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The fact that Zhou Li, a former deputy director of Beijing’s International Liaison Department, is complaining about the “unprecedented” coronavirus stimulus in the United States shows just how confused many – if not most – Chinese officials are about... https://www.scmp.com/economy/china-economy/article/3092147/us-coronavirus-stimulus-reignites-chinas-criticism-dollar?utm_source=Twitter&utm_medium=share_widget&utm_campaign=3092147
...the role of an international currency and why, for all their talk, CNY will not become a major currency. China’s response to the huge demand shock imposed by Covid-19 has been mostly in the form of supply-side stimuli. This cannot possibly work except to the extent that...
...China can take advantage of demand-side stimuli abroad by rapidly increasing its trade surplus (which has been soaring since Q1). With the rest of the world buying USD assets, this mostly means that China’s recovery depends in part on a wider US trade deficit, which the...
...Fed’s monetary response is accommodating.
That is why China has no choice but to accumulate USD. What Beijing doesn’t understand is that USD is central to the global economy in large part because the US financial system forces the US economy to accommodate the needs of the...
That is why China has no choice but to accumulate USD. What Beijing doesn’t understand is that USD is central to the global economy in large part because the US financial system forces the US economy to accommodate the needs of the...
...rest of the world. The world needs more demand, and the US accommodates this even at the cost of US growth. Beijing, on the other hand, believes that if the world stops using USD, and perhaps switches to RMB, China can grow faster by forcing the world to accommodate its...
...needs for more demand. This is totally muddled thinking.
By the way Zhou Li’s statement reminded me very much of a similar one made by Luo Ping, an official at the China Banking Regulatory Commission, in 2009. “We hate you guys”, he said. “Once you...
By the way Zhou Li’s statement reminded me very much of a similar one made by Luo Ping, an official at the China Banking Regulatory Commission, in 2009. “We hate you guys”, he said. “Once you...
...start issuing $1tn-$2tn . . . we know the dollar is going to depreciate so we hate you guys — but there is nothing much we can do.” Mr. Luo, of course, turned out to be right about “there’s nothing much we can do”, but wrong about the rest, and the value of China’s...
...dollar-denominated foreign reserves did not plunge. On the contrary, if the PBoC had purchased more dollars instead of fewer dollars, it would have avoided some of the currency losses it has taken since 2009. I explain that in this piece: https://carnegieendowment.org/chinafinancialmarkets/57514
