done by 1 CAD exchange to 0.81 USD and that 0.81 USD exchange to 4.9661 RMB

You can have Yuan in the Basket Currency, that does not mean the rest of the world have to sign a deal to have a direct exchange system to China. And even for currency swap, you do know the Canadian bank needed to buy the Yuan and the Chinese Bank need to buy the CAD in a exchange rate predetermined by a third party, as there are no "Pegging Deal" available to change from CAD to RMB directly. And care to guess who is that third party?

You need a fixed exchange rate pegged between CAD or any currency to RMB to "avoid" the US hand on that piece of pies. Being an international currency is just that, at the end of the day, only one country spend RMB and that's China, for all other country, they would have to exchange it to something they spend, AUD in Australia, GBP in UK and CAD in Canada. And if there are no pegged value to follow, they will have to exchange the Yuan to USD first, then exchange it to GBP or CAD or whatever, same goes to China, they will have to exchange whatever that currency to USD first, then to Yuan so that they can spend it.

Can you understand the difference?

And I never said China is not walking out of the export driven market, if you care to look at my first post in this topic, you will see me calling people ludicrous by saying exactly the same thing, that's Service Sector is overrated or not important.

And the USD is strong not because of their trade volume but rather how the USD are related to World Currency, there are about 140 currency pegged to the USD, and there are only 7 pegged to RMB, you do the maths.

 

[BigDaddyWatch]

You cannot use random unrelated point to back up your statement just because it suit you....

Currency Swap is different then Currency Pegging and the stuff we are talking about. Promoting Yuan to international Currency.

You can have Yuan in the Basket Currency, that does not mean the rest of the world have to sign a deal to have a direct exchange system to China. And even for currency swap, you do know the Canadian bank needed to buy the Yuan and the Chinese Bank need to buy the CAD in a exchange rate predetermined by a third party, as there are no "Pegging Deal" available to change from CAD to RMB directly. And care to guess who is that third party?

You need a fixed exchange rate pegged between CAD or any currency to RMB to "avoid" the US hand on that piece of pies. Being an international currency is just that, at the end of the day, only one country spend RMB and that's China, for all other country, they would have to exchange it to something they spend, AUD in Australia, GBP in UK and CAD in Canada. And if there are no pegged value to follow, they will have to exchange the Yuan to USD first, then exchange it to GBP or CAD or whatever, same goes to China, they will have to exchange whatever that currency to USD first, then to Yuan so that they can spend it.

Can you understand the difference?

And I never said China is not walking out of the export driven market, if you care to look at my first post in this topic, you will see me calling people ludicrous by saying exactly the same thing, that's Service Sector is overrated or not important.

And the USD is strong not because of their trade volume but rather how the USD are related to World Currency, there are about 140 currency pegged to the USD, and there are only 7 pegged to RMB, you do the maths.

About 140 currencies pegged to the USD ? Do you have a source for that ?

I don't care what others here say about services economy. I'm simply making an observation about the Chinese economy. But like everything else there needs to be a healthy balance between the different economic sectors services and manufacturing and others. Too much of the one or the other is bad.

 

[Götterdämmerung]

1.) With low currency value
2.) With low cost manufacture base.

@LeveragedBuyout

Yeah, Germany is such a low cost and cheap manufacturing base.

 

[Edison Chen]

Are you sure? Then why luxury brand keep opening more and more outlet in China and iphone6 can break record sales in China?
The Europe branded fashion stores are always filled with Chinese tourist.

Luxury brands and iphone6 are not the measurement of wealth. The average income is 49969 rmb in China.

 

[Beast]

Luxury brands and iphone6 are not the measurement of wealth. The average income is 49969 rmb in China.

In fact but the increasing market share of Chinese on those luxurious good more or less tells you the change of Chinese taste.

 

[mike2000 is back]

It's pretty sad seeing how far Britain has fallen from its peak to the point it has to cheerlead other countries to take on China

Cheerlead which countries.?? Look at the diagram you yourself posted in the article and compare a small island like Britain with barely 50 million people(i.e over 15 times less than China. lol), far smaller land size(over 9 times smaller than China) with far less natural resources and yet China has just over twice our consumer market. LOOL That shouldn't even be a matter of pride for you to be honest, but as my friend @AndrewJin said a shame. It reminds me of Indians having almost a trillion dollar less in nominal GDP than we do, and yet claiming they are more advanced/powerful than Britain just because of their size/population and talking about how irrelevant we are while claiming how valuable they are in the world scene. etc. lol

As i said, China still has a long way to go before start boasting. Nothing wrong in what i said, even your fellow country men agreed with me, yet seems you being the most ultra nationalist Chinese here take things too personally.

Don't get me wrong though, as many members here know fully well, I always give credit when due, But on this one, there is no credit to be given to be honest.

