Thread: China Goes To TradeCon 2, Warns Currency Bill Will "Ine

China Goes To TradeCon 2, Warns Currency Bill Will "Inevitably Lead To Serious Damage In China-US Trade Relations"

Submitted by Tyler Durden
10/11/2011 21:26 -0400
Comments: 297 / Reads: 14,944

Save this press release for the archives: it may well be the formal counter announcement of a trade war from China, which now realizes it has a batshit schizo trading partner, one who critically needs China to recycle its mercantilist dollars into buying America's one ply toilet Treasurys, yet one which is now blasting China for doing just that...



From the Chinese Ministry of Commerce http://www.mofcom.gov.cn/aarticle/ae/ag ... 75416.html

On October 11, the U.S. Senate passed the "2011 Oversight Reform Act of currency exchange rate," Shen Danyang, a spokesman for the Ministry of Commerce has issued a statement that the recovery in the global economy facing a severe test of the critical moment, the U.S. Senate to force through legislation to promote trade partner currencies, is tantamount to upgrading the wrong signal on protectionism. This is a serious violation of international rules, and not only threatens the stable development of Sino-US economic and trade relations, but also with other countries to jointly cope with challenges, runs counter to efforts to oppose trade protectionism, China is firmly opposed.

Shen Danyang stressed that China has always maintained need for the two sides to strengthen communication, and to take common positive measures to develop Sino-US economic and trade cooperation. Once the motion is formally made into law, it will inevitably lead to serious damage to China-US economic and trade relations. China hopes that the U.S. after a rational and objective treatment of the exchange rate, makes the right choice.

And now, the PBOC gets involved too: http://www.pbc.gov.cn/publish/goutongji ... 3207_.html

October 11, the U.S. Senate passed the "2011 Reform Act of currency exchange rate surveillance", which, we firmly oppose.

In recent years, China to accelerate the reform of RMB exchange rate formation mechanism, and has achieved significant results, the RMB exchange rate is becoming more and more reasonable and balanced level, but also for the international economy has made important contributions to financial stability. It won't solve the U.S. economy and employment problems and will only seriously disturb Sino-U.S. economic and trade relations and will also disturb the efforts of the two countries and global community's joint efforts to promote the world economic recovery and growth.

http://www.zerohedge.com/news/china-goe ... s-trade-re

Geopolitical Risk in Middle East and China Currency and Trade War Risk Supporting Gold

Submitted by Tyler Durden on 10/12/2011 06:57 -0400
Comments: 32 / Reads: 3,751
many links on this post

Submitted by GoldCore

Geopolitical Risk in Middle East and China Currency and Trade War Risk Supporting Gold

Gold is trading at USD 1,684.20, EUR 1,221.90, GBP 1,068.81, JPY 129,103.00, AUD 1,663.34 and CHF 1,509.80 per ounce.

Gold’s London AM fix this morning was USD 1,687.00, GBP 1,070.36 and EUR 1,222.02 per ounce.

Yesterday’s AM fix was USD 1,662.00, GBP 1,064.09 and EUR 1,222.96 per ounce.


Cross Currency Table

Gold has traded in a range between $1,580/oz and $1,680/oz for two weeks. Gold has broken out above the upper end of the range and resistance at $1,680/oz this morning. A close above $1,680/oz and rise to over $1,700/oz could result in gold quickly rising back to $1,800/oz.


Gold in US Dollars – 30 Day (Tick)

Support is at $1,600/oz, $1,580/oz and below that strong support is seen at the lows reached on September 26th of $1,532.70/oz.

Market participants are divided as to whether this is consolidation prior to a resumption of the bull market, whether a further sell off takes place or whether a bear market has commenced.

Strong physical demand being seen internationally, but especially in Asia, would suggest that gold may have bottomed and the bull market is set to continue in the traditionally strong autumn and winter months.

The fundamental factors that have driven the gold market in recent years - macroeconomic, monetary, systemic and geopolitical risk – also suggest gold’s bull market is set to continue.

Geopolitical risk is seen in the bizarre alleged plot by the Iranian revolutionary guard to use a purported Mexican drug dealer to assassinate Saudi Arabia's ambassador to the United States.

The Obama administration plans to leverage the incident into a new global campaign to further isolate the Islamic republic and maintain US dominance over the strategically vital region.


Gold in Euros – 30 Day (Tick)

Support is at $1,600/oz, $1,580/oz and below that strong support is seen at the lows reached on September 26th of $1,532.70/oz.

Market participants are divided as to whether this is consolidation prior to a resumption of the bull market, whether a further sell off takes place or whether a bear market has commenced.

Strong physical demand being seen internationally, but especially in Asia, would suggest that gold may have bottomed and the bull market is set to continue in the traditionally strong autumn and winter months.

The fundamental factors that have driven the gold market in recent years - macroeconomic, monetary, systemic and geopolitical risk – also suggest gold’s bull market is set to continue.

Geopolitical risk is seen in the bizarre alleged plot by the Iranian revolutionary guard to use a purported Mexican drug dealer to assassinate Saudi Arabia's ambassador to the United States.

The Obama administration plans to leverage the incident into a new global campaign to further isolate the Islamic republic and maintain US dominance over the strategically vital region.


Gold in Euros – 30 Day (Tick)

The Middle East is already a tinder box on the brink of conflict over Iran's nuclear programme, with Israel increasingly twitchy over the progress Tehran is making towards an alleged capacity to make nuclear weapons.

A small spark such as this alleged plot and the reaction of the US, Iranian, Saudi and Israeli governments could result in military conflict in the region. Also, there are simmering geopolitical tensions between the US and the increasingly powerful Russia and China about the Middle East.

A military conflict would see oil and gold prices rise sharply due to supply concerns and safe haven demand respectively.

Geopolitical risk and the geopolitical instability in North Africa and the Middle East was one of the factors that led to gold’s rise in recent months and it is likely to remain an important driver of prices in the coming months.

Monetary risk remains and the Slovakian vote is another reminder of the real risk posed to the Eurozone and the euro through contagion.

Currency and macroeconomic risk is also seen in the Chinese warning to the US overnight that the US currency law risks a trade war and a 1930’s style Depression.



Gold in Chinese Yuan – 30 Day (Tick)

Systemic risk remains heightened and Trichet acknowledged that yesterday with his warning that the crisis is ‘systemic’ and his warning that the high interconnectedness in the EU financial system has led to a rapidly rising risk of ‘significant contagion’.

European banks are on the verge of collapse and global debt markets risk a critical meltdown.
Finally, these risks are contributing to elevated macroeconomic risk and the significant risk of severe recessions in all major economies and the risk of a new Great Depression.

Gold remains an essential diversification that will protect from the real risks facing investors and savers today.

Those negative on gold and calling gold a bubble continue to focus almost exclusively on price.

A more enlightened approach for those genuinely concerned about people’s financial welfares would be to advocate a diversification into the safe haven asset and currency that is gold in order to protect against these real risks.

For the latest news and commentary on financial markets and gold please follow us on Twitter

NEWS

(Reuters) -- Gold climbs as dollar weakens; Slovak vote supports
http://www.reuters.com/article/2011/10/ ... USTRE78M...

(Business Week) -- Gold Climbs on Renewed Europe Debt Concern After Slovakia Vote‎
http://www.businessweek.com/news/2011-1 ... ed-europ...

(Mineweb) -- ECB gold reserves fall by 181m euros during week ending Oct 7th.
http://www.mineweb.com/mineweb/view/min ... 1&sn=Det...

(The Financial Times) -- US accuses Iran of Saudi envoy death plot
http://www.ft.com/intl/cms/s/0/185fa35c ... ab49a.html

(FT Alphaville) -- China warns US currency law risks 1930's style Depression
http://ftalphaville.ft.com/thecut/2011/10/11/699571/

COMMENTARY

(China Briefing) -- China’s Pan Asia Gold Exchange: A New Playing Field for Speculators?
http://www.china-briefing.com/news/2011 ... ld-excha...

(GoldSeek) -- Gold price suppression purposes and proofs
http://news.goldseek.com/GATA/1318362560.php

(Mineweb) -- Politicians, Financial Regulators, Banking Officials and Gold
http://www.mineweb.com/mineweb/view/min ... 7241&sn=...

