What China needs to do to make the yuan more international – Shirley Yu

 

Shirley Yu

China’s currency, the yuan, still has a long way to go on its road to become an international currency, says political economist Shirley Ze Yu at the S&P Global. The need for China to internationalize its currency “is both strategic and opportune,” Yu said.

The S&P Global:

“The BRI (Belt&Road Initiative) region is China’s natural region to succeed in building a multilateral currency order, to rival the 20th-century U.S.-dominated global monetary system,” said Shirley Ze Yu, a political economist and a fellow at Harvard Kennedy School’s Ash Center.

To be sure, China needs to allow the yuan to float more freely. The digital yuan won’t be “a standalone entity,” Yu said, adding, the digital yuan cannot become a global center currency, unless the yuan “itself becomes one.”

The depth and width of the capital market is still the most significant variable, because no country or individuals would hold on to a yuan-denominated asset if there is insufficient market liquidity globally. The yuan “has a long road to travel still,” she said.

Yu said that it is crucial for China to internationalize the yuan now, especially since the U.S. dollar has enjoyed its reign as “the ultimate currency of last resort” post-World War II and dominates the global monetary system. The need for China to press the gas pedal on its yuan internationalization agenda also became more pronounced recently as the U.S. announced sanctions against Chinese and Hong Kong officials. China has to be prepared for its banks to be excluded from international monetary clearing systems, including SWIFT and CHIPS systems, down the line, she said.

The need for China to internationalize its currency “is both strategic and opportune,” Yu said. “In the current decade, we might inevitably see two parallel global monetary systems” — the dollar-based system and a rising and regional yuan-based system.

More at the S&P Global.

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The future of Hong Kong: continued decline - Jim Rogers

Jim Rogers

Hong Kong is economically on a downhill slope and its current problems do not help the city to stop that, says Jim Rogers, veteran investor, at his weblog. "China's opening up so we don't need Hong Kong anymore."

Jim Rogers:

The only reason Hong Kong became Hong Kong was because of 1949, in Mao Zi time. Now, you don't need Hong Kong anymore. Shanghai was the largest financial center between New York and London before the before the war, Second World War. 

China's opening up so we don't need Hong Kong anymore. It's going to continue to decline. When the Renminbi, the Chinese currency, is convertible, yes, I would expect the Hong Kong dollar to disappear.

More at his weblog.

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Renminbi lost its chance as an international currency - Arthur Kroeber

Arthur Kroeber

For a while, China's Renminbi or Yuan looked like a potential competitor in international markets. But China has lost that opportunity, says economist Arthur Kroeber in OZY. “Who’s going to issue or buy bonds in a market where liquidity can be turned off at the drop of a hat?” he asks.

OZY:

Global use of the renminbi would reduce exchange rate risks for Chinese companies and minimize exposure to sharp drops in dollar liquidity — one driver of the fall in Chinese exports during the financial crisis. 

“There was both an objective to use renminbi internationalization as a wedge to drive finance sector reform, but there was also a very strong and widely held view that having a more fully independent currency was really important to secure China’s economic sovereignty,” says Arthur Kroeber, managing director of research company Gavekal Dragonomics. 

Zhou (Xiaochuan, then governor of the People’s Bank of China)’s initiative came at an awkward time. Despite having a large economy, China had neither deep financial markets facilitated by an open capital account nor widespread confidence in its currency — elements deemed “fundamental determinants” of international currency status by Harvard economist Jeffrey Frankel. 

Yet the central bank pushed on, creating an offshore market for renminbi debt centered in Hong Kong. By 2014, annual offshore issuance had climbed to Rmb112 billion ($16 billion), according to Dealogic. The offshore exchange rate is independent of the controls used by the central bank on the onshore rate, which limits moves against the dollar to 2 percent in either direction of a daily fix. 

But in August of 2015, the central bank set the daily fix sharply weaker, inducing a shock devaluation in the normally stable onshore rate. Global markets convulsed and the offshore rate pushed below its onshore counterpart, spurring massive capital outflows on fears of a further sharp depreciation. Ultimately, Beijing tightened capital controls to stem renminbi outflows, which cut off liquidity to the offshore market. 

Kroeber contrasts this move to the U.S. decision in the 1960s not to throttle the nascent eurodollar market when an offshore pool of dollar liquidity began ballooning in Europe. China’s decision stabilized the renminbi, he said, but left it bereft of credibility as an international financial currency. “Who’s going to issue or buy bonds in a market where liquidity can be turned off at the drop of a hat?” he asks. 

