“Twitter president” Donald Trump drew in voters with his China bashing campaign, claiming that “China is the largest currency manipulator on the planet.” Trump’s impending presidency seems to mean that a Sino-US trade war is approaching. China’s Deputy Minister of Finance Zhu Guangyao recently stated that the implementation of full cooperation is the only strategic choice for the two countries. As such, Trump’s administration should abandon its zero-sum game.
The exchange rate of the Chinese yuan has been continuously and heatedly debated over the past year. As the yuan exchange rate against the greenback approaches the psychological 7.0 threshold, people have become increasingly focused on whether the yuan’s gradual devaluation is sustainable and whether China should allow a free float of the yuan.
A Chinese consortium led by three Chinese exchanges is slated to acquire a 40 percent stake in the Pakistan Stock Exchange (PSX) for 28 rupees ($0.27) per share, valuing the stake at 8.96 billion rupees. The three exchanges – China Financial Futures Exchange, Shanghai Stock Exchange and Shenzhen Stock Exchange – will take a combined 30 percent, while the remaining 10 percent will be halved between their local partners – Pak-China Investment Company and Habib Bank.
As such, more efforts need to be made to facilitate market communication and effectively guide market expectations, while gradually improving the yuan’s daily fixing rate mechanism. As China’s foreign exchange reserves have shrunk by 25 percent this year, it’s also of vital importance that the monetary authority comes up with solutions to reduce the consumption of foreign exchange reserves, seek steady measures in the opening-up of its capital accounts and reduce market intervention to achieve market clearing in the foreign exchange market, so as to fundamentally attest to the belief that “there’s no basis for continued depreciation of the Chinese currency.”
If that is the case, Chinese brands might lead the way in setting smart home trends, an achievement that would be a testament to the country’s emergence as an innovative powerhouse.
But is a development gap a guarantee of potential? If it is, why have countries that are less developed than China not been able to exceed China’s development over the years? My latest research has shown that only 10-20 countries, among which include ones in East Asia and Europe, have truly achