Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

China Moves to Devalue Yuan

wsj.com

Post reply on HN
Print view View original

21–30 of 65 posts

Re: China Moves to Devalue Yuan

#21

Post by pjc50 »

jvm wrote: post #10

The PRC has had a historical policy of linking the RMB to the dollar. That made sense when they were primarily reliant on exports to the US, but now that their exports are diversified and they have massive domestic demand, a float and inflation peg like we have in the US is a much more sensible policy. The US dollar has an absurdly high valuation, so the sensible thing for the RMB (and most other currencies) is to de…

I prefer ftalphaville's take: http://ftalphaville.ft.com/2015/08/11/2137067/this-one-time-...

There is a massive but officially not permitted capital outflow from China that's pushing up real estate markets around the Western world. To some extent we're paying for our imported manufactured goods from China by exporting house ownership and rent payments.

Re: China Moves to Devalue Yuan

#22

Post by Zach_the_Lizard »

pjc50 wrote: post #21
jvm wrote: post #10

The PRC has had a historical policy of linking the RMB to the dollar. That made sense when they were primarily reliant on exports to the US, but now that their exports are diversified and they have massive domestic demand, a float and inflation peg like we have in the US is a much more sensible policy. The US dollar has an absurdly high valuation, so the sensible thing for the RMB (and most other currencies) is to de…

I prefer ftalphaville's take: http://ftalphaville.ft.com/2015/08/11/2137067/this-one-time-... There is a massive but officially not permitted capital outflow from China that's pushing up real estate markets around the Western world. To some extent we're paying for our imported manufactured goods from China by exporting house ownership and rent payments.

I think the Chinese billionaire effect might be real, but really the chief reason housing prices are so high is because we make it difficult to build housing. This is especially true in the most economically productive metro areas, such as New York and the Bay Area.

Even smaller cities such as DC are facing housing affordability crises. DC gained ~90K residents from 2005 to the present, but only gained ~12.5k new housing units in that time. If DC continues to grow, in the next 30 years DC will actually reach full buildout as allowed under current zoning and height restrictions. No additional units will be allowed.

Re: China Moves to Devalue Yuan

#23

Post by go1979 »

pjc50 wrote: post #21
jvm wrote: post #10

The PRC has had a historical policy of linking the RMB to the dollar. That made sense when they were primarily reliant on exports to the US, but now that their exports are diversified and they have massive domestic demand, a float and inflation peg like we have in the US is a much more sensible policy. The US dollar has an absurdly high valuation, so the sensible thing for the RMB (and most other currencies) is to de…

I prefer ftalphaville's take: http://ftalphaville.ft.com/2015/08/11/2137067/this-one-time-... There is a massive but officially not permitted capital outflow from China that's pushing up real estate markets around the Western world. To some extent we're paying for our imported manufactured goods from China by exporting house ownership and rent payments.

I fully believe the capital outflow link to the rise in western real estate prices. As someone unlucky enough to be caught without any property, I am perplexed by the reasonable response. Friends have responded by taking insane loans (since property prices went up after said loans, these were really prudent financial decisions). I am at a loss. Will I be buying at the top? :(

Re: China Moves to Devalue Yuan

#24

Post by go1979 »

Zach_the_Lizard wrote: post #22
pjc50 wrote: post #21

Earlier quoted context omitted.

I prefer ftalphaville's take: http://ftalphaville.ft.com/2015/08/11/2137067/this-one-time-... There is a massive but officially not permitted capital outflow from China that's pushing up real estate markets around the Western world. To some extent we're paying for our imported manufactured goods from China by exporting house ownership and rent payments.

I think the Chinese billionaire effect might be real, but really the chief reason housing prices are so high is because we make it difficult to build housing. This is especially true in the most economically productive metro areas, such as New York and the Bay Area. Even smaller cities such as DC are facing housing affordability crises. DC gained ~90K residents from 2005 to the present, but only gained ~12.5k new hou…

Consider Toronto as a counter example. That city tore down parks to build condos. That didn't rein in prices. Now, the affluent foreigners have 3-4 condos to go along with that Maserati.

Re: China Moves to Devalue Yuan

#26

Post by Zach_the_Lizard »

go1979 wrote: post #24
Zach_the_Lizard wrote: post #22

Earlier quoted context omitted.