This year, offshore renminbi bond issuance totaled just Rmb16 billion ($2.3 billion) at the end of September compared with onshore issuance of Rmb4.5 trillion ($635 billion), Dealogic data show.

More in OZY.

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Drop of yuan caused by US tariffs - Jim Rogers

Jim Rogers

China's currency, the yuan, is on a downward track, not because of government action, but is a market reaction on the US tariffs on Chinese goods, says investment guru Jim Rogers. Washington has to blame itself for the weakening yuan, he tells in the Stocknewsbrief.com.

The Stocknewsbrief:

“If you put billions of dollars (in Chinese goods) under tariffs, don’t you think it would affect the currency?” Rogers told RT. He added that while the People’s Bank of China actually can have a hand in changing the renminbi exchange rate, the recent course of events is explained by basic economic rules. “Anybody who knows any basic economics knows that if you hit a huge economy with lots of tariffs it’s gonna have [an] effect on the currency… It’s the way the market works.” 

The weaker yuan can actually help Beijing to offset the impact of Washington’s tariffs on China’s exports. As its national currency declines, Chinese goods become cheaper to sell abroad. So, the US fears that it would not be able to sell its own goods while there are plenty of cheaper Chinese products on the market thanks to a weaker yuan. “It makes American goods more expensive and therefore more difficult for America to sell goods in the world market,” Rogers explained. 

However, the falling yuan has a downside, according to Rogers, such as an increase in the cost of living and production as everything China imports becomes more expensive.

More in the Stocknewsbrief.com.

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The trade war fallout - Victor Shih

Victor Shih

The trade war damages both the US and China's economy, and global trade. Financial and political analyst Victor Shih, Ho Miu Lam Chair associate professor of political economy at UC San Diego and author of the forthcoming “Economic Shocks and Authoritarian Stability," gives an overview of the damage in the Los Angeles Times.

Victor Shih:

The trade spat between the U.S. and China now seems headed toward a new phase, which could prove to be far more dangerous for the global economy. 

The recent shifts roiling global markets began with President Trump tweeting on Aug. 1 that the U.S. would impose an additional 10% tariff on $300 billion in Chinese exports, starting Sept. 1. On Tuesday, the administration announced a delay on tariffs on some consumer goods until Dec. 15. But that may not be enough to alleviate the anxiety in world markets. China already reacted last week by weakening the Chinese currency, pushing the exchange rate to 7 yuan per dollar for the first time in over a decade. 

Both sides risk considerable harm to their economies. As the Trump administration increases tariffs on Chinese goods purchased by American firms and consumers, Americans will be paying billions more for Chinese goods. Higher prices brought on by tariffs will decrease U.S. business investment and consumption, dampening momentum in U.S. economic growth. 

Likewise, China’s imposition of tariffs on American goods — even barring Chinese companies from buying agricultural and energy commodities from the U.S. — since the start of the trade conflict in April 2018 has imposed costs on Chinese firms and consumers, stalling growth momentum in China. 

With inflation on food already at 7% in China, more import restrictions or tariffs will put a great deal of hardship on ordinary households. Although Chinese President Xi Jinping does not face any electoral pressure and may not suffer any political fallout from the economic results of the trade war, these consequences still directly contradict his desire to bring about “more prosperous and healthy lives” to the Chinese people. 

Now, devaluing the yuan may further jeopardize the stability of China’s financial system. China’s high domestic debt already forces the central bank to expand its money supply at a rate of 8% to 10% a year, a relatively high pace that typically weakens the exchange rate. 

To guard against the expectation of a weakening currency, the central bank of China has spent years establishing the reputation of the yuan, which has been built on the tacit assumption that it would not fall below 7 yuan to the dollar. This reputation is important for the yuan because, unlike the dollar, the currency does not have a deep and liquid market, where market participants can hedge against various risks at a relatively low price.

More at the Los Angeles Times.

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How digital change hits purchases in China - Jim Rogers

Jim Rogers

Investor Jim Rogers tried to buy an ice-cream in Beijing but discovered you cannot buy it for money, you need a mobile. Alibaba and Tencent have become giant technology firms that have changed day-to-day life.

