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China Moves to Devalue Yuan

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Re: China Moves to Devalue Yuan

#51

Post by rm_-rf_slash »

droopyEyelids wrote: post #50
rm_-rf_slash wrote: post #28

Earlier quoted context omitted.

>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…

Precisely the same thing was said about Japan. I know Japanese products don't have special cache now, but there was a time when the phrase "Jap crap" was in common circulation, and then a time afterwards where Sony took over the world. It seems entirely plausible to me that China is working through the same historical process. Consider the possibilities of Foxcon- they already manufacture the most desirable consumer…

I'm not entirely convinced. Japan didn't only invade America with electronics, it came with a widely appealing culture as well. Sushi, anime, jpop, all of these things made Japan more interesting than the gadgets it made.

Foxconn does indeed produce excellent electronics, but they're largely designed elsewhere. Most Chinese-designed consumer products lack appeal outside of China.

The reason I harp on about culture is because it drives fashion. The Chinese government is so adamant about dictating culture that it stamps out the possibility for subcultures to grow and, most crucially, become popular outside the country. Just look at China's film industry. Actually, don't. I've seen what passes for Chinese film media and it could have been written by a machine, or one of those folks from 1984 who release the same book every few years with different character names.

Dissent gives rise to new culture: American blacks playing blues becomes classic rock, which becomes punk rock, and so on. A government focused on dictating culture in an age of information is like going to high school and still being dressed by your mom.

Meanwhile, peripheral - and far poorer - countries are having cultural booms as their popularity spreads around the globe. Singapore, Vietnam, Thailand, heck, not to mention India, all have widely appealing cultural products. If China can't become cool, then they'll remain a factory, subject to the whims of global finance and technology.

Re: China Moves to Devalue Yuan

#52

Post by joelwilliamson »

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.

The obvious counter-argument is that home prices would have risen even faster without the construction boom.

Re: China Moves to Devalue Yuan

#53

Post by TheCoelacanth »

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…

It would help if most of DC wasn't limited by zoning to 3 stories. Even allowing the legal maximum of 10ish stories would help a lot.

Re: China Moves to Devalue Yuan

#54

Post by zaccus »

toomuchtodo wrote: post #48
ebiester wrote: post #47

Earlier quoted context omitted.

The big difference between the US and GB is how much more land there is in the US. We can always build a new city.

Its not where the land is. Its where the jobs are. Is everyone going to live in a tiny house in BFE Texas?

This wouldn't be as much of an issue if more companies embraced working remotely.

Re: China Moves to Devalue Yuan

#55

Post by EliRivers »

ebiester wrote: post #47
toomuchtodo wrote: post #42

Earlier quoted context omitted.

This: > It hurts the domestic home buyer, though, who has to compete with inflated all-cash offers from these foreign investors. is much more hurtful then the benefits provided by foreign buyers paying taxes. If you don't believe me, look at London. Actual workers are pushed out by money launderers (yes, that is what they are).

The big difference between the US and GB is how much more land there is in the US. We can always build a new city.

GB is less than 10% urban. A lot less. You could build another city the size of Birmingham in GB and not notice. The problem GB has with land isn't not having enough; it's a regulatory problem of planning permission and associated issues.

Re: China Moves to Devalue Yuan

#56

Post by MichaelCrawford »

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…

I understand that Chinese parents are sending their parents to school in the US specifically so Chinese kids can learn to innovate.

At some point this will pay off, but I expect that we have not yet educated enough Chinese students to make a real difference to their economy.

Re: China Moves to Devalue Yuan

#57

Post by somerandomone »

Xophmeister wrote: post #12
somerandomone wrote: post #7

Earlier quoted context omitted.

As long as the government doesn't allow unobstructed access to foreign websites that aren't even remotely related to politics I don't see that transition any time soon.

I'm the last person to be an apologist for the Great Firewall, but how does it preclude the OP's point? The Chinese-language web and Chinese Internet users represent a pretty sizeable chuck, to the point that it's self-sustainable and innovation definitely occurs within this space. The Great Firewall just results in a walled garden; access to Facebook isn't going to magically spur innovation! (Don't get me wrong: The…

First of all, that comment is mixed with a bit of rant. But seriously, the issue is so much more than mere access to Facebook. The connection to GitHub, Google Code, or anything via ssh or HTTPS in general is slow, flaky and frustrating. This poses a cost on acquiring latest news and technology, collaborating and deploying. AS for the walled garden, there's a Chinese saying of 闭门造车, which says if you build a cart with a closed door without any exchange of ideas, you can't make much progress. (Though that's not what the phrase originally meant, but the meaning when the phrase evolved)

Re: China Moves to Devalue Yuan

#58

Post by balls187 »

droopyEyelids wrote: post #50
rm_-rf_slash wrote: post #28

Earlier quoted context omitted.

>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…

Precisely the same thing was said about Japan. I know Japanese products don't have special cache now, but there was a time when the phrase "Jap crap" was in common circulation, and then a time afterwards where Sony took over the world. It seems entirely plausible to me that China is working through the same historical process. Consider the possibilities of Foxcon- they already manufacture the most desirable consumer…

There is a massive cultural difference between Japan and China, however.

Much of Japan's industrial transformation came after massive US post WWII investment.

(Note: same happened in Germany as well).

Re: China Moves to Devalue Yuan

#59

Post by toomuchtodo »

zaccus wrote: post #54
toomuchtodo wrote: post #48

Earlier quoted context omitted.

Its not where the land is. Its where the jobs are. Is everyone going to live in a tiny house in BFE Texas?

This wouldn't be as much of an issue if more companies embraced working remotely.

Completely agree. It'll happen slowly. You already can see more companies willing to hire remote so you're not limited to candidates that fit your requirements within 0-50 miles of your office.

Re: China Moves to Devalue Yuan

#60

Post by maxerickson »

chatmasta wrote: post #44
adventured wrote: post #13

Some likely effects from this: 1) US consumers just got a small standard of living boost. The same things they were buying before, will now cost less. It'll have little to no effect on US domestic manufacturing. 2) This will put some downward pressure on US consumer prices. Giving the Fed even less inflation concern (at least from the CPI angle). 3) The Fed is very, very unlikely to raise interest rates in September.…

I keep hearing about the Fed raising interest rates, or not raising interest rates, but I'm unclear what the pros vs. cons are for the Fed to raise them at a given time. Would someone mind explaining that? Why does China devaluing the Yen have any impact on US raising interest rates or not?

A looser monetary policy (lower interest rates) is thought to stimulate the economy (more jobs) at the risk of higher inflation. A tighter policy (higher interest rates) is thought to control inflation (stable prices) at the risk of a slower economy. They post a lot of information about it, for instance:

https://www.chicagofed.org/publications/speeches/our-dual-ma...

China is a large portion of the global economy, so things that happen there can end up having a big impact globally.

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