China threatens to trigger US dollar crash

[Tiki Tam Tam]

China threatens to trigger US dollar crash

By Ambrose Evans-Pritchard
Last Updated: 1:41am BST 09/08/2007

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US Treasury bonds if Washington imposes trade sanctions to force a yuan revaluation.

More at:

http://www.telegraph.co.uk/money/ma...VCBQ0IV0?xml=/money/2007/08/08/cnchina108.xml

This will have serious consequences in the world economy, if executed.

The Beijing Olympics may also get affected if the western nations do a boycott as they did for the Moscow Olympics!

 

[PakSniper]

Yup, I been reading about this all day. That $1 Trillion should be used as a "Gambling" chip for China to get it's way, also know 3 European countries have already dropped the dollar, and some Arab nations. The dollar is getting weak but holding it's wrinkled green color.

If things don't shape up Say hello to, "Recession", probably the biggest we will ever see. But then again the "Euro" wouldn't be hurt as much people will switch over if they are on time doing it (As dollar is getting weaker for the time being the Euro has risen considerably if you look at the market value).

Their are endless possibilities of what can happen Especially with a sweet $8 Trillion dollar debt and rising, but it is scary with an already failing financial market in the US.

 

[Adux]

Nothing more than International Gung-Ho talk, and I say that with my biased against the chinese kept aside

 

[kvLin]

double post.

Tangxu, director of research bureau of people's bank (the central bank) clarified that China will not vend its dollarwise assets, but a part of the fast growing reserves will be used to purchase other assets like oil.

 

[Adux]

Americans arent going down anytime soon, or even loosing their status as the uber power in the forseeable future.

 

[PakSniper]

Nothing more than International Gung-Ho talk, and I say that with my biased against the Chinese kept aside.

Um, then you must go back and read about Chinese banning US products not to long ago, and US wasn't able to respond properly (They couldn't block Chinese products as a counter "Except for some tooth paste's, Lol), why China threatened it with the Trillion dollar "Nuke".

Hell, Majority of Americans can't even live without Chinese goods.

Americans arent going down anytime soon, or even loosing their status as the uber power in the forseeable future.

Wow, your more suck up to Americans then Americans themselves. If you actually lived here you would know the conditions.

It's true they willn't go down, but their are vulnerabilities anyone can exploit. If China is directly threatened who says they wouldn't do it, it all depends on US actions against China.

"Every action has a re-action".

PS: I'm just waiting for a financial melt-down, I truly want to see the bigger side of it. As a business student what better than having actual experience, Lol, of a market-crash.

 

[parihaka]

Well firstly China has been divesting itself of US dollars for quite some time in the form of 'aid' to such luminaries as Mugabe, in other words buying up assets in other countries for long t erm strategic gain. I believe Gwadar is a case in point?

Secondly, any attempt to dump US dollars and drive down its value works in America's favour, not China's.

Third, this would close America's markets to Chinese imports.

Fourth China's growing middle class would be most unhappy with a big drop in living standards.

Fifth China's loss in reputation would damage their international standing, already badly damaged by the revelations of toxic waste included in their food and appliance/toy products. Just by making this statement, that they would in fact create a world reccession for political leverage, damages them.

 

[Marathaman]

Um, then you must go back and read about Chinese banning US products not to long ago, and US wasn't able to respond properly (They couldn't block Chinese products as a counter "Except for some tooth paste's, Lol), why China threatened it with the Trillion dollar "Nuke".

Hell, Majority of Americans can't even live without Chinese goods.



Wow, your more suck up to Americans then Americans themselves. If you actually lived here you would know the conditions.

It's true they willn't go down, but their are vulnerabilities anyone can exploit. If China is directly threatened who says they wouldn't do it, it all depends on US actions against China.

"Every action has a re-action".

PS: I'm just waiting for a financial melt-down, I truly want to see the bigger side of it. As a business student what better than having actual experience, Lol, of a market-crash.

If the US goes down, it is taking Pakistan with it. So don't dream of watching the US economy collapse from a distance.
You will be right in the middle of it, fighting for your life.

 

[PakSniper]

If the US goes down, it is taking Pakistan with it. So don't dream of watching the US economy collapse from a distance.
You will be right in the middle of it, fighting for your life.

You think I don't know that (Considering I live in the US) plus their will be more country's joining Pakistan if a financial melt-down of that scale happens? You should be the last one to tell me, and frankly I really don't care cause in the end its' up to the men sitting in the "Federal Reserve" seats. Hence, what ever happens...happens.

 

[PakSniper]

Secondly, any attempt to dump US dollars and drive down its value works in America's favour, not China's.