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Why China's 'nuclear options' might not work - Victor Shih

Victor Shih

Devaluating the Yuan and dumping US treasuries regular pop up as 'nuclear options' China has in its trade war with the US. Financial and political analyst Victor Shih explains why that might be a wrong idea. "These options are not credible, because they conflict with other important policy objectives of China’s," he writes at the China File.
Victor Shih:

As the trade conflict between the U.S. and China heats up, observers in and out of China have speculated on two potential “nuclear options” that China may deploy: substantial devaluation of the yuan, and the dumping of China’s roughly U.S.$1 trillion in U.S. treasuries. Yet these options are not credible, because they conflict with other important policy objectives of China’s. Also, they would likely cause more financial harm to China than to the United States. Although Western policymakers generally underestimate the pain that authoritarian leaders can impose on their citizens with hardly any political repercussions, substantially slower growth would undermine Xi’s own ambition for China to be a great power. 

Yuan devaluation would severely jeopardize the relative stability in the foreign exchange market that Chinese regulators have tried hard to restore after 2015’s near crisis. Given that an exchange rate above 7 yuan to the dollar has not occurred at the end of a trading session for over a decade, devaluating the yuan past that point would be considered a “black swan” event by most of the trading algorithms, throwing the entire emerging market into turmoil. Devaluation to 25 percent would bring about even more dire consequences. For the past several years, Chinese banks and firms have borrowed close to two trillion dollars from offshore counterparts. Since much of this borrowing is in currencies linked to the dollar, a 25 percent devaluation would mean that Chinese debtors would need to pay 25 percent more in yuan to service their debt. Given the high domestic debt burden of the Chinese corporate sector, such a sudden increase in debt servicing would likely trigger a sizable wave of defaults by Chinese firms and even some financial institutions. Without a truly massive government bailout, which would deplete China’s foreign exchange reserve, many Chinese companies would be shut out of the global credit market for years—contravening Xi’s dictate to “hold the bottom line of financial stability.” 

Unwinding China’s roughly U.S.$1 trillion holding in U.S. treasuries would cause temporary turmoil in the treasury market and a temporary decline in the price of treasuries. However, as the lone determined seller, China would likely bear the brunt of the losses. If China decided to upset the treasury market, it would have to keep selling—even as treasury prices begin to decline. Thus, sellers in this initial period would bear the bulk of losses. Once market participants determined that China was selling for political reasons, they would begin to buy in earnest, taking advantage of the unusually high treasury yields. The Federal Reserve would then likely step in to buy, extinguishing any panic. China would bear the brunt of the losses in the initial period, and besides making headlines for a few days would gain nothing of consequence while losing billions. And what would China do with all the cash? If it invested the money in a dollar money market, U.S. banks would borrow the cheap money to buy up treasuries, which would also extinguish the panic.

More at China File.

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The US wants China to stop running their economy as they do - Arthur Kroeber

Arthur Kroeber

The trade negotiations between China and the US might be in their endgame, but the differences are still huge. The US wants China to stop running their economy as they have always done, says economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know®, to the Asia Society blog.

The Asia Society blog:

In addition to participating in trade talks, the Trump administration has restricted investment by Chinese companies in the United States and tightened export rules, steps that make a grand bargain between the two countries more remote in the short term. 

“From the Chinese perspective, it looks like the U.S. is asking them to abandon a basic method of running their economy as well as implementing a containment strategy,” said Arthur Kroeber, an expert on the Chinese economy at Gavekal. “I think that even if we get a deal on trade in the next 30 to 60 days, it’ll be narrowly constructed and there will still be a lot of sources of friction.” 

For Trump, a president known to boast about his negotiating prowess, even a limited deal with China may be enough to suit his needs. But the fundamental differences between the world’s two largest economies seem likely to remain an issue throughout the rest of his administration — and beyond.

More at the Asia Society blog.

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Why a currency deal might be bad for China - Arthur Kroeber

Arthur Kroeber

China is pondering to throw in a currency deal in its trade negotiations with the US, maintaining the value of the Renminbi, to pacify the doves in the White House. But that might be a wrong idea, say analysts like economist Arthur Kroeber, who point at Japan. Japan agreed to a currency deal in 1985 as has paid for it dearly, writes the South China Morning Post.

The South China Morning Post:

Amid reports that the United States will demand that China stop devaluing its currency as part of any trade agreement, Beijing has been urged to learn from the cautionary tale of Japan, which in 1985 agreed to a currency deal which has shouldered a good portion of the blame for its economy’s disastrous “lost decade”. 

