Economy of China:

IMF Greenlights Addition Of Chinese Yuan To SDR Basket


While none of the currencies globally are viable under the current debt based monetary system but there is no viable solution yet on how to make people around the world use something/anything as a medium of exchange that is divisible and 'trusted' and is 'legal tender'.

Having said that, finding a new system and the costs associated with it will also be very challenging in current difficult times.

We have come thus far post the GFC mainly due to money printing, QE and whatever wars had to be fought.

We must remember that EUR was just born in 1997 and implemented in electronic form in 1998 and from Jan 1999 it became legal tender in currency notes form.

It is my view that China will keep rising, and IMF's SDR inclusion is just paving the way forward and strengthening the currency. As US loses it's grip on the global monetary system, it is hard for the American Govt hegemons to accept it thus China had to wait until now. If it was me, Chinese yuan would have been in IMF SDR about a decade ago when the manufacturing prowess of China was at it's peak.

We shall have many crises in the years ahead but inclusion of Chinese Yuan in the IMF led SDR basket which is the monetary system AS ON DATE will not make it any worse but slightly better because this will bring stability.

Global trade and spneding is increasingly being done in yuan and most goods are made in China whether we like it or not, and hence all the 210 countries need to have yuan available in their banking systems in order to continue trading with China.

In fact, this will make things slightly cheaper because globally, the wholesalers will not need to price in the FX fluctuations which they currently do when remitting to China.

Screw the big G-7 banks, they always have an agenda of their own survival. Usually they always lie and most analycysts are a pain in the butt anyways.

I am waiting for the day within the next few months when Saudi (post OPEC break up?) will announce acceptance of yuan for oil which will be the last day of the connection between the world's USD based monetary system as we know it and the new monetary system where Yuan will rule the roost over the next few decades.

Every single day, oil remains below USD 50-60 level, the neeed for the world's top 10 oil producers rises more and more and they are choking by this USD based system especially when US is no longer the world's top oil importer.......Why are the Chinese forced to pay in USD when they can simply use CNH....hence Chinese have stopped buying from Saudi and Saudi exports of oil to China have dropped 35% over the last decade.....

Same for India or any other major oil importer, if they buy oil in USD, it makes things that much more expensive due to exchange rates. The day the exporters move away from USD, they have to go closer to CNH being their largest importer of oil which is why inclusion of CNH in IMF's SDR is very important step for China who have got this approval to occur on Nov 30 this year instead of the date announced by IMF a few weeks ago of Oct 2016 for which in all likelihood, US was involved in pushing the day further.

We should hear the news on Dec 1 when the CNH will be included in IMF's SDR and this will be a major game changer because all Govt's will need to hold trillions in CNH in order to assist their domestic banks/importers to pay China in yuan.

China's contribution in Africa :








Meanwhile Zimbabwe adopts Chinese Yuan


Zimbabwe already had multiple currencies but now it is kind of formalising the yuan and is relieving the USD from such a heavy responsibility! (rather kicking the USD out as 2015 slides into history).

USD is losing a battle worldwide from Angola to Russia to Iran to Zimbabwe to Venezuela and many more nations who are choosing the yuan and dropping the USD for trade, reserves, investments etc!

The main decision has to be made by Saudi/OPEC and that day should come any time (sooner they do it, better it will be for them, because at least they will get to keep their reserves else in 2 years the reserves will be gone and the currency will need to be depegged from the USD anyways) who have to choose yuan instead of USD for sale of oil.

World's 20 Largest Economies in 2030

Get ready for a new economic order. In the world 15 years from now, the U.S. will be far less dominant, several emerging markets will catapult into prominence, and some of the largest European economies will be slipping behind.

That's according to the U.S. Department of Agriculture's latest macroeconomic projections that go out to 2030, displayed in the chart below. The U.S. will just barely remain the global leader, with $24.8 trillion in annual output. The gray bar represents the $16.8 trillion gross domestic product projected for 2015, and the green bar shows how much bigger the economy is expected to be 15 years from now. The country, worth 25 percent of the world economy in 2006 and 23 percent in 2015, will see its share decline to 20 percent.

