Weaker Dollar, Stronger Yuan May Hurt The United States And Help China In The Long Run!

I’m no expert in economic matters, but I just want to use my own personal logic to make sense of a few things that are currently happening.  People are seeing that the Dollar is weakening as we speak, and the Yuan is growing stronger as we speak.  Some people say weaker Dollar is a good thing because export will become more profitable.  Furthermore, when export becomes profitable, it also drives up the manufacturing sector at home.  That’s the theory for some people, but I feel that it’s way more complicated than this.

Since the United States isn’t a world manufacture hub — China is holding this title — the United States’ exports won’t matter as much unless the United States becomes the world manufacture hub.  Sure, with weaker Dollar, the United States’ exports will become more competitive than before.  The question is, will a little gain in competitiveness in exports spur the manufacturing sector at home?  Meanwhile, weaker Dollar will make the United States’ imports a lot more expensive.

I think the United States currently imports a lot more than exports.  The United States’ import is at $2.25 trillion and the export is at $1.45 trillion for the year of 2016, according to Wikipedia.  If the United States’ exports continue to slack even with the weak Dollar and the imports continue to grow, the United States could face an even stronger trade deficit.  For an example, manufacturer companies in the United States may have to import more expensive materials from the outside to manufacture products at home for selling across the world and at home.  This may not make the products at home cheaper for homegrown consumers.  Furthermore, this will increase the trade deficit in manufacturing sector if not enough products within the United States get to export to balance out the import costs.

Weak Dollar will increase less buying power for the Americans who go abroad for vacation, business, and so forth.  Weak Dollar can make purchases of products from foreign companies through online websites or offline imports more expensive for the American consumers.  For an example, I could be buying a music plugin from an online website which belongs to a French company, and with a weak Dollar, I could be paying more for this software.

I guess good things and bad things do exist even when the Dollar is weak or strong.  Nonetheless, the most interesting question is can the United States fare better when the Dollar is weaker or stronger.  In my opinion, weaker Dollar can help spur export a bit, but if the United States’ exports don’t carry the whole United States’ overall, long-term economy, then the weaker Dollar will be a very bad thing!

What about China?  If the United States enters a trade war against China, China can increase import tariff costs for the products from the United States.  This could hurt the United States’ export market because weaker Dollar would be neutralized by this move from China.  Furthermore, China can also buy up weak Dollar on the cheap to make Yuan stronger if this would serve China’s agenda.  Of course, stronger Yuan for China could make China’s exports look expensive.  Still, from what I’ve heard, China is trying to spur demands at home to create a bigger home consumer market so China won’t be relying on too much from the export market.  If this is the case, then cheap Dollar would be beneficial for China in a big way!

Stronger Yuan would allow Chinese who are going abroad to get more bang for the buck.  Meanwhile, Chinese imports would become cheaper, and so China won’t have to spend so much money to import stuff.  As China’s export market isn’t doing so bad and the imports get cheaper, stronger Yuan allows China to continue to reform her consumption market.  Foreign companies would love to enter China’s bigger homegrown consumption market because China has 1.4 billion headcounts and growing.  As China becomes an ever more important factor for foreign companies due to the size of Chinese population and market, China can begin to dictate tastes, styles, fashions, and so forth worldwide.  Chinese culture will become ever more influential if Chinese market becomes the most important market in the world.

With a weaker Dollar and stronger Yuan, entering a trade war against China might be very bad for the United States!  China can sanction the United States’ companies, entities, and so much more to crash the United States economy.  Of course, a trade war would be bad for China too, because the United States’ imports from China do matter to China a lot.  Nonetheless, as China doesn’t rely on the export market so much, a trade war between the United States and China won’t deter Chinese economic reform plan.  After all, China wants to grow the homegrown consumption market!  While growing a homegrown consumption market to rely less on the export market, China relies on the cheaper import market to balance out the reduction of Chinese exports.  Weaker Dollar and stronger Yuan will allow China to transit from the export market to a service market, also to move to a higher value-added export market — all in all – making this transition in a smoother fashion.