The US demands that China limit the yuan’s depreciation have been compared with the Plaza Accord, under which Japan, France, Germany, the United Kingdom and the US agreed to push the value of the US dollar down against the Japanese yen and German Deutsche mark. 

The five countries began selling large amounts of US dollars, leading to a significant loss in dollar value. 

The intervention resulted in the Japanese yen doubling in value against the US dollar in under two and a half years... 

The clause demands that currencies are market-determined and that signatories avoid competitive devaluation, as a means of gaining a competitive advantage in trade. 

It is the first time such a clause had been included in a major trade agreement. 

China has previously signed up to to commitments at the G20 and International Monetary Fund that bar it from competitive devaluation. 

However, critics claim that China has not upheld these commitments. In an interview with the Financial Times last year, US Treasury Secretary Steven Mnuchin noted that the yuan had fallen significantly over the course of 2018. 

“As we look at trade issues there is no question that we want to make sure China is not doing competitive devaluations,” he said. 

Arthur Kroeber, co-founder and research head at Gavekal Dragonomics, said that a currency agreement would be aimed at satisfying the demands of Mnuchin, a more dovish presence in the US administration, compared to hardliners such as US trade representative Robert Lighthizer. 

“An exchange rate agreement is just a way for Beijing to collude with Trump administration doves like Stephen Mnuchin to trumpet a non-event as a big US victory,” Kroeber wrote. 

Former US Federal Reserve chair Janet Yellen last week that it is “difficult and treacherous” to define when a country is manipulating its currency, warning US trade negotiators to think twice about asking China to maintain a stable yuan exchange rate.

More at the South China Morning Post.

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Digital money, not crypto currencies will galore - Jim Rogers

Jim Rogers

While renowned investor Jim Rogers is a firm believer in the blockchain technology and is sure that China leads the way in digitizing money, he believes that governments will stick to their own currencies, rather than crypto ones, he says on his weblog.

Jim Rogers:

Paper money is going to disappear and it's going to be on the internet but this is going to be government money; it's not going to be anybody else's money. Money is already disappearing in China and in many countries. China's far ahead of the United States for instance. 

While I'm extremely optimistic about blockchain and I'm extremely optimistic about the changes of money to the internet which I know is happening it's not going to be cryptocurrencies because the governments are not going to let it happen.

More at Jim Rogers' weblog.

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Devaluation yuan pondered amid trade war exchanges - Victor Shih

Victor Shih

China's financial institutions ponder on the pros and cons of a currency devaluation as the effects of the trade war with the US start to kick in. While devaluation is on the agenda, it would be a tricky road, says financial analyst Victor Shih, author of Factions and Finance in China: Elite Conflict and Inflation, at CapitalWatch.

CapitalWatch:

Meanwhile, the famed trade surplus the export powerhouse ran with the rest of the world has been shrinking. 

Victor Shih, an associate professor of political economy at the University of California, San Diego, says currency devaluation could be an attractive option for China to offset the impact of the trade war. But he warned the tactic had limits, as it "could create a panic on the renminbi which becomes difficult to control."... 

U.S. President Donald Trump has announced tariffs on about half of China's roughly $500 billion of annual exports to the United States in a tit-for-tat trade war, and has threatened to broaden those penalties. 

Analysts say the trade spat could lead to heavier pressure on the yuan if China's trade surplus shrinks and gloomy economic prospects deter multinational investments in the country. 

Shih estimates that even a modest 20 percent reduction in exports to the United States could cause the monthly trade surplus to drop by $8 billion to $10 billion, nearly a third of the average. In addition, a reduction in foreign direct investment, which brought $136 billion into China last year, would also reduce forex inflows substantially, he added... 

The most recent data from the State Administration of Foreign Exchange (SAFE) shows that China had total foreign liabilities of $5.3 trillion at the end of the second quarter, of which $1.13 trillion was portfolio investments - equity and debt securities that foreign investors could attempt to offload in the event of market panic. 

Broader SAFE data showed China's total external debt, excluding Hong Kong and Macau, at $1.84 trillion at the end of the first quarter, an increase of $455 billion from the end of 2016. 

Although not all of those exposures are at risk of fleeing China's shores, analysts say they put the size of China's $3 trillion in foreign exchange reserves into perspective. Shih said existing capital controls were very stringent. 