 

[Kyle Sun]

Luxury brands and iphone6 are not the measurement of wealth. The average income is 49969 rmb in China.

To be honest . I do not believe the data of average income.

 

[TaiShang]

RMB internationalization to rebalance global economy: report

2015-06-30

The internationalization of Chinese currency yuan, or RMB, along with a more open capital account, will rebalance the global economy for more sustainable growth, said a report published on Monday.

The internationalization of RMB will also facilitate a more competitive, consumer-oriented economy in China, while firms and investors in the United States and Europe will enjoy new means of diversifying their portfolio investments, as will China's savers, the report found. [ @BigDaddyWatch ]

The report, entitled "Renminbi Ascending: How China's Currency Impacts Global Markets, Foreign Policy and Transatlantic Financial Regulation", was developed by Atlantic Council's C. Boyden Gray Fellow on Global Finance and Growth, Chris Brummer, and sponsored jointly by the City of London Corporation, Standard Chartered and Thomson Reuters.

"RMB internationalisation is an unprecedented financial event that is irrevocably changing the global market, and presenting an enormous opportunity for both Chinese and the world's business to trade and invest," said Mark Boleat, Policy Chairman at the City of London Corporation.

David Craig, President of Financial & Risk of Thomson Reuters, said: "China is growing -- and internationalizing -- with exhilarating speed. Last year alone, Thomson Reuters saw a 350 percent increase in renminbi trading across our foreign exchange platforms. From our vantage point, at the intersection of currencies, commerce and regulation, it is clear the success of China's currency brings great opportunities for everyone in international commerce."

"The challenge for China now is to build confidence in its regulatory system in partnership with global policymakers and industry. Only by working together will the global economy benefit fully from the re-emergence of China, and the ascent of the renminbi as a major world currency," he added.

 

[Beidou2020]

Cheerlead which countries.?? Look at the diagram you yourself posted in the article and compare a small island like Britain with barely 50 million people(i.e over 15 times less than China. lol), far smaller land size(over 9 times smaller than China) with far less natural resources and yet China has just over twice our consumer market. LOOL That shouldn't even be a matter of pride for you to be honest, but as my friend @AndrewJin said a shame. It reminds me of Indians having almost a trillion dollar less in nominal GDP than we do, and yet claiming they are more advanced/powerful than Britain just because of their size/population and talking about how irrelevant we are while claiming how valuable they are in the world scene. etc. lol

As i said, China still has a long way to go before start boasting. Nothing wrong in what i said, even your fellow country men agreed with me, yet seems you being the most ultra nationalist Chinese here take things too personally.

Don't get me wrong though, as many members here know fully well, I always give credit when due, But on this one, there is no credit to be given to be honest.

You mad? Did I hit a nerve?

 

[jhungary]

About 140 currencies pegged to the USD ? Do you have a source for that ?

I don't care what others here say about services economy. I'm simply making an observation about the Chinese economy. But like everything else there needs to be a healthy balance between the different economic sectors services and manufacturing and others. Too much of the one or the other is bad.

Dude, you do know at least 50 US and Non-US City uses USD as an Official and Unofficial Currency? (US,UK overseas territories uses USD as their official Currency)

And what I said is currency, not Nation.

And finally you are just going around, and you are also contradicting yourselves, you said and I quote at post #32

The main goal of Yuan internationalization is to get away from the USD in trade and other international dealings

. As China's economy grows Chinese companies are growing too and are increasingly looking for opportunities abroad. Giving the Yuan an international status would facilitate this tremendously and it means that more of the benefits would flow to China instead of the US. Its about much more than the financial sector. In fact at this point the financial sector plays a secondary role in China's international commercial dealings.

Internationalize Yuan is to get away from USD in trade, which as I proofed, this is not the case, currency pegging get away from USD in trade, not internationalize Yuan.

Even your fellow countrymen @northeast said Internationalize Yuan is to strengthen the currency not to avoid the USD taking a piece of the pie in every trade

And then you proceed to at the same post saying Financial Sector plays a secondary roles in China.

but then you do a 180 and said balance of trade is essential??

Again, unless China do not want to be a developed world ever, their secondary economy WILL DIED DOWN and service sector have to led the economy when, NOT IF, their manufacturer based become less competitive.

You cannot expect China become first world and still have 40 or 50% secondary economy.

 

[TaiShang]

I don't care what others here say about services economy. I'm simply making an observation about the Chinese economy. But like everything else there needs to be a healthy balance between the different economic sectors services and manufacturing and others. Too much of the one or the other is bad.

I agree. China is working towards keeping the balance. R&D in high-tech and machinery is the most important for future growth. China targets these areas, specifically.