In conclusion, I think China can make the best out of either weaker or stronger Dollar, and the United States — as long as the country stays less competitive — won’t be able to have the upper hand if a trade war occurs between China and the United States.  Meanwhile, China can use stronger Yuan to buy cheap debts from United States’ weak Dollar to prop up China Yuan’s strength.  This, in turn, will actually help China transits from a manufacturing to a service economy.  As the low value-added market goes away in China, China has to accelerate the reform of the manufacturing sector at home so Chinese future export market will be more about high value-added products.  Anyhow, if the United States isn’t going to be able to use the opportunity of a weaker Dollar to reform her economy somehow to make the United States’ economy more competitive against rivals such as China, in the long run other rivals will use the weaker Dollar as the opportunity to make their own economies a lot stronger.

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We Should Heed Chinese Minister of Foreign Affair’s, Wang Yi, Call For Diplomacy In Regarding To Tension Between the United States and North Korea

A rumor has that China has moved around 150,000 troops to the border of North Korea.  Meanwhile, a Chinese minister of foreign affair, Wang Yi, has warned both the United Sates and North Korea to not start a war on Korean Peninsula, and he also said all sides will lose if this to occur.  Wang Yi is one of those top 7, if I’m not wrong, people who are directly taking orders right underneath Chinese president Xi Jin ping.  His words are to be taken seriously, and so it’s going to be foolish to believe that China isn’t going to protect North Korea from an attack.  Lately, online and offline news have surmised that China would help the United States to take out North Korea, but I think these news are too optimistic.  I believe that China would use North Korea as a proxy war to drag the United States in once the North Korea war gets going.

United States’ arm forces are spreading thin throughout the world.  Russia is tempting to expand further West while China is going to expand further in South and East China Seas.  A war with North Korea will be expensive for the United States, because it won’t be a quick war unless the United States uses nuclear weapons.  Nonetheless, once a nuclear missile from the West flies toward the East, Russia and China would quick to release theirs toward the West, because they won’t trust the United States’ true targets.  This means a nuclear war could happen if a nuke starts to fly off in any direction.  Invading North Korea through ground forces requires the United States to persuade ally countries to go along, and the war will be very expensive.  Furthermore, if not careful, North Korea war this time could be a repeat of Viet Nam war in which the North would eventually swallow the South.

The United States still has Afghanistan, Syria, and several other places to be worried about, and so adding North Korea to the plate in a time in which the United States is still trying to fix her economy is rather worrisome.  Although China isn’t favoring the North Korea position in regarding North Korea’s nuclear development, but China hates to see the South swallows the North even more.  This means China would aid North Korea once again once the war starts.  In the long run, I think China is going to use the United States to push North Korea to abandon nuclear development and nuclear weapons altogether in exchange for China’s protection.  If I’m not wrong, I think China’s position is very clear, because China is strategically regarding North Korea as a buffer between the United States and South Korea.  If I’m not wrong, a war with North Korea in our time will pull China into a war against the United States like it had happened in the 1950s (Korean War).

South Korea should be very worried, because once missiles start flying, North Korea will pour down South and try to repeat the Korean War.  Basically, North Korea is a very poor country, and so it got nothing to lose.  South Korea is a very rich country, and so it got everything to protect.  This time with modern weapons, things can be so much worse.  Chinese minister of foreign affair, Wang Yi, in the video right after the break warns both the United States and North Korea in not starting a war on Korean Peninsula.

My Thought On Presidential Election of 2016

In a democracy like the United States, a leader who got too many baggages like Hillary Clinton, you lose, because the United States loves the underdog.  In authoritarian state such as in China, a leader can win according to how specialize and how large the experience he or she has.  I think Hillary Clinton lost the White House to president elect Donald Trump, because she represents a dynasty.  The people in the United States are always looking out for fresher ideas that may give them hope, and president elect Donald Trump is definitely something that a majority people of the United States are going for.  Of course, it’s hard to say how well would president elect Donald Trump run against someone else.  It’s now clear that Hillary Clinton isn’t going to be the next president as she represents the Clinton dynasty.

Before Donald Trump is a clear known winner of the presidential election, a lot people were and probably still are against him.  Will he be able to bring those people onto his side in the coming years?  If president elect Donald Trump won’t be able to bring the oppositions to work with him, we may very well have another four or eight years of divisions within the United States.  Since the United States is a home to so many different groups of ethnicities and cultures, I fear divisions within will bring down the United States even more.  I hope that our next president will be able to unite the people so the United States won’t degrade.  After all, what people need most are security and wealth building opportunities, because these things will improve people lives.

