Kindle Notes & Highlights
organisational and administrative changes, and regulations to influence supply and demand, but only according to the Party’s top-down narrative.
political apparatchiks
political strategy than on commercial efficiency.
This chapter is going to argue two things. First, that it is not enough to want currency stability – delivering it, if domestic money and credit policies are not compatible, is impossible. Second, that China cannot have a truly global currency when current account surpluses and capital controls restrict the accumulation of Renminbi by foreigners. In these ways, China faces a Renminbi trap.
Competitive edge is more about financing, commercial selling and marketing arrangements, and trust in one’s currency and financial system.
Peak Renminbi, measured against the US dollar, was reached in January 2016 at RMB 6.05.
In 2009, Governor Zhou Xiaochuan of the People’s Bank of China wrote an essay on the bank’s website that railed against America’s hegemony in the global financial system, and argued that the flaws laid bare in the US by the Western financial crisis constituted a step towards the inevitable decline and eclipse of the Western system in the world order.2
Positioning for inevitable US decline. No more biding the time. Should we buy into it?
to convert foreign currencies into Renminbi and to invest the proceeds in Chinese equities and other Renminbi-denominated instruments. These were the Qualified Foreign Institutional, and Renminbi Qualified Institutional Investor Schemes. A Qualified Domestic Institutional Investor Scheme was introduced and later broadened to allow domestic financial entities to invest in portfolio securities, such as stocks and bonds, abroad.
encourage two-way flows of capital, China established the Shanghai Free Trade Zone in 2013, followed by similar arrangements in 2015
in Guangdong, Tianjin and Fujian. There are, however, restrictions on foreign investment, and generally, few foreign firms have taken the...
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The People’s Bank of China has also established a number of bilateral currency-swap arrangements, permitting an expansion in the use of Renminbi, with roughly three dozen central banks. As
Globally the proportion is 1 per cent.
There are, though, only two ways this can happen. One is by running current account deficits, so that foreigners receive more of your currency than they pay for goods and services. The other is by having an open capital account, so that capital flows freely abroad.
the Renminbi’s share of global reserves is still very small. According to the IMF, global reserves stood at $11.3 trillion at September 2017, of which $9.6 billion were ‘allocated reserves’ – that is, their currency composition was identified, while the rest were ‘unallocated’. The Renminbi share of allocated
reserves are about a quarter of the size of those accounted for by both
deep contradiction that existed – and still exists – between wanting a ‘decisive’ role for markets and prices in resource allocation, and insisting on a dominant role for the state sector. This
including over-invoicing of imports from, and under-invoicing of exports to, Hong Kong, purchases of insurance policies from Hong Kong providers, casino operations in Macau, money laundering, property purchases in cities such as London, New York and San Francisco, and even underground money smuggling operations.11
State Administration for Foreign Exchange (SAFE), net errors and omissions indicate capital outflows averaging around $70 billion a year between 2012 and 2014, rising to $223 billion in 2016.
Capital controls were also reinforced by the 2017 financial crackdown with President Xi Jinping’s blessing, under the guise of national security, with stringent measures designed to slow down or stop companies with substantial debt from investing overseas. Ostensibly,
having hostile political connections.
Dalian Wanda Group,
HNA
Fosun
Anbang
economist, Robert Mundell,
impossible trinity,
by between 25 and 35
‘control’ is a lodestone
better-off in China feel insecure.
The Renminbi’s fortunes, then, are inextricably linked to the manner in which China eventually resolves its debt and deleveraging problems.
productivity in China
1950 and 2010, 35 of 52 middle-income countries became trapped.8 If we look at the World Bank’s 167 member countries in 2016 (excluding the 48 oil-producing countries and low-population, high-income island states), there were 31 low-income nations (less than $1,045 of income per head), 51 lower-middle-income countries ($1,046 to $4,125), 53 upper-middle-income countries ($4,126 to $12,735), and 32 high income countries, which were all members of the OECD.
China could only join the World Trade Organization once. It could only embark on a massive real-estate ownership and
It could only enrol all of its children in secondary school once. Exploiting
the demographic dividend, benefiting from rural–urban migration, and raising the share of employment in industry and manufacturing to peak levels were all achi...
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powerful globalisation during the 1990s and 2000s was a b...
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total factor productivity (TFP). A brief explanation would be helpful
Needs revisit and citation
efficient use of capital, measured by the ‘incremental capital–output ratio (ICOR)’,