I think the Chinese billionaire effect might be real, but really the chief reason housing prices are so high is because we make it difficult to build housing. This is especially true in the most economically productive metro areas, such as New York and the Bay Area. Even smaller cities such as DC are facing housing affordability crises. DC gained ~90K residents from 2005 to the present, but only gained ~12.5k new hou…

Consider Toronto as a counter example. That city tore down parks to build condos. That didn't rein in prices. Now, the affluent foreigners have 3-4 condos to go along with that Maserati.

DC has torn down a lot of things to build housing, and has converted former industrial properties into new neighborhoods (NoMA is an example). DC itself can't get rid of many of its parks because the National Park Service controls many of them, but neighboring jurisdictions certainly have gotten rid of parks in exchange for high rises (Arlington, for instance).

What matters isn't what was replaced, but how many net new units are built vs. demand for new units. DC is falling behind. I'd imagine that Toronto has similarly fallen behind.

Re: China Moves to Devalue Yuan

#27

Post by vegabook »

brobinson wrote: post #25
vegabook wrote: post #20

Earlier quoted context omitted.

R package txtplot.

Cheers! I'm actually using R as part of a SaaS app I'm building at the moment. I'm gonna use this for an easter egg. :)

It's pretty useful if you're ssh-ing into a machine to run R and you just want a quick and basic idea of some data.

Re: China Moves to Devalue Yuan

#28

Post by rm_-rf_slash »

jakozaur wrote: post #4

China is devaluing yuan for quite a while, but usually more smoothly. Will this that do the trick or there is problem in fundamentals? Like debt is growing too fast comparing to rest of the economy. Moreover, will China start making transition from cheap labour, efficiency based economy to innovation based one. Does government is aware of that challenge or they try to execute strategy for old model, that used to work…

>Moreover, will China start making transition from cheap labour, efficiency based economy to innovation based one.

This is my biggest skepticism towards China. They are simply not an aspirational brand. Who says "I buy Vietnamese so someday I can buy Chinese"? No, they say "I buy Chinese so someday I can buy European."

It doesn't matter how much of my dad's semiconductor research they steal (>10,000 hacking attempts from China EVERY DAY at an IVY LEAGUE INSTITUTION), China will never be sexy. That's why Titans like Renren and Weibo are huge in China while almost nobody outside the Middle Kingdom could give a damn. Name one luxury product that says "Made in China" without being accompanied by "Designed in California."

If the Chinese government let go of their iron grip of culture, maybe something remotely approaching cool will come out of China, but that's a can of worms they would rather keep shut.

It should be no surprise that even Hong Kongers are openly racist towards mainlanders: China has no brand.

Re: China Moves to Devalue Yuan

#29

Post by zhte415 »

vegabook wrote: post #14

CNYEUR (euro per cny) exchange rate past 60 months: ++-------+------+-------+------+-------+------+--+ 0.15 + ** + | * | | *** | | ** | 0.14 + + | | | | | * | 0.13 + ** + | * * | | *** * * | | * ** * * * | | * ** *** * * | 0.12 + * ** * * ** + | * * *** | | * | | ** * | 0.11 + * * * + | * * *** | | * | ++-------+------+-------+------+-------+------+--+ 0 10 20 30 40 50 60 Against the euro, the CNY has appreciated by…

Nice ASCII.

But surely this is a function of USD vs other currencies, as CNY is mainly fixed against USD.

Re: China Moves to Devalue Yuan

#30

Post by lubos »

go1979 wrote: post #23
pjc50 wrote: post #21

Earlier quoted context omitted.

I prefer ftalphaville's take: http://ftalphaville.ft.com/2015/08/11/2137067/this-one-time-... There is a massive but officially not permitted capital outflow from China that's pushing up real estate markets around the Western world. To some extent we're paying for our imported manufactured goods from China by exporting house ownership and rent payments.

I fully believe the capital outflow link to the rise in western real estate prices. As someone unlucky enough to be caught without any property, I am perplexed by the reasonable response. Friends have responded by taking insane loans (since property prices went up after said loans, these were really prudent financial decisions). I am at a loss. Will I be buying at the top? :(

Foreign investors buying up real-estate don't do it for the love of it. They seek returns by renting out.

And even though real-estate value has increased a lot. Rental income from these properties didn't increase at the same rate. Tenants can't afford to pay rent landlords would like to charge so there is downwards pressure on returns these properties can generate.

Not to mention, interest rates are at record low. What's going to happen when they go up? Not only demand for real-estate will be lower, there are borrowers who have accumulated too much debt to buy real-estate. They might be simply forced to sell as they wouldn't be able to service their loans anymore.

Nobody can predict the future but I'm not going to be surprised if we witness another real-estate crash in 2-3 years.

Post reply on HN