Thread: China State TV: Dump Your Dollars!

China State TV: Dump Your Dollars!
Friday, Nov. 16, 2007 10:20 a.m. EST

BEIJING -- Chinese lunchtime television on Friday gave ordinary people a basic tip on how to play the currency markets: sell the dollar!

A state news program, quoting unnamed "wealth management experts," told residents with dollar accounts on the mainland to convert their holdings into yuan or a range of other foreign currencies, including the pound and the euro.

The prospect of ordinary Chinese ditching the dollar should be less alarming than reports that have roiled global markets of Beijing diversifying its official foreign exchange reserves.

Whereas China's official reserves of more than $1.4 trillion are the world's biggest, private foreign currency deposits in China are a fraction that size: $162.1 billion at the end of October, according to People's Bank of China. The central bank did not give a currency breakdown of these deposits.

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The state news program, which did not quote any government official, said people were getting squeezed because the pace of yuan appreciation against the dollar was greater than the interest rate earned domestically on dollar accounts.

Analysts expect the yuan to rise anywhere from 5 to 7 percent annually against the dollar, while domestic dollar accounts earn depositors just 3 percent a year.

The program proposed three solutions.

"Selling dollar for yuan as soon as possible may be a safe approach," the news program said, adding the yuan could then be used to invest in domestic mutual funds.

"Secondly, you can change the dollar into strengthening currencies," it continued. "Currently, the U.S. dollar is falling against the euro, the British pound, the Australian dollar and the Canadian dollar, and you can change the dollar into these currencies for deposits."

The third recommended strategy was to invest the dollars abroad, in search of higher yields, by buying into Qualified Domestic Institutional Investor (QDII) products offered by Chinese banks and fund managers.

http://moneynews.newsmax.com/money/arch ... 9.cfm?s=st

You can believe President Bush if you want too... But all of the evidence says this country is on shaky ground

Sell the dollar, huh? Well I say, "boycott made in China products"....

Tit for tat...

Sell the dollar, huh? Well I say, "boycott made in China products"....

And so it begins, China has a huge reserve and we will suffer. Time to pull your dollars out and stuff the mattresses. Thanks Bill and George!

DUMP CHINESE JUNK!

DON'T BUY CHINESE!

Oh boy, here it comes. I hope all of the fat cats who have been doing business with this COMMUNIST country really suffer. China's military buildup is only meant for one enemy--the U.S.A. We stand in their way for gloabl domination and our leaders have been giving them our prosperity for years. Their faith in China is about to be spoiled by their own greedy ambitions. Let it be known, the Chinese are coming..whether its Tiwan or where ever, they are coming.

Originally Posted by No2Illegals

Sell the dollar, huh? Well I say, "boycott made in China products"....

That's not necessary. As the dollar falls you'll get less Chinese stuff for it. Kinda dumb to boycott stuff you can't afford?

This article is interesting. The coming depression might just save us from illegal invasion from Mexico and China.

The limits of a smaller, poorer China
By Albert Keidel

Published: November 14 2007 02:00 | Last updated: November 14 2007 02:00

In a little-noticed mid-summer announcement, the Asian Development Bank presented official survey results indicating China's economy is smaller and poorer than established estimates say. The announcement cited the first authoritative measure of China's size using purchasing power parity methods. The results tell us that when the World Bank announces its expected PPP data revisions later this year, China's economy will turn out to be 40 per cent smaller than previously stated.

This more accurate picture of China clarifies why Beijing concentrates so heavily on domestic priorities such as growth, public investment, pollution control and poverty reduction. The number of people in China living below the World Bank's dollar-a-day poverty line is 300m - three times larger than currently estimated.

Why such a large revision in the estimates of China's economic condition? Until recently, China had never participated in the careful price surveys needed to convert accurately its gross domestic product into PPP dollars.

The World Bank's estimates based on summary data from the late 1980s probably overstated China's PPP gross domestic product even then. Up to now, the bank has revised its estimate very little. In the meantime, China has repeatedly raised the prices of food, housing, healthcare and a range of other non-traded goods and services. These reforms should have lowered the PPP adjustment, but the bank left it basically unchanged.

Last month, Robert Zoellick, World Bank president, argued that the bank should continue to lend to countries such as China, India and Brazil because they still had large shares of the world's poor.

The new, more accurate statistics describing a smaller, poorer China strengthen this argument. The ADB's announcement also indicates that the number of dollar-a-day poor in India is closer to 800m than the current estimate of 400m.

These PPP adjustments affect poverty measures because the World Bank's dollar-a-day poverty line is a PPP dollar poverty line. Reducing PPP consumption estimates drops large numbers of additional households below the poverty line.

For China, the correction needs to be made back to the 1980s and 1990s, when instead of World Bank estimates of roughly 300m people below the dollar-a-day poverty line, the number was more likely more than 500m. China has made enormous strides in lifting its population out of poverty - but the task was perhaps more gargantuan than most people thought and progress has been overstated by bank estimates.

These calculations are not just esoteric academic tweaks. Based on the old estimates, the US Government Accountability Office reported this year that China's economy in PPP terms would be larger than the US by as early as 2012. Such reports raise alarms in security circles about China's ability to build a defence establishment to challenge America's.

Well-informed analysts know that PPP calculations are a poor measure of a country's potential military base, but with the corrected China PPP statistics, the whole question is moot. China is just not that big now and will not get that big any time soon.

Given uncertainties about China's political and security evolution, this more moderate picture of China's economic size is reassuring. It means that the US and other developed nations have more time to engage China and interact with its fledgling institutions. There might be no better place to start than with military-to-military relations.

The immediate international interest, however, is for China to succeed in its still daunting internal development challenges. Such opportunities might be manageable if engagement focused on a needy sub-region such as Sichuan Province, where the US has a flourishing Peace Corps programme. The goal is to promote economic development conducive to political moderation.

Close contact with China's development process on the ground might also help us understand better the lessons China's experience might have for so many poor countries where development is stalled.

Finally, both Congress and the Treasury department should recognise the limitations and opportunities revealed by these more accurate data. For example, risks to its impoverished rural hinterland from a sudden large revaluation of its currency loom larger in Beijing's eyes than in Washington's. Acknowledging this could smooth negotiations.

The writer is senior associate at the Carnegie Endowment for International Peace. He was acting director of the US Treasury department's Asia Office
Copyright The Financial Times Limited 2007

http://www.ft.com/cms/s/0/4eaba8b0-9255 ... ck_check=1