US$4mln research fund opened to Shanghai small firms
Shanghai Daily, July 1, 2015
Hundreds of technology-based small firms will from Wednesday be able to redeem more than 24 million yuan (US$3.9 million) worth of government-funded "vouchers" for academic and scientific research.

The Shanghai Science and Technology Commission in April invited companies to apply for grants of up to 100,000 yuan per organization, Wu Biren, an official with the Shanghai R&D Public Service Platform, a unit of the commission, said Tuesday.

The aim of the scheme is to provide innovative firms with the access they need to state-of-the-art scientific equipment and facilities at local universities and research institutions, he said.

A total of 488 enterprises — mostly Internet firms, and biological and pharmaceutical companies — have been awarded the vouchers since the scheme was launched.

"Almost 60 percent are small firms with fewer than 20 employees, while 35 percent are at the cutting edge of information technology," Wu said.

 

[jhungary]

Yeah, Germany is such a low cost and cheap manufacturing base.

Dude, I wonder why you did not quote the line IMMEDIATELY BEFORE the lines you quote me??

I wrote

Secondary, or Manufacturer based economy can only be sustained in 2 factors.

1.) With low currency value
2.) With low cost manufacture base.

I put it in bolt and and blown it to 6 so your lazy eyes can see.

IS GERMANY MANUFACTURE BASED ECONOMY?

With almost 70% service based according to IMF, explain to me how Germany is a Manufacturer Based economy?

 

[KAL-EL]

Somewhat related? recently bought a pair of good quality earphones made by an up and coming Chinese company OSTRY. Shipped from Hong Kong.

 

[jhungary]

RMB internationalization to rebalance global economy: report

2015-06-30

The internationalization of Chinese currency yuan, or RMB, along with a more open capital account, will rebalance the global economy for more sustainable growth, said a report published on Monday.

The internationalization of RMB will also facilitate a more competitive, consumer-oriented economy in China, while firms and investors in the United States and Europe will enjoy new means of diversifying their portfolio investments, as will China's savers, the report found. [ @BigDaddyWatch ]

The report, entitled "Renminbi Ascending: How China's Currency Impacts Global Markets, Foreign Policy and Transatlantic Financial Regulation", was developed by Atlantic Council's C. Boyden Gray Fellow on Global Finance and Growth, Chris Brummer, and sponsored jointly by the City of London Corporation, Standard Chartered and Thomson Reuters.

"RMB internationalisation is an unprecedented financial event that is irrevocably changing the global market, and presenting an enormous opportunity for both Chinese and the world's business to trade and invest," said Mark Boleat, Policy Chairman at the City of London Corporation.

David Craig, President of Financial & Risk of Thomson Reuters, said: "China is growing -- and internationalizing -- with exhilarating speed. Last year alone, Thomson Reuters saw a 350 percent increase in renminbi trading across our foreign exchange platforms. From our vantage point, at the intersection of currencies, commerce and regulation, it is clear the success of China's currency brings great opportunities for everyone in international commerce."

"The challenge for China now is to build confidence in its regulatory system in partnership with global policymakers and industry. Only by working together will the global economy benefit fully from the re-emergence of China, and the ascent of the renminbi as a major world currency," he added.

You do realise the article you quote are saying Internationalize RMB have a big impact for currency trading, not goods trading, right??

 

[TaiShang]

http://content.pncmc.com/live/pnc/c...les/Market-Commentary-Global-Perspectives.pdf

The Chinese government has undertaken an extensive process to internationalize its currency, slowly relaxing rules to become a more equal trading partner with other nations. The government wishes to promote international use of the RMB in a three step process:

• RMB as a global trade currency – As the RMB develops as a trade currency, businesses outside China become accustomed to using it as payment for goods and services.

• RMB as a global investment currency – The goal is to allow the RMB to be invested more freely. Enterprises are now able to move their RMB-based holdings cross-border. Firms want to be able to use the cash that they receive from trade.

• RMB as a global reserve currency – The government wants its currency status to match its position as an economic leader. China would like to challenge the USD as a reserve currency

TRANSACTING IN RMB vs. USD

U.S. companies have historically believed that negotiating international agreements in USD insulates them from exposure to currency volatility. However, this practice often puts them at a competitive disadvantage compared to companies that transact in local currency. Shifting to local currency has been a useful solution for trade with many countries. With China’s changing currency regulations, clients are learning that conducting business in the RMB instead of the USD can pay significant dividends. The PBOC has estimated that the administrative cost of transacting in USD is 2-3% higher than dealing in local currency due to embedded premiums. The acceptance of the RMB as a trading currency and the growth of the offshore market are inevitable. We advise our clients to review their processes and to consider using the RMB in their business dealings with China. As further evidence of the benefits and ease of RMB use, the hedging market is liquid and has been expanding in volume and tenor.

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