China's GDP will grow to more than twice its size today, helping the Asian powerhouse to almost entirely close its gap with the U.S. India, ranked eighth for 2015, will climb past Brazil, the United Kingdom, France, Germany and Japan to take third place in the world ranking. The International Monetary Fund calls India "the bright spot in the global landscape." The country will have the largest workforce in the world within the next 15 years, the IMF notes, and among the youngest.

Other nations won't be so lucky, particularly among developed economies. Japan, which was a roaring economy until its asset bubble burst in the early 1990s, has already slogged through decades of stagnation and will likely continue to see very little growth over the next 15 years. That will push Japan down a spot in the rankings by 2030, according to the USDA estimates.

Japan is "an important lesson in how quickly you can downshift your status of what a structure of an economy delivers," said Bruce Kasman,JPMorgn's chief economist. France will slide three spots, while Italy drops two.

In the overall ranking, Jamaica will surrender the most ground, bumping down 13 places to 136. Countries with the biggest advances -- like Uganda, which will climb 18 spots to rank 91 -- are concentrated in Africa, Asia and the Middle East. It's important to take estimates stretching out so far with a note of caution, though.

"There are lots of uncertainties," said Kasman. "Whether China grows at 4 percent or 6 percent matters an awful lot for where it looks like it's going to be in the global economy. Whether India grows at 3 percent or 8 percent -- these are huge differences when you compound them over long periods of time." The USDA is not the only -- and hardly the most widely-followed -- ranking of global economic growth, though it does offer the advantage of particularly long-term outlooks. The International Monetary Fund's economic outlook only projects out two years.

Look out for it later this month.And if 15 years is too far out for you, take a look at the fastest-growing economies just for this year.

The doomsayers have it wrong about China

Celebrate the rise of flawed, febrile China.For all the risks, we should celebrate its rise to the world’s second-largest economy.It is easy to imagine China’s economic freight train going off the rails. When I came to Asia 14 years ago, many people in Japan, where the economy was then three times the size of China’s in nominal terms, were predicting precisely that. Surely, they reasoned, the system must crumble under its own contradictions.
It was, after all, a state-managed economy prone to misallocation of capital and dependent on wasteful investment. It had a repressive political apparatus that spent more on internal security than on national defence.

Anger was growing at Communist party officials, many of whom were neck deep in corruption and engaged in land grabbing on an epic scale. Crudely measured, the economy was churning out astonishing growth. Yet it was poisoning the air, the water and, not infrequently, China’s own citizens.
None of that analysis was wrong. The conclusion, however, that the inherent stresses would lead to social chaos and bring the system crashing down was born of wishful thinking.


It underestimated the Communist party’s achievements in bringing tangible improvements to the lives of hundreds of millions of people. It underestimated, too, the strength of its patriotic message: that, after more than 100 years of humiliation, China had, finally, in the words of Mao Zedong, “stood up”.


Instead of collapsing, by some measures China has gone from strength to strength. Its output is more than twice the size of Japan’s. In purchasing-power parity terms, it overtook the US last year, making it the world’s biggest economy. In just 15 years, its gross domestic product per capita has jumped from 8 per cent of the US level to 25 per cent.

In Japan, many secretly hope that China will fail. Not without reason, they fear a vengeful, powerful neighbour with history book in hand. Yet in America and Europe, too, some have been guilty of assuming it is a house of cards.

Books with titles such as The Coming Collapse of China have been staples for years. It is possible to point out the flaws and gross injustices of the authoritarian system without predicting its imminent demise. At some point, the Communist party will yield to something else. All dynasties fail. Yet in all likelihood it will stay in power longer than many expect.

China’s rise is the most important event of our epoch. In the minds of many westerners, it is overshadowed by the threat of terrorism and by a technological revolution bearing the binary gifts of opportunity and destruction. Yet the consequences of the rejuvenation of a nation containing one-fifth of the world’s people will be profound, drawing the globe’s centre of gravity from west to east.

