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This post was edited by abramicus at 2013-8-26 03:03|
TRYING TO INVEST ONE TRILLION DOLLARS ABROAD IS STUPID WHEN THE YUAN IS SO OVERVALUED THAT NO FOREIGNER IS WILLING TO EXCHANGE HIS DOLLARS FOR SO FEW YUANS AT THE CURRENT EXCHANGE RATE OF 6.121 CNY/USD.
Only the People's Bank of China is wlling to give up 1 dollar for only 6.121 Yuans, and this is not hard to figuure out.
Because first of all, the foreign currency reserve in the PBOC belongs not to the PBOC but to the people of China, i.e., it is OPM (Other People's Money), and it aggrandizes all the bigwigs and SOES wanting to "invest a trillion dollars abroad", because at the current exchange rate of 6.121, it would cost them only 6.121 trillion Chinese yuans, whereas, if the Yuan were correctly valued at the Pre-2008-Crash exchange rae of 7.00, it would have cost them 7.00 trillion yuans, in short, giving them all a hidden bonus of 145 Billion US dollars, which after being parked abroad as investments, can then be reconverted into Yuans when the Yuan is eventually devalued back to 7.00 (as it must or China's manufacturing will collapse), reaping a windfall profit for the Chinese bigwigs and SOES investing abroad of 888 Billion Yuans.
That's the whole gist of their "investment model" - creaming the Chinese foreign currency reserve with the cooperation of China's own central bank. 888 Blllion Yuans equates to Fa-Fa-Fa, sweet music to the ears of these "investors in the global market". At the expense of the factory owners and domestic capitalists who invested in China instead of abroad, and at the expense of the workers whose cheap labor enabled China to earn its 3.5 trillion dollars of foreign currency reserves.