(24h Gold) – Kunstler: Occupy Everything
http://www.24hgold.com/english/news-gol ... g.aspx?c...

(Guardian) – Prately: Does the EFSF have a design fault?
http://www.guardian.co.uk/business/nils ... oct/11/d...

http://www.zerohedge.com/news/geopoliti ... rting-gold

Senate Passes China Currency Legislation Bill 63-35

Submitted by Tyler Durden
10/11/2011 18:40 -0400
Comments: 68 / Reads: 6,382

So while the US is setting the stage for a possible retaliation against Iranians hiring Mexicans to kill for them, because they obviously can't do it on their own, the US Senate has just passed the China currency legislation bill in a 63 to 35 vote, which in turn will do miracles for Sino-US foreign relations. According to the legislation, it would let companies seek duties to compensate for a weak Chinese yuan. However, as Goldman indicated first thing this morning, the probability of this bill actually being enacted in its current form, or any, is slim to nil: while the Bill is under review by Obama administration, John Boehner, has called it "dangerous." If only he had an idea... Full Goldman take can be found here.

From The Hill: http://thehill.com/blogs/floor-action/s ... rency-bill

The Senate approved legislation that could lead to higher tariffs on Chinese imports in a 63-35 vote, with several Republicans voting with Democrats.

The vote poses an immediate quandary for House Republican leaders, who have so far dismissed the bill as a recipe for starting a trade war between the U.S. and China, just when the world is looking for the countries to work together to help maintain global economic growth.

It is also a headache for President Obama, who is cool to a bill that will complicate his administration’s work with China on an array of issues. Obama has also suggested that the bill, if passed, could run foul of international trade rules and lead to retaliatory tariffs on U.S. exports, hurting the businesses and workers the legislation is designed to protect.

The bill would require the U.S. to determine which countries' currencies are misaligned, and impose compensating duties on imports from those countries if this misalignment is not corrected. While not specifically aimed at China, the bill is seen as an answer to what most agree is an undervalued Chinese currency that makes it harder for U.S. companies to compete against relatively less expensive Chinese goods.

Naturally the Alliance for American Manufacturing was ecstatic by this development:

This evening, the U.S. Senate passed S.1619, the Currency Exchange Rate Oversight Act of 2011, a bill to address China’s ongoing currency manipulation, by a vote of 63-35.

Said Alliance for American Manufacturing (AAM) Executive Director Scott Paul:

"The Senate's vote is a win for American jobs. A strong bipartisan majority has said to China: Stop the cheating on currency or face consequences. And more importantly, American manufacturers and their workers know that the Senate will guarantee a level playing field on currency so that we can export and successfully compete in the global marketplace.

"If S.1619 is signed into law, it will create good American jobs. But there is a long way to go. Speaker Boehner and President Obama appear to have concerns about this legislation. Most trade lawyers who have reviewed the legislation believe it is in compliance with our international trade obligations. The chances of a 'trade war' with China are about as likely as seeing a unicorn on the Capitol lawn.

"The choice is now clear for Speaker Boehner and President Obama: Will you side with the Beijing regime and outsourcers, or will you stand with American manufacturing? I find it hard to believe that Speaker Boehner would defy a majority of his own caucus and the House of Representatives to placate irrational threats from a communist government. I doubt President Obama wants to be outflanked on China by Mitt Romney or any other presidential candidate after criticizing President Bush on China trade in 2008.

"The passage of the currency bill in the Senate is also a major defeat for special interests. 16 Republican Senators defied the Club for Growth and voted with the strong majority of their constituents for this bill.

"We praise the leadership of Senators Sherrod Brown, Lindsey Graham, Chuck Schumer, and Jeff Sessions for authoring and securing passage of S.1619. We also thank Majority Leader Harry Reid for bringing the legislation to the floor and the 63 Senators who supported passage of S.1619 tonight."

We wonder what the AAM will think of this historic victory when that can of Folgers coffee at Wal Mart jumps by 100% in a few months, or when the government has to actually pay a real interest rate for those 10 Year bonds...

http://www.zerohedge.com/news/senate-pa ... bill-63-35