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Chinese Yuan’s Ascent to Global Reserve Status: A Timeline (bloomberg.com)
60 points by eth0up on Oct 1, 2016 | hide | past | favorite | 24 comments



This is pretty much a non-event. China's more likely to suffer hyperinflation first, than become a currency that other countries use/store.

1.) Yuan is being printed massively (it hit a credit-to-gdp ratio of 30 to 1 http://www.bbc.com/news/business-37403363)

2.) it is a non-fully-convertible currency

3.) there are severe restrictions for yuan to move out of the country due to capital controls. max $50/year. also, $15k/year withdraw restrictions (http://money.cnn.com/2015/09/30/news/china-overseas-atm-cash...)

4.) no one is required to use yuan for trade.

5.) nobody wants yuan outside China. people in China are desperate to exchange yuan for other things inside China. All the conditions are there for hyperinflation to occur. Might happen early next year when europe and China both likely reject China's market economy status, and starts imposing tariff on Chinese imports heavily.


This is basically a copy and paste of your previous post https://news.ycombinator.com/threads?id=ting_bu_dung without even bothering to correct the most glaring error pointed out by others. I say this is pretty disrespectful to users who are interested in real discussions.


my last comment didn't get any good response; one wanted a clarification which was easily googleable. the other one about hyperinflation being supply driven made no sense (incorrect definition of hyperinflation), so I didn't bother responding.

how about you? do you have any response about the content, or is it more meta-critique?


"europe and China both likely reject China's market economy status"

Did you even read what you posted? The above does not make any sense and you repeated it here without any correction anyway.

Googling or not you don't seem to realize that China is not currently recognized as a market economy by both Europe and US per China's WTO accession agreement. That particular clause is going to sunset this year. After the sunset if Europe and US follow the WTO rules they will no longer be able to use "substitute country" in determining fair prices in anti-dumping investigations. This is a positive for China. Even if Europe and US refuse to change it is still just status quo, or in your words, "non-event".

The other commenter's critique on your hyperinflation claim is entirely valid. Calling him incorrect without giving your "correct" definition does not make it so.

Also self-plagiarism is a thing. Sure this is only an internet forum but unless you are hell bent on propaganda please refrain from copying yourself verbatim without at least making a reference to your previous posts so people don't waste time repeatedly refuting your identical claims.


Such short term thinking. Nothing in your post about the next fifty years. Basically everything you describe are policy choices that can be reversed over time.

Consider that Australia didn't even have a currency 70 years ago and didn't even float their dollar until the 1990s! Now the AUD is a decent chunk of the reserve basket.

US does plenty of printing and currency manipulation too via the Fed.

It's ridiculous to think that one national currency should be the international reserve. We're just in an awkward period. It will be a blend of all currencies with China becoming a bigger portion over time.


Re: "non-event"

This could be a big step in the direction of displacing the US dollar as a global reserve currency, replacing it with the SDR. Maybe it is a non-event because the effects won't be instantaneous, but they very well might be game changers.

I am not an economist, nor could one easily convince me that the petrodollar and the artificially increased global demand for US dollars that result from it are insignificant. We will likely be seeing this change, soon. This all relates and touches on what seems to me, critical components of the world economy. Maybe a non-event - for a little while.


It seems you know a lot about the Chinese.Maybe it's smear.


It's a smear because they are knowledgeable? Please elaborate, account which was created 25 minutes ago. Your pathetic attempts to control opinion make me want to short your market even more.


My impression up until recently is that actually holding onto Yuan outside of China is near-impossible, is this no longer the case?


Not yet, but eventually that is supposed to be the goal.


the goal is supposed to be holding yuan outside china is impossible? or possible?


More from the Working Group on USD Yuan trading:

https://www.rmbusawg.com/

Bit of a Catch-22. Can't invest directly in Chinese markets until the Yuan is convertible. And closed markets affect the Yuan's stability. But foreign demand, it's in the trillions:

China’s debt markets start to stir foreign appetite

https://www.ft.com/content/7c6708f6-8627-11e6-8897-2359a58ac...


Ok, this is really interesting, the Yuan (CNY) has officially become one of the 5 mayor reserve currencies (USD, EUR, CNY, JPY & GBP), since the IMF added it to the SDR basket today.

The following month will be the American elections and I expect the Brexit effect to repeat with the US Dollar after the result gets announced, since the average Joe will certainly vote for the candidate who proposed the less global-friendly economic policies.

Will the Yuan have a chance to benefit from the post-election speculative chaos?


Both the Brexit effect and the speculative chaos you propose are very short term. The fluctuations do not correspond in any way to the performance of the state and economy backing these currencies. Therefore, I think that if it benefits CNY, then only for a short timespan. However, if the US really tightens the screws on international trade, it will suffer longterm and so will its currency.

(And yes, I find the prospect of closed markets, increased tariffs and the like dreadful. There is no reason for the US to do that. This is different from Brexit though, since the EU conditions free movement of people and huge bodies of law on the trade agreements. A post-Brexit Britain may have more free trade than ever before since it can do its own agreements with any country - like any sovereign nation should.)


I don't see British trade expanding post brexit, we will almost certainly loose a substantial portion of our financial services and over time car manufacturing, the only trade likely to increase is tourism.


Another possible source of speculative chaos might be any fallout if Deutsche Bank collapses. I have seen some really negative news articles about DB lately.


Actually, because of brexit, Europe will get rid of pro-China England, and will be able to impose alot of anti-dumping restrictions to China.


And the Chinese know better and are buying real estate in Canada.


The Chinese are also buying a ton of real estate in China. It just happens that a lot of Chinese have immigrated to Canada, especially Vancouver, and so tell their relatives about the place, and many of them have fairly wealthy relatives who are all too eager to snatch up the rapidly rising real estate.


Its also just recycling their trade deficit back in. It is infact Canadian funds being used to buy those homes, the savings which came from the excess of imports to Canada to exports to China. A solution to the structural issue is to export more to China so there aren't so many savings stored in real estate.


Whenever Canadians complain about Chinese speculation in real estate, I wonder why they don't try to create more inventory. It is probably naive to think this way but AFAIK Canada has a lot of land and a housing boom can help extend and modernize urban infrastructure.


> I wonder why they don't try to create more inventory.

They can't exactly conjure up more undeveloped land in the middle of Vancouver, Toronto, or Montreal.

> AFAIK Canada has a lot of land

Yeah, where almost no one wants to live. 90% of the Canadian population lives within 100km of the US-Canada border.

If you ask people abroad about major Canadian cities, everyone knows of Vancouver and Toronto. Some people also mention Montreal and Ottawa, but after that very few people can name other cities (e.g. Calgary, Quebec City, Winnipeg)

> and a housing boom

Many people are now warning that Canada has a housing bubble. Given the country's history of policies, I wouldn't trust them to handle it well. The mortgage and banking industry are not as powerful as they are in America, but they have influence.

I grew up in Canada but am currently living abroad, so I get to talk to a lot of foreigners on their opinion/knowledge of Canada.


I buy a car from you for $5000. You then buy my shoes for $100. The money you used to buy my shoes used to be mine!

So what?


> So what?

Uninvested trade surplus increasing the value of homes outside the surplus country, making it unaffordable for people who live there.

Perhaps ask these to yourself, amongst owning your shows.

- Do you own a home?

- Do you earn little to no interest at your bank?




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