China’s Aircraft Carrier Entered Tartus To Support Russia and Iran In Syrian Force Building

Something big is happening under the surface, but we have no idea what is going on.  Basically, security-intelligence.org’s article “DEBKAfile Exclusive Report: A Chinese aircraft carrier docks at Tartus to support Russian-Iranian military buildup” suggests that China’s aircraft carrier Liaoning has docked at Syrian port Tartus to back the Russians up on building up forces in Syria for fighting against ISIS.  I’m not very well informed with the Middle East and Syria situations at all, but this news tells me that united force building of Russia, China, and Iran in this region prepares for something big.  Perhaps, fighting ISIS is only a piece of the puzzle, because ISIS isn’t strong enough to encourage China, Russia and Iran to combine forces and take actions in this region.  Without China in the picture, I think the overall picture of the Syrian conflict was murky but somewhat clearer than how it’s now.  Meanwhile, China is cooperating with the United States in boosting trades and agreeing on cyber security.  Nonetheless, geopolitically, China is helping out Russia and Iran in securing Bashar Assad’s power in Syria.

United States’ Stock Market Plunged Triple Digits In Past Two Days, Fears Are In The Driver Seat

I don’t play stock anymore, because I’m suck at it.  United States’ stock market plunged a thousand points, more or less, since last Friday and this Monday, and the whole market looks incredibly shaky now.  Nonetheless, I remembered how we complained the market was so unregulated in 2008 or so in which contributed to subprime crisis that spilled into the whole market, but now we are complaining that the market is being controlled by China which may contribute to the plunging of stock markets around the world.  I’m wondering, which method is the correct method to let the market runs wild?

If you have followed the news, China’s stock market has been hammered very badly by selling, and so people suggest that the fear in China’s stock market has spread to the United States and elsewhere.  This certainly has some truth, I think.  After all, if people invest in China as the stock market there is plunging, it’s understandable that they may sell in the United States to recover some physical assets such as Dollar.  Nonetheless, this may not be true since nobody would know how China’s stock market gone wrong would really affect the United States.  It’s curious to me to see China’s stock market is affecting the United States’ stock market too.

There is another argument which proposes that China’s Yuan devaluation contributes to the stock market plunge in the United States, because United States’ corporations and companies would be less competitive in China, elsewhere, and at home, thus contributing to the selling of shares in the United States’ stock market.  Nonetheless, nobody would know how much fear would be driven by Yuan devaluation.  Thus, it is curious to me to see people are selling shares in the United States as China devalued Yuan down to 4%, more or less.

Of course, people may think Yuan devaluation would not allow the FED to raise interest rate, and so it would be super bad to see the FED may raise interest rate.  I think this may have some effects on how people manage their shares in the United States’ stock market.  Nonetheless, the general public isn’t too sure about when the FED would raise interest rate, but the FED had said that they want to raise interest rate.  Perhaps I’m missing on reading several news articles or so, because I didn’t see the FED had come out to calm the stock market down in term of relieving the fear of interest rate raising.

The stock markets around the world are evermore interconnected somehow, and I don’t really know how one country’s stock market could affect another, but I guess it’s all about the economic conditions that drive the fears, speculations, and so on.  We are living in an interesting decade as not only economic conditions are the fears but we also have around the world, small scale conflicts that may spill into much bigger conflicts kind of fear.  Furthermore, we have oil prices which has plunged below $40 per barrel.  The near term outlooks of the stock market and world economy are not really that optimistic.  I guess we will see more actions coming soon in coming days.

Dr. Ron Paul On China’s Currency Devaluation And Currency War

Dr. Ron Paul warns more bad time to come as China is now beginning to participate in currency war.  Today, as it’s happening now, China devalues its currency to 1.9% weaker than the pegged Dollar (USA) (according to WSJ).  Market in the USA goes negative, and the world is actively watching China’s movements.  Dr. Ron Paul thinks what China is doing cannot solve China’s slow down in the long run, because the market eventually will force other countries to do the same thing which negates the benefits of what China is doing now.  Since China is devaluing its currency as we speak, can the FED in USA be able to raise interest rate?  Is China sending a message to the IMF and USA for not including China’s Yuan in SDR basket thus far?  How far China will devalue her currency?  Anyhow, check out Dr. Ron Paul’s message on China’s currency devaluation in the video right after the break.  Enjoy!!!