"Even the billionaire class faces tight restrictions in terms of where they can invest money," he said. "However, there are still ways, and it is likely that corruption is returning, which will undermine Chinese capital control measures."

More at CapitalWatch. 

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Trump's dramatically changed view on China - Sara Hsu

Sara Hsu

US president Trump called during his election campaign China a currency manipulator and announced a 45% import tax on Chinese goods, but instead came up with a 100-day plan to work out friendly relations. Political analyst Sara Hsu discusses how the 100 day plan is developing, and why Trump changed his viewpoint.

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Currency floating looms if capital controls fail - Victor Shih

Victor Shih

A strengthening US dollar since the election of US president-elect Donald Trump might increase the outflow pressure of the Renminbi, and China might first try more stricter measures to increase capital control, says financial specialist Victor Shih to Bloomberg. But if that fails, financial authorities might consider a more uncontrolled floating currency to get the market into balance.

Bloomberg:

Dollar strength and rising U.S. interest rates under President-elect Donald Trump would intensify pressure on capital outflows from China, forcing its policy makers to choose between tightening capital controls or a drastic floating of the currency in coming months. 

That’s according to Victor Shih, a University of California at San Diego professor who studies China’s government and finance and specializes in tracking politics at the most elite level. 

"Given the Chinese government’s consistent preference for control, we may see much more Draconian capital controls before a decision to float the currency can be made," Shih said in an interview in Beijing. "The main objective is to avoid a panicky float."... 

China may face a stark choice between abandoning recent policy changes to tie the yuan more to a basket of currencies and letting it float more freely or stringent capital controls sometime in the next six to 18 months, said Shih. 

The Communist Party’s preference for control suggests economic reform is unlikely to accelerate, Shih said. He sees China following Russia toward slower growth and rising currency volatility.

More in Bloomberg.

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All is well in China ahead of the G20 - Arthur Kroeber

Arthur Kroeber

China´s economy seems to have steered clear through the turbulance of the past few years, says economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know® to Bloomberg. "I’d guess that Xi Jinping is feeling pretty confident about things."

Bloomberg:

China meanwhile seems to have dodged a currency crisis and is busy bolstering its economy, growing the nation’s military muscle and securing influence abroad with hundreds of billions of dollars in infrastructure projects. With China’s markets calmed at home, the Communist Party’s message to critics is: our system works. 

It’s a long way from the turbulent period between June 2015 and March this year when the economy seemed to be lurching and market chaos raised concern that policy makers had lost their grip, according to Arthur Kroeber, the Beijing-based founding partner and managing director at Gavekal Dragonomics, a research firm. 

"Today, China’s contribution to global macro risk seems pretty close to zero, and the main issues are populist anti-globalization backlash on the political front, and the impact of negative interest rates on the economic front," said Kroeber, author of the 2016 book “China’s economy: What Everyone Needs to Know”. "I’d guess that Xi Jinping is feeling pretty confident about things." 

Even with growth at the lower end of the government’s projection and recent data signaling another soft patch, China’s economy is on track to overtake the whole of the euro zone.

More in Bloomberg.

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Brexit fallout: limited risks for China - Arthur Kroeber

Arthur Kroeber

While the world is trying to get to grips with the fallout of a possible Brexit, very few of the effects for China can be sure, with the exception of the currency trade, says economist Arthur Kroeber to Bloomberg. At this stage, the risks seem fairly limited.

Bloomberg:

Arthur Kroeber, the founding partner and managing director at research firm Gavekal Dragonomics. 

"The only major impact that we can identify is on the currency. To the extent that Brexit triggers a broad-based dollar rally that’s sustained, that makes management of the exchange rate harder. If the dollar goes up a lot then Chinese corporations have a lot more incentive to hold dollars rather than renminbi. They would start to shift money one way or another from renminbi into dollars, and that gets recorded as a capital outflow. Then in order to maintain the exchange rate the People’s Bank has to spend reserves." 

"If you are spending them at a $100 billion a month as they were at the peak in January and February they probably have about six months of spendable reserves before they get to a point where they say it’s not worth it any more. Based on what we’ve seen so far it doesn’t seem like the Brexit outcome is large enough to make that a high risk in the next month or so but who knows?"

More in Bloomberg.

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China´s central bank is safe for another year - Arthur Kroeber

Arthur Kroeber

How deep are the pockets of the People´s Bank of China (PBOC) to keep on funding its financial system? According to economist Arthur Kroeber they are safe for another year, and can use the time to clean up the current mess. Learning how to communicate with the markets is one talent that needs urgent development, he tells Bloomberg.