You might want to re-think what your saying, cause it will not be in China's interest, but it will "Definitely" not be in America's interest either way you look at things.

Cause:

1. US owes Chine trade In-balance money.
2. $ 8 Trillion dollar debt (Biggest for any country in world history) & growing.
3. America's middle-class will be smeared down, "American's are one pay check away from bankruptcy", and my neighbors are a testament to that .
4. China produces majority of the products domestically to survive but will have to only depend on High-tech imports, but that can be solved.

+ Their are more things that can happen, hence why I call it a "Trillion Dollar Nuke" (TDN). Hence, why I believe China which is still a closed economy (To some scale) will be able to stand on bruised feet, but then again those cheap products can find their way into other Asian and African nations, which I believe Africa will be the next economic war-zone after Asia.

 

[PakSniper]

Here's some other interesting read for some, enjoy.

China's Trade Surplus Is Second-Highest on Record

By Nipa Piboontanasawat

Aug. 10 (Bloomberg) -- China's trade surplus surged 67 percent in July to the second-highest on record, bolstering U.S. Treasury Secretary Henry Paulson's case for a faster appreciation of the yuan.

The gap widened to $24.4 billion from $14.6 billion a year earlier, the General Administration of Customs said today on its Web site. That was more than the $23.1 billion median estimate of 18 economists surveyed by Bloomberg News.

Paulson told Chinese leaders in Beijing last week to raise the currency's value without delay and the Senate Finance Committee has approved legislation aimed at securing faster gains. Unsafe exports such as lead-painted toys have added to tension between the U.S. and its second-largest trading partner.

``The trade relationship between China and the U.S. is heading straight for the worst yet,'' said Enzio von Pfeil, chief executive at Commercial Economics Asia Ltd. in Hong Kong. ``With the election coming up, everybody will beat up on China to get votes.''

The yuan fell 0.15 percent to 7.5756 against the dollar as of 10:26 a.m. in Shanghai, before the data was released. It has gained 9.3 percent versus the U.S. currency since the scrapping of a fixed exchange rate in July 2005.

The surplus narrowed from June's record $26.9 billion when businesses rushed to beat cuts to export incentives.

Trade Tensions

Exports jumped 34.2 percent in July from a year earlier and imports rose 26.9 percent, the government said. For the first seven months, the surplus grew 81 percent to $136.8 billion.

U.S. manufacturers accuse China of holding down the currency's value to spur exports. China says it will make the yuan more flexible at its own pace. Alarm in the U.S. over imports from China including toys, tires, toothpaste and seafood has added to tensions.

Trade surpluses have pushed China's foreign-currency reserves to a world record $1.3 trillion and the nation held $407 billion of U.S. Treasuries in May.

President George W. Bush and Paulson this week dismissed speculation that China may dump the securities. Xia Bin, a government researcher, has suggested using the reserves as a ``bargaining chip in response to some silly U.S. senators.''

Yuan Gains

Selling Treasuries could weaken the U.S. currency, diminish the value of China's dollar-denominated assets and accelerate yuan gains. Finance Minister Jin Renqing said last week that China will move on the yuan at its own pace.

Surging overseas sales helped the world's fourth-largest economy expand 11.9 percent in the second quarter from a year earlier, the fastest pace in more than 12 years. The government is concerned at accelerating inflation and the risk of asset bubbles.

The People's Bank of China has raised interest rates three times this year and ordered lenders to set aside larger reserves on six occasions.

The benchmark CSI 300 stock index has climbed more than 130 percent this year. Inflation reached a 33-month high of 4.4 percent in June and the central bank said this week that consumer-price gains may quicken. July's figure is due Aug. 13.

China's leaders have pledged to boost domestic consumption and imports to narrow the trade surplus. The nation is also curbing exports of the most labor-intensive products, the Ministry of Commerce said last month.

The National Development and Reform Commission, China's top economic planning agency, forecasts the trade surplus will widen to a record $250 billion to $300 billion this year, up from $177.5 billion in 2006.

http://www.bloomberg.com/apps/news?pid=206...&refer=home

 

[The Wisdom Tree]

You might want to re-think what your saying, cause it will not be in China's interest, but it will "Definitely" not be in America's interest either way you look at things.

Cause:

1. US owes Chine trade In-balance money.
2. $ 8 Trillion dollar debt (Biggest for any country in world history) & growing.
3. America's middle-class will be smeared down, "American's are one pay check away from bankruptcy", and my neighbors are a testament to that .
4. China produces majority of the products domestically to survive but will have to only depend on High-tech imports, but that can be solved.