Economically, it has already transformed the prospects of raw-material producers from Angola to Australia, notwithstanding the recent fall in commodity prices born of China’s slowdown.

Politically, it has changed the calculations of almost every nation. The US has pivoted to Asia even as its diplomats ponder the continued feasibility of unconditional security guarantees with the likes of Japan and Taiwan. Drawn by the magnet of business and power, the UK has defied Washington by joining a Chinese bank designed to challenge a postwar order epitomised by the Bretton Woods institutions.China has shown that Japan’s success can be emulated, if not yet matched, on a much larger scale.


There are risks to China’s rise. Two stand out. The first is war. Humanity’s record in adjusting to rising powers is not good. As it grows stronger, Beijing will not accept Pax Americana, at least in what it considers to be its natural sphere of influence. Sino-US posturing around artificial islands in the South China Sea is a sign of things to come. So are bouts of angry nationalism aimed at Japan.


The second is environmental. Understandably, Chinese people aspire to US living standards, with American-sized cars and fridges. So do 1.3bn Indians, and hundreds of millions more in Asia, Africa and Latin America. It is not clear the planet can sustain such ambitions. Without significant technological breakthroughs, plausible but hardly preordained, something might have to give. That brings us back to conflict.For all the risks, China’s rise should be celebrated. Postwar Japan proved to the world that prosperity and modernity were not the preserve of white Europeans and Americans. China has shown that Japan’s success can be emulated, if not yet matched, on a much larger scale.


This might seem an odd time to celebrate. Is the Chinese model not coming apart at the seams? Growth has fallen more quickly than many had imagined. It could slow much further still. That could precipitate a financial crisis. Debt has doubled since 2009. It was not hard to paper over cracks in the system with double-digit growth. At 3 per cent, it might not be so easy.

Even if it avoids outright crisis, China may simply get stuck. Its labour force is shrinking. Its population is ageing rapidly . In just 15 years, nearly a quarter of its people will be over 65. Don’t the doomsayers now look like soothsayers?

In truth, China does not have to do that well to change the world. Because of the scale of its population, if its people attain only half the living standard of the US, its economy would be twice the size.

The Rise and Fall of Great Powers, by Professor Paul Kennedy of Yale University, suggests that military and diplomatic power will follow. Those seeking fissures in the system will find them aplenty. Those imagining that “the China threat” is about to disappear will be disappointed.

The consequences of the rejuvenation of a nation containing one-fifth of the world’s people will be profound, drawing the globe’s centre of gravity from west to east.'






World's largest economies GDP

max steel wrote:China is expected to surpass the US in terms of nominal GDP by 2026

Far earlier...China still has an anemic internal demand in absolute terms. Much of the money the Chinese have is still going into housing and big projects. When that will go back to intermediate goals and consumption, China will leverage far quicker than the US. It's just a matter of numbers.

If by 2020 the gap is around a trillion, it will be basically a dead horse for the US.

KoTeMoRe wrote:

max steel wrote:China is expected to surpass the US in terms of nominal GDP by 2026

Far earlier...China still has an anemic internal demand in absolute terms. Much of the money the Chinese have is still going into housing and big projects. When that will go back to intermediate goals and consumption, China will leverage far quicker than the US. It's just a matter of numbers.

If by 2020 the gap is around a trillion, it will be basically a dead horse for the US.

If you look at current figure difference between their GDPs is only 6.9 Trillion.

max steel wrote:

KoTeMoRe wrote:

max steel wrote:China is expected to surpass the US in terms of nominal GDP by 2026

Far earlier...China still has an anemic internal demand in absolute terms. Much of the money the Chinese have is still going into housing and big projects. When that will go back to intermediate goals and consumption, China will leverage far quicker than the US. It's just a matter of numbers.

If by 2020 the gap is around a trillion, it will be basically a dead horse for the US.

If you look at current figure difference between their GDPs is only 6.9 Trillion.

Yes but that's about half a decade worth, not over a decade. China is growing a trillion more in net terms and about 1.4 trillions brutto over the US. Clearly there's a questionmark about both numbers and sustainability when it comes to China, but if thy can keep it up, we would have new overlords at the dawn of the new decade.

