Space Travel News  
TRADE WARS
Yuan decline helps China in US trade war, at a price
By Julien GIRAULT
Beijing (AFP) Aug 10, 2018

The recent fall of the yuan has been a boon to Chinese exporters facing a trade war with the United States, but it poses financial risks that could prompt Beijing to prop up its currency.

While markets are spooked by the standoff between the world's two biggest economies, a weaker currency makes exporters' goods cheaper, cushioning the impact of high tariffs imposed by US President Donald Trump on Chinese imports worth $34 billion.

Additional levies on $16 billion in Chinese goods will kick in later this month.

The cushion comes at a price: companies with dollar-denominated debt have to pay more, and imports trading in the American unit become more expensive.

The Chinese currency, also known as the renminbi (RMB), has sunk seven percent since June, reaching 6.85 yuan per dollar on Monday -- its lowest level since May 2017. The slide has prompted Washington to accuse China of manipulating the unit.

"The renminbi's decline will leave China's overall exports cheaper on average in US dollar terms than they were prior to the escalation in trade tensions," said Julian Evans-Pritchard, a China analyst at Capital Economics.

And while 70 percent of Chinese exports are billed in US dollars, exporters adjust their pricing "fairly fast", Evans-Pritchard said.

Olivier Blanchard, a former chief economist of the International Monetary Fund, wrote on Twitter that the decline of the yuan was probably enough to "offset" as much as $250 billion in planned US tariffs.

- Trade war fears -

While it does let market forces play a role, the Chinese central bank keeps the yuan within a narrow trading band that it adjusts daily, but policymakers have steadfastly denied that they manipulate the currency.

This time around, analysts say the yuan's decline is due to market jitters and not a deliberate move by Beijing.

"The slide has occurred because of a shift in market sentiment due to trade war fears and because of concerns over monetary easing by the PBoC (People's Bank of China) to address the resulting risks to economic growth," said Dariusz Kowalczyk, senior emerging markets strategist at French banking giant Credit Agricole.

"However, Beijing is clearly choosing not to prevent the RMB's slide."

Other experts noted that the central bank had not sold foreign currency reserves last month, a step it usually takes to support the yuan.

But the PBoC has made other moves to slow the decline. Last week, the bank increased the amount of money that short-sellers must put aside to bet against the yuan in order to dissuade the practice.

- 'No panic yet' -

While a weaker yuan helps exporters, Chinese importers are left with more expensive bills to buy products trading in dollars -- mainly commodities.

It also puts a burden on Chinese companies that have to pay back dollar-denominated debts.

The central bank could hit the panic button if the currency falls to more than seven yuan to the dollar.

"China's drive to advanced economy status, financial reforms and yuan internationalisation may be derailed should the currency go into a downward tailspin," Christy Tan, head of markets strategy at National Australia Bank, was quoted as saying by Bloomberg.

The country already experienced a big devaluation in August 2015 that triggered a capital flight -- an event that the authorities are loathe to see again.

"If confidence wavers, people will sell their yuan-denominated assets, shares and real estate. Certain sectors will suffer," Ye Tan, an independent economist in Shanghai, told AFP.

But Beijing would work to prevent such a scenario by closing the door to the flow of capital if necessary, Ye said, stressing that there was "no panic yet".


Related Links
Global Trade News


Thanks for being here;
We need your help. The SpaceDaily news network continues to grow but revenues have never been harder to maintain.

With the rise of Ad Blockers, and Facebook - our traditional revenue sources via quality network advertising continues to decline. And unlike so many other news sites, we don't have a paywall - with those annoying usernames and passwords.

Our news coverage takes time and effort to publish 365 days a year.

If you find our news sites informative and useful then please consider becoming a regular supporter or for now make a one off contribution.
SpaceDaily Contributor
$5 Billed Once


credit card or paypal
SpaceDaily Monthly Supporter
$5 Billed Monthly


paypal only


TRADE WARS
China exports top forecasts but warning over US tariffs impact
Beijing (AFP) Aug 8, 2018
China on Wednesday posted a forecast-busting surge in exports for July, but while its surplus with the US dipped slightly analysts warned that the full impact of US sanctions was yet to be felt. The figures come as the world's two largest economies exchange threats of stiff duties on billions of dollars worth of goods, fuelling fears of a full-blown trade conflict that could hit global growth. Beijing reported a $28.1 billion surplus with the US in July, down from the record $28.9 billion seen i ... read more

Comment using your Disqus, Facebook, Google or Twitter login.



Share this article via these popular social media networks
del.icio.usdel.icio.us DiggDigg RedditReddit GoogleGoogle

TRADE WARS
TRADE WARS
Mars Dust Storm May Have Peaked

Students can now build their own rover model

Scientists looking for ways to grow crops on Red Planet

Mars makes closest approach to Earth in 15 years

TRADE WARS
At 60, NASA shoots for revival of moon glory days

MIDAS cameras spot pair of lunar flashes caused by meteoroid impacts

Russia may use ISS Modules in Lunar Gateway Project

Israel plans its first moon launch in December

TRADE WARS
New Horizons team prepares for stellar occultation ahead of Ultima Thule flyby

High-Altitude Jovian Clouds

'Ribbon' wraps up mystery of Jupiter's magnetic equator

The True Colors of Pluto and Charon

TRADE WARS
Exoplanets where life could develop as on Earth

Exoplanet detectives create reference catalog of spectra and geometric albedos

NASA's TESS spacecraft starts science operations

How Can You Tell If That ET Story Is Real

TRADE WARS
NASA Selects US Firms to Provide Commercial Suborbital Flight Services

China's newest micro-rocket has fast production cycle

India Working on Augmenting Power of Electric Propulsion for Heavier Satellites

First SLS Core Stage flight hardware complete, ready for joining

TRADE WARS
Growing US unease with China's new deep space facility in Argentina

China developing in-orbit satellite transport vehicle

PRSS-1 Satellite in Good Condition

China readying for space station era: Yang Liwei

TRADE WARS
What Looks Like Ceres on Earth

China Focus: Capture an asteroid, bring it back to Earth?

Twenty Years of Planetary Defense

NASA's Dawn spacecraft focused on Ceres as it nears end of mission









The content herein, unless otherwise known to be public domain, are Copyright 1995-2024 - Space Media Network. All websites are published in Australia and are solely subject to Australian law and governed by Fair Use principals for news reporting and research purposes. AFP, UPI and IANS news wire stories are copyright Agence France-Presse, United Press International and Indo-Asia News Service. ESA news reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. All articles labeled "by Staff Writers" include reports supplied to Space Media Network by industry news wires, PR agencies, corporate press officers and the like. Such articles are individually curated and edited by Space Media Network staff on the basis of the report's information value to our industry and professional readership. Advertising does not imply endorsement, agreement or approval of any opinions, statements or information provided by Space Media Network on any Web page published or hosted by Space Media Network. General Data Protection Regulation (GDPR) Statement Our advertisers use various cookies and the like to deliver the best ad banner available at one time. All network advertising suppliers have GDPR policies (Legitimate Interest) that conform with EU regulations for data collection. By using our websites you consent to cookie based advertising. If you do not agree with this then you must stop using the websites from May 25, 2018. Privacy Statement. Additional information can be found here at About Us.