China

  • 30 Jun 2010 at 4:09 PM

Pulling The Peg

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The following post is by Dealbreaker reader and commenter Infinite Guest.

To a nation of savers, to a growing economy, and to the general well-being of central planners, inflation poses a bigger threat than unemployment. Ahead of China’s 12th Five Year Plan, due out soon, Chinese foreign direct investment is booming; the pace of bilateral currency swap agreements quickens; China has reduced the duration of her foreign holdings; a regional currency fund using yen, yuan and won in place of dollars has been established; and there is finally a nascent foreign market for Chinese debt. Simultaneously, productivity gains are slowing, resulting in wage stagnation and growing income disparity; energy consumption is rising, pushing Chinese toward becoming a net importer; and real estate is overvalued. All of which suggests, unfortunately for the West, that the Chinese are serious about floating their currency. But first, they have to manage its revaluation. Continue reading »

  • 25 May 2010 at 1:18 PM

Tim Geithner Has Two Requests

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Request Number One: Challenge him to a game of your choice. Nok Hockey, tennis, jacks, Crossfire, fire ball, ping pong, rock paper scissors, mud-wrestling, Egyptian Ratscrew, kick ball, something weird and exotic with ever-changing rules you just made up on the spot. Doesn’t matter what it is, the important thing is that you underestimate him, smirk and think to yourself “this should be good.” Then watch as he flips you and your expectations on your back.

Geithner is a “sports nut and is up for playing or trying any sport someone suggests,” said Treasury spokesman Andrew Williams. “A lot of folks have underestimated Secretary Geithner in a lot of ways, and the basketball court’s one place where he’s been underestimated,” said U.S. Representative Rick Larsen, 44, a Washington state Democrat who played with Geithner and President Barack Obama at an Oct. 8 game at the basketball court on the White House’s South Lawn. He said he and Geithner covered one another during much of the game. “He definitely is a credible basketball player, one that you would choose to have on your team,” said Representative John Shimkus, an Illinois Republican who also played in the after-work contest. He has “good ball-handling skills” and he’s fast on the court, Shimkus, 52, said in an interview.

Request Number Two: caption this photo: Continue reading »

  • 18 Dec 2009 at 10:50 AM

That’ll…Show Her?

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China sentenced Wu Ying to death for defrauding investors of more than $100 million, the China News Service reported today, citing a court ruling. Wu, born in 1981, raised 773 million yuan ($113 million) with promises of high returns, according to a report by the Beijing-based news service posted to Chinacourt.org, a Web site operated by the Supreme People’s Court of China. The Jinhua Intermediate People’s Court of Zhejiang province ruled Wu’s actions undermined the stability of the nation’s financial system, according to the report.
Wu used a portion of the money for futures trading, racking up 50 million yuan of losses, China News reported. She also spent almost 20 million yuan buying automobiles, including a 3.75 million yuan Ferrari SpA car, according to the report.

Chinese Court Sentences Woman to Death for $113 Million Fraud [Bloomberg]

  • 30 Jun 2009 at 2:00 PM

China’s Real Currency Concern

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World of Warcraft.jpgAs China searches for an alternative to the dollar, it has another more immediate threat to its own currency. The growth of the online gaming industry has reached the point where virtual currencies are regularly being converted into cash and, in some cases, used to purchase goods directly. Not amused that people place more value in World of Warcraft credits than the renminbi, the government is fending off the impending currency crisis by issuing regulations restricting the use of virtual currencies to virtual purchases. China may have just found that global reserve currency “delinked from sovereign nations” it was looking for.
China Limits Use of ‘Virtual’ Currency [NYT]

  • 19 Jun 2009 at 1:03 PM

Finally Someone Who Doesn’t Hate Hedge Funds

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Shanghai.jpgIt turns out hedge funds do have a friend in this world- China. While legions of politicians in DC spend countless hours and dollars determining how best to handicap the hedgies’ ability to operate in the free market, the sovereign wealth fund of the People’s Republic is ready to part with $500 million and see what ruthless speculators such as Blackstone can do with it.
CIC Said to Invest $500 Million in Hedge Funds, Blackstone [Bloomberg]

  • 15 Apr 2009 at 3:58 PM

China’s Smack Addiction Continues Unabated

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No wonder they want to invent a reserve currency that has some merits over the United States Dollar. It would be a form of methadone treatment:

China, the U.S. government’s biggest creditor, increased its purchases of American securities in February just weeks before the country’s officials questioned whether such investments were safe.
While China’s purchases slowed and most were in short-term Treasury bills, the country remained the largest foreign holder of Treasuries after its holdings rose 0.6 percent to $744.2 billion, according to a monthly report released in Washington.

We have long considered hollow the cries that the Chinese might abruptly cut off their large-scale purchasing of Treasuries. To do so would be cutting their own throat as their own prosperity is tied quite directly to their ability to find and fund customers for their chief exports (cheap labor and manufacturing). It is worth pointing out that Chinese leaders are not afraid of being deposed. They are afraid of being shot if they break the grand bargain they struck with their subjects: keep us in power, we’ll give you a taste of capitalism and the trappings of upward mobility, but we will manage that social stuff and political voice for you.
China Bought More U.S. Securities Even as Its Concerns Grew [Bloomberg]

  • 27 Mar 2009 at 3:44 PM

Send In The Marines!

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We aren’t laughing with you, Max, we are laughing at you.

“So any country looks at those examples and they say, ‘You know if we get out of the U.S. dollar, does this mean that U.S. Marines are going to show up in our backdoor and start to cause mischief?’” Keiser said. “That’s a legitimate concern these countries have.”

BBC Host and HuffPo Blogger Warns of U.S. Military Action if China Pushes for Global Currency [Business and Media Institute]