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Reasons to Open a Chinese Bank Account

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Re: Reasons to Open a Chinese Bank Account

#11

Post by msy »

meric wrote: post #10
msy wrote: post #7

It's not a floating currency, it's directly controlled by politicians. Holding yaun is taking a speculative currency bet on the competency of the Chinese Communist Party to successfully manage the Chinese economy.

Trust them to do everything they can to keep it growing. People are in China are only generally content with their government because every year everyone gets richer and richer, except the family five blocks down the road that had their house confiscated and compensated only 25% market price because the local council is planning to build a `public facility` on the land.

A growing economy does not necessarily correlate to an appreciating currency when its value is decided by political actors.

Re: Reasons to Open a Chinese Bank Account

#13

Post by garply »

dublinclontarf wrote: post #5

>Politically, the country is under international pressure to rein in its huge trade surplus. The government doesn't feel any of this pressure, as it's not an internal issue they don't care. I would argue that yes the yuan is likely to rise against the dollar, but because of high inflation (very very high in China) most assets would also rise in comparison to the dollar(Oil, Gold, Silver etc.) Actually the only good r…

Is there much inflation in the US right now? It's really high in the mainland at the moment, particularly with relation to food.

My business partner just sold an apartment in Beijing. I tried to convince her to buy up some land back in the US, but she chose to buy another apartment here instead. Part of her concern was that the US housing market was going to be relatively flat for the next couple of years, which is her desired time range for selling the new property. The future potential weakening of the dollar vis-a-vis the RMB also played a role.

Re: Reasons to Open a Chinese Bank Account

#14

Post by maukdaddy »

samlevine wrote: post #4

A better investment (for most people) would be in a mutual fund or index that is tied to the Chinese economy.

I cannot upvote you enough on this point. Index/mutual fund is much less risky and provides much better tax benefits, especially if inside an IRA.

Re: Reasons to Open a Chinese Bank Account

#15

Post by reedlaw »

msy wrote: post #7

It's not a floating currency, it's directly controlled by politicians. Holding yaun is taking a speculative currency bet on the competency of the Chinese Communist Party to successfully manage the Chinese economy.

Ditto for the dollar. You're taking a bet on the Federal Reserve's competency in regulating the US economy.

Re: Reasons to Open a Chinese Bank Account

#16

Post by MikeCapone »

meric wrote: post #10
msy wrote: post #7

It's not a floating currency, it's directly controlled by politicians. Holding yaun is taking a speculative currency bet on the competency of the Chinese Communist Party to successfully manage the Chinese economy.

Trust them to do everything they can to keep it growing. People are in China are only generally content with their government because every year everyone gets richer and richer, except the family five blocks down the road that had their house confiscated and compensated only 25% market price because the local council is planning to build a `public facility` on the land.

I expect them to keep activity very high, but I don't expect them to allocate capital well in a way that will result in much profit and sustainable growth. This could last for a while, but IMO it's very unstable and could blow up faster than many expect.

Part of my reasons for believing this are stated in this presentation (which has been posted on HN, iirc):

http://dl.dropbox.com/u/6010227/Webshare/China%20Japan%20Pre...

Re: Reasons to Open a Chinese Bank Account

#17

Post by mark_l_watson »

samlevine wrote: post #4

A better investment (for most people) would be in a mutual fund or index that is tied to the Chinese economy.

Good advice, I think. Last year I put a year's worth of salary in a good emerging market fund and felt better having diversified. I think for us small investors, diversification for some tiny shred of possible safety is more important right now than maximizing yields. No investment is really safe though - best bet is in producing income in diversified ways.

Re: Reasons to Open a Chinese Bank Account

#18

Post by chailatte »

garply wrote: post #13
dublinclontarf wrote: post #5

>Politically, the country is under international pressure to rein in its huge trade surplus. The government doesn't feel any of this pressure, as it's not an internal issue they don't care. I would argue that yes the yuan is likely to rise against the dollar, but because of high inflation (very very high in China) most assets would also rise in comparison to the dollar(Oil, Gold, Silver etc.) Actually the only good r…

Is there much inflation in the US right now? It's really high in the mainland at the moment, particularly with relation to food. My business partner just sold an apartment in Beijing. I tried to convince her to buy up some land back in the US, but she chose to buy another apartment here instead. Part of her concern was that the US housing market was going to be relatively flat for the next couple of years, which is h…

US Rent prices rose 12% last year

http://www.marketwatch.com/story/rent-prices-rose-12-last-ye...

Sugar Prices Hit 30-Year Highs

http://online.wsj.com/article/SB1000142405274870350690457559...

Gasoline Tops $3 a Gallon for First Time at Christmas

http://www.dailyfinance.com/story/3-dollar-gas/19775116/

Unless you believe the official US CPI, which excludes food/oil

Re: Reasons to Open a Chinese Bank Account

#19

Post by Vivtek »

reedlaw wrote: post #15
msy wrote: post #7

It's not a floating currency, it's directly controlled by politicians. Holding yaun is taking a speculative currency bet on the competency of the Chinese Communist Party to successfully manage the Chinese economy.

Ditto for the dollar. You're taking a bet on the Federal Reserve's competency in regulating the US economy.

Yeah, and given the results of the past decade I'm inclined to trust the Communists... Not that they're actually communists; they're just a really big national corporation, imho.

Re: Reasons to Open a Chinese Bank Account

#20

Post by yummyfajitas »

chailatte wrote: post #18
garply wrote: post #13

Earlier quoted context omitted.

Is there much inflation in the US right now? It's really high in the mainland at the moment, particularly with relation to food. My business partner just sold an apartment in Beijing. I tried to convince her to buy up some land back in the US, but she chose to buy another apartment here instead. Part of her concern was that the US housing market was going to be relatively flat for the next couple of years, which is h…

US Rent prices rose 12% last year http://www.marketwatch.com/story/rent-prices-rose-12-last-ye... Sugar Prices Hit 30-Year Highs http://online.wsj.com/article/SB1000142405274870350690457559... Gasoline Tops $3 a Gallon for First Time at Christmas http://www.dailyfinance.com/story/3-dollar-gas/19775116/ Unless you believe the official US CPI, which excludes food/oil

CPI doesn't exclude food/oil, only Core CPI does.

http://research.stlouisfed.org/fred2/series/CPIAUCSL

http://research.stlouisfed.org/fred2/series/CPILFESL

The only major difference between CPI and Core CPI is that CPI is more volatile than Core CPI. This is why, for the purposes of year on year changes, Core CPI is usually reported. If we didn't do this, we'd get headlines like "OMFG, massive inflation, we are all doomed" followed by "OMFG, massive deflation, we are all doomed" 6 months later. Over a period of a year or two, massive inflation x massive deflation = small but stable inflation.

A better way to go would be to use moving averages, but that's too complicated to explain to reporters.

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