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Chinese lose trust in their currency - Shaun Rein

Shaun Rein

Almost a trillion US dollar worth of capital has left China over the past year, showing a profound lack of confidence among its citizens, tells business analyst Shaun Rein in the New York Times. “Companies don’t want renminbi and individuals don’t want renminbi."

The New York Times:

For years, China soaked up much of the world’s investment money, as the economy grew at annual rates in the double digits. A largely closed financial system kept China’s own money corralled inside the country. 

Now, with growth slowing, money is gushing out of the country. And the government has a looser grip on the spigot, because China dismantled some currency restrictions to open up its economy in recent years. 

“Companies don’t want renminbi and individuals don’t want renminbi,” said Shaun Rein, the founder of the China Market Research Group. “The renminbi was a sure bet for a long time, but now that it’s not, a lot of people want to get out.” 

Managing the situation has proved complicated for the government... 

Unofficial methods abound (to export capital out of the country). 

Companies have inflated trade invoices to keep more profits outside the country, although Chinese authorities have cracked down on the practice. 

Mr. Rein described doing market research with a wealthy woman in Shanghai who changed $7 million this winter from renminbi into dollars, by using 140 relatives, friends and even friends’ relatives who each carried $50,000 a piece.

More in the New York Times.

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China´s melting foreign reserves - Victor Shih

Victor Shih

China has been throwing much foreign reserve to maintain the value of its currency, the yuan. Financial analyst Victor Shih says in Bloomberg that while there is no acute problem, not all is well after hundreds of billions have evaporated.

Bloomberg:

The Communist leadership’s pledge to give markets a bigger say in the economy is running up against the reality that currencies can be prone to overshooting, as seen in the large appreciation in the yen during the 2007-2009 global crisis. Refusing to let the yuan, or renminbi, settle on its own means increasing scrutiny of the usability of China’s $3.4 trillion of reserves. 

"When the PBOC talks about an orderly depreciation, there’s no free lunch -- it has a cost," said Victor Shih, a professor at the University of California at San Diego who studies China’s politics and finance. "The PBOC would need to spend down its foreign exchange reserves in order to manage the spot rate." 

China doesn’t provide a breakdown of its reserves, and some of the assets could be in illiquid investments or already committed to fund other government projects. The U.S. measure of China’s holdings of Treasuries, the benchmark liquid investment in dollars, stood at $1.25 trillion in October -- though Chinese investments are in part channeled through other countries. Chinese companies and banks have billions worth of foreign currency borrowing, a liability to be considered against the nation’s reserves. 

Altogether, China’s usable reserves are hundreds of billions less than the headline suggests, according to Shih. The latest official estimate of the total is scheduled for release Thursday. 

"We should be skeptical of the $3.4 trillion," he said. "It doesn’t make China a basket-case, but it’s certainly lot less safe than most people would assume."

More in Bloomberg.

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Bankers win, retailers lose in Hong Kong - Wei Gu

Wei Gu

The recent financial turmoil has different effects on different industries, notes Wei Gu, wealth editor of the Wall Street Journal in Hong Kong. While sales have dropped in retail, as mainland shoppers drop out, bankers are extremely busy helping mainland customers to change a devaluating Yuan into other currencies.

Wei Gu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers´ request form.

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China stops manipulating its currency and gets the flak from Washington - Sara Hsu

Sara Hsu

Financial analyst Sara Hsu strongly disagrees with former US ambassador to the UN John Bolt as he accuses China it manipulated its currency by the recent devaluation. China is just doing what politicians in Washington have asked them to do, Hsu argues in PressTV "They wanted China to become more market oriented."

PressTV:

“I would strongly disagree with what former US ambassador John Bolton has said and I would fall in line with what China is stating in terms of the motivation for its devaluation,” said Hsu, who is also a research director at the Asia Financial Risk Think Tank. 

“If they [China] were attempting to devalue their currency in order to boost exports, they would have had to devalue that by even more because the little that they did, devalue the currency, it doesn’t quite make sense in terms of promoting exports,” she added. 

“This also flies in the face of their attempts to structurally reform and move away from an export-led and manufacturing-led economy to a more service-based economy,” the academic noted.

More in PressTV.

Sara Hsu is a speaker at the China Speaker Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers´request form.

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