- Registration time
- Last login
- Online time
- 1223 Hour
- Reading permission
This post was edited by abramicus at 2013-8-26 13:16|
cestmoi Post time: 2013-8-26 03:41
Couple of things you seem to have missed.
The overseas investment is likely to be over a period o ...
In your line of thinking, the CCP is the root of all of China's problems, conveniently ignoring that China had even bigger, potentially life-threatening problems, for more than a hundred years before the CCP came into existence, so how can you justify your thesis that getting rid of the CCP would solve most if not all of China's problems, which remain to a large extent due to hostile Western and Japanese policies.
The one trillion dollars overseas investment is not coming from the PBOC direct, sorry. It is coming from investors who put up the Yuan equivalent of their dollar investments, exchange their 6.121 Yuans for 1 Dollar, and then just sit it out and wait for the Yuan to devalue, as it must in order for China's manufacturing to survive and for the GDP growth rate to not drop below 3%, and then, they repatriate their overseas dollars back to China at the exchange rate of 7.00 CNY/USD, making a windfarr profit of 0.88 Yuans for every dollar they had previously "invested abroad". For you to say that no Yuans are involved sounds either naive at best, or cunning at worst. Of course, Yuans are involved, which is the point of the "investment" scheme to take dollars out of the foreign currency reserves of China and give it to the bigwigs and SOES that are lining up to invest as much of China's dollars abroad as they can get away with, and earn an arbitrage profit when the Yuan eventually devalues back to 7.00 from its current 6.12.
All this "investing" abroad smacks of a heist of the Chinese central bank using accounting tricks that leave only a wisp of a digital trail.
As to the time they propose to engineer this transfer of Chinese dollars abroad, 10 years, that is beside the point. So, they can make a clean profit of 88 blllion yuans per year for 10 years, if they invested 100 billion dollars abroad each year. Of course that is less than making 880 blllion yuans from an immediiate investment of 1 trilliopn dollars abroad, but 88 billion yuans per year is a lot of money still.
China should not be investing any of its dollars abroad until the Yuan exchange rate is sustainable, which implies, until the Yuan falls back to its equilibrium exchange rate of 7.00 CNY/USD which was what was the case just before the 2008 Mortgage Derivative Meltdown in Wall Street. To do so before the Yuan exchange rate is back to normal is to allow the foreign currency reserve of China to be looted in broad daylight without a shot. It is like letting the fox into the chicken koop.