So NO BI, you can't flogg a dead horse and hope it will run. Thanks for playing though.

China's non-financial FDI set to hit a record $126 billion in 2015

China’s Central Bank Strengthens Yuan-Dollar Rate by 0.3%

The People’s Bank of China (PBOC) set its national currency, the yuan, at 0.3 percent against the US dollar opening the market after extended Chinese Lunar New Year holidays on Monday.

BEIJING (Sputnik) – The PBOC fixed the average yuan exchange rate at 6.5118, marking the biggest rise in over three months, against the pre-holiday February 5 rate of 6.5314.

China's currency has lost more than 1.5 percent against the US dollar since the start of 2016.

The yuan's January devaluation by PBC has been the largest since August 2015, when the currency lost over 3 percent against the dollar, triggering a stock market slump around the world.

Decelerating growth rates have plagued the Chinese economy alongside turbulent stock markets and a falling currency. China's economy grew 6.9 percent in 2015, down from 7.3

Read more: http://sputniknews.com/asia/20160215/1034760719/yan-dollar-rate-strengthened.html#ixzz40EHMG12D

China's Debt Bomb: No One Really Knows The Payload



http://www.zerohedge.com/news/2016-05-17/chinas-debt-bomb-no-one-really-knows-payload

Austin wrote:China's Debt Bomb: No One Really Knows The Payload



http://www.zerohedge.com/news/2016-05-17/chinas-debt-bomb-no-one-really-knows-payload

hmm surely us agencies tell truth and only truth. Alas forgetting China still has $3,22 trillions foreign exange reserves. Dumping this to drain means collapse of us economy and likely total war.
http://www.tradingeconomics.com/china/foreign-exchange-reserves


BTW what base of gdp was taken to measure debt I did not find but might miss something.


us accumulated debt seems to be close to 70,000 trillions! they no way gonna pay it back. That´s why most of wars around world.
http://www.usdebtclock.org/

Austin wrote:China's Debt Bomb: No One Really Knows The Payload

Well for start NEVER read Zerohedge to know about China's Economy.

Make a Good Read on 3 Part Series on Chinese Ponzi Economy by David Stockman

Red Ponzi Ticking—-China And The Dark Side Of The Global Bubble, Part 1
Red Ponzi Ticking—-China And The Dark Side Of The Global Bubble, Part 2
Red Ponzi Ticking—-China And The Dark Side Of The Global Bubble, Part 3

New 2025 Global Growth Projections Predict China’s Further Slowdown and the Continued Rise of India

http://atlas.cid.harvard.edu/rankings/growth-predictions/

China's economy wont collapse. Instead, it will be sustained as it is (kicking the can) till alternative method is in place. Currently, silk road and other investment projects abroad are a way out for China from current method.

China's debt problem explained. - Thomson Reuters

Austin wrote:China's debt problem explained. - Thomson Reuters

Reuters can go and shove itself where the sun don't shine. The way to establish debt carrying capacity is to compare it to assets.
So far China has a much better (i.e. lower) debt to asset ratio than many "solid" (according to Reuters) NATO members.

This western media focus on Chinese debt is a clear destabilization campaign. They know that economics is to a large extent
about human psychology. So if you can spook key players and consumers in general then you can force serious damage.
This is regardless of any actual problem in the target economy. Reuters and the rest of the NATO fake stream media have
been systematically attacking the Russian economy as well. You can see the massive spew of "Russia is going collapse"
excrement since 2014. But the attacks actually predate 2014 and go back to the early 2000s. (I recall the Chicken Little
screeching before 2003 about how the debt service payments in 2003 were going to destroy Russia's budget; but 2003 came
and went and nothing happened).

China's problem is deeper than that.

The Chinese economy is unbalanced on extreme level, and debt is a symptom only.

http://data.worldbank.org/indicator/NE.CON.PETC.ZS?end=2016&start=1990

The consumption ratio is record low for any economy.

Japan had around 50% when it was hit by the crisis.

The biggest problem of the world is the low consumption level .


The military spending is a good exit route from it : )