Stable Renminbi and other links

Why is the renminbi stable? China has instituted draconian controls on outflows. Analogous to what it did nearly two years ago to arrest a stock market slide. Good bye to Yuan internationalisation.

Chinese banks have reported profits. Read Balding to find out why and how.

A great piece on China’s obsession for ‘dragon production’. No belief in moving up the frontier and in global supply chains. Indicative of an insecure psyche. Comparison to Apple’s global supply chain is instructive.

China’s official and private gauges of purchasing managers diverge.

IMF, WTO and World Bank are defending global trade, apparently. They must read Prof. Robert Allen’s ‘Global Economic History: a very short introduction’. Countries liberalised internal trade and raised barriers against global goods. They grew thus.

It might be worthwhile for the Heads of IMF, World Bank and WTO to read Professor Robert Allen’s ‘Global Economic History: a very short introduction’. Countries liberalised internal trade and raised walls against external competition when they were trying to grow. We have no idea of what works. If the Chiefs of multilateral institutions want to help developing countries access markets in the developed world, they must address two things: (a) They must make China fairer in trade. (b) They must make sure that unskilled and low-skilled workers in developed countries, their families and their communities are not affected by trade. If they are, they must be made whole. That means more than financial compensation or relocation, etc.

The key to sustaining global free trade is not to attack America or its President but to fix China’s trade practices.

Christopher Balding has tweeted as follows, in response to the news that Syngenta-ChinaChem deal gets U.S. regulatory approval:

You know what the probability of a foreign company getting approval to buy a $50b Chinese company? Hint: 0<p<0.00000000000000000000000000001 [Link]

I am aware that this is about investment and not about trade. But, find one respectable and objective economist or journalist who is willing to go on record that China is an open market for trade. Then, I would accept that this is not symptomatic of China’s overall openness or the lack, thereof. Fix China trade and investment regimes and then issue statements on a open global trading regime.

A useful, factual article on China’s outbound FDI exceeding in-bound FDI, despite massive capital controls on outflows. Tells you something.

Chris Balding explains the reasons:

People don’t want to be abused; Significant importance for BOP; It isn’t reversing soon and China market remains very closed. [Link]

Very interesting how FDI investors are more sensible than portfolio investors. The former chases value, it seems, whereas the latter chases fads. Proof? FDI into Latin America far outpacing FDI into Asia.

S&P downgrades a Local Government Funding Vehicle (LGFV) in China. About time.

This FT article talks about human stupidity beating Artificial Intelligence when it comes to investing. Well, human stupidity beats institutions and technnology any day, anywhere. Never bet against human stupidity and hubris.


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