+ Their are more things that can happen, hence why I call it a "Trillion Dollar Nuke" (TDN). Hence, why I believe China which is still a closed economy (To some scale) will be able to stand on bruised feet, but then again those cheap products can find their way into other Asian and African nations, which I believe Africa will be the next economic war-zone after Asia.

Your assurance surprises me, considering you're just a business student yet

And, IMHO : atleast in macroeconomic cases such as these, involving millions of factors that a million ppl like you put together would still probably fall short in ability to analyse, it is far better to keep mum and learn your american books for now, than open your mouth and be a fool.

My 2 cents which I know you wont take, being high on one sided closed mind : but hoping some other saner might..

 

[The Wisdom Tree]

Listen, retarded Sh1t head, if you don't know anything about me, then learn before you open your gutter mouth, got it!

It surprises me you don't know that the facts I listed could happen under-different circumstances written by other top business analystits who hold more weight that you probably ever will.

And learn what theories are you sub-human ape.



Lo, It willn't only affect Macro but also Micro to such a large extent. If you cracked open your book you will know about US housing market, and companies filing Chapter 11/13 bankruptcy if you don't know what they are go to your local neighborhood data base "Wikipedia" and learn.

As I was saying in my previous posts which I believe your un-developed brain wasn't able to comprehend I said, "+ Their are more things that can happen", so I suggest you keep your mouth shut and crack open your yarn bound book for now instead of yapping about things you don't understand which you crack head Indians always seem to be thinking you do "Moron".



Please, don't give me a lecture if you can't argue besides posting ranting posts don't even post.

Phew! Lot of venom you got down there

But personal attacks aside my lil frd, there are lot of complexities involved in this game.

If you check how an imbalanced, incomprehensible US economy (as told by these same "experts") for the past so many years has been dictating the global economy more or less, you will probably see what I'm talking about.

 

[parihaka]

You might want to re-think what your saying, cause it will not be in China's interest, but it will "Definitely" not be in America's interest either way you look at things.

Cause:

1. US owes Chine trade In-balance money.
2. $ 8 Trillion dollar debt (Biggest for any country in world history) & growing.
3. America's middle-class will be smeared down, "American's are one pay check away from bankruptcy", and my neighbors are a testament to that .
4. China produces majority of the products domestically to survive but will have to only depend on High-tech imports, but that can be solved.

+ Their are more things that can happen, hence why I call it a "Trillion Dollar Nuke" (TDN). Hence, why I believe China which is still a closed economy (To some scale) will be able to stand on bruised feet, but then again those cheap products can find their way into other Asian and African nations, which I believe Africa will be the next economic war-zone after Asia.

You've got to be kidding me. China becomes far less competitive, can't export to America anymore, America becomes far more competitive and the best you can offer to carry on the Chinese economic boom is Africa?
Have you not realized that America WANTS the yuan floated? Or are you going to tell me that China will still peg the yuan to the dollar even when they dumping it?
And what happens to the fiat currency? Do you think every other country in the world is going to toss out the currency just on China's say so? America alone has a gdp of 13.13 trillion dollars. Per year. Yet you think every reserve bank in the world is going to run screaming because China burns 1 trillion of it?
Whatever it is you are doing in the states, it's got nothing to do with business or economics

 

[PakSniper]

You've got to be kidding me. China becomes far less competitive, can't export to America anymore, America becomes far more competitive and the best you can offer to carry on the Chinese economic boom is Africa?
Have you not realized that America WANTS the yuan floated? Or are you going to tell me that China will still peg the yuan to the dollar even when they dumping it?
And what happens to the fiat currency? Do you think every other country in the world is going to toss out the currency just on China's say so? America alone has a gdp of 13.13 trillion dollars. Per year. Yet you think every reserve bank in the world is going to run screaming because China burns 1 trillion of it?
Whatever it is you are doing in the states, it's got nothing to do with business or economics

First, It's not China but also US who's going to fight for resources that are untapped in Africa, recently China has flooded Billions into it's infracture "mostly oil wealthy African countries". I know all about what US wants with Chinese currencies (It's been on the news for the past year non-stop).

Now:

1. Where did I say the world will toss out US dollars in any of my posts, I just gave an example of 3 nations and some Arab nations who are diversifying? Please, don't twist posts around.

2. Where did I say if China says others will toss out currencies?

3. That Trillion is gold for US as of right now...everyone knows that, heck have u seen the financial market is US it's horrible go read about companies who were not allowed to take out money, or who couldn't pay back, etc, and you will see where I'm coming from.

What I learn in the states, Business, etc, is all put together (Hence, even analysts who come out with theories, like the Federal reserve might be crazy right? God, you learn to read posts properly before responding.