{"id":33285,"date":"2018-04-10T06:58:25","date_gmt":"2018-04-10T11:58:25","guid":{"rendered":"http:\/\/olduvai.ca\/?p=33285"},"modified":"2018-04-10T06:58:25","modified_gmt":"2018-04-10T11:58:25","slug":"china-eyes-yuan-devaluation-in-trade-dispute","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=33285","title":{"rendered":"China Eyes Yuan Devaluation in Trade Dispute"},"content":{"rendered":"
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China Eyes Yuan Devaluation in Trade Dispute<\/a><\/h3>\n<\/div>\n
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Finally, we have a story that makes retaliatory sense vs. the widely believed “nuclear” treasury dumping theory.<\/p>\n<\/section>\n<\/div>\n<\/header>\n
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The widely-circulated “nuclear” theory suggests China would dump US treasuries in a trade war with the US. That theory never made any sense. Such a move would tend to strengthen the yuan, making Chinese exports more expensive. Thus, it would be precisely what the US would want.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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The Real Nuclear Option<\/strong><\/p>\n<\/div>\n<\/div>\n<\/div>\n

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The real nuclear option would be a devaluation of the yuan, making Chinese goods less expensive to the US.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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Reportedly, China is Studying Devaluation<\/a>.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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China is evaluating the potential impact of a gradual yuan depreciation, people familiar with the matter said, as the country\u2019s leaders weigh their options in a trade spat with U.S. President Donald Trump that has roiled financial markets worldwide.<\/p>\n

Senior Chinese officials are studying a two-pronged analysis of the yuan that was prepared by the government, the people said. One part looks at the effect of using the currency as a tool in trade negotiations with the U.S., while a second part examines what would happen if China devalues the yuan to offset the impact of any trade deal that curbs exports.<\/p>\n

While a weaker yuan could help President Xi Jinping shore up China\u2019s export industries in the event of widespread tariffs in the U.S., a devaluation comes with plenty of risks. It would encourage Trump to follow through on his threat to brand China a currency manipulator, make it more difficult for Chinese companies to service their mountain of offshore debt, and undermine recent efforts by the government to move toward a more market-oriented exchange rate system.<\/p>\n

It would also expose China to the risk of heightened financial-market volatility, something authorities have worked hard to avoid in recent years. When China unexpectedly devalued the yuan by about 2 percent in August 2015, the move fueled capital outflows and sent shock-waves through global markets.<\/p><\/blockquote>\n<\/div>\n<\/div>\n<\/div>\n

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…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n<\/article>\n","protected":false},"excerpt":{"rendered":"

China Eyes Yuan Devaluation in Trade Dispute Finally, we have a story that makes retaliatory sense vs. the widely believed “nuclear” treasury dumping theory. The widely-circulated “nuclear” theory suggests China would dump US treasuries in a trade war with the US. That theory never made any sense. Such a move would tend to strengthen the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,5],"tags":[130,1099,14648,13390,805,19291,3222,827,839,1031],"class_list":["post-33285","post","type-post","status-publish","format-standard","hentry","category-economics","category-geopolitics","tag-china","tag-currency-devaluation","tag-michael-shedlock","tag-mishtalk","tag-trade","tag-trade-tariffs","tag-trade-war","tag-united-states","tag-us-dollar","tag-yuan"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/33285","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=33285"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/33285\/revisions"}],"predecessor-version":[{"id":33286,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/33285\/revisions\/33286"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=33285"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=33285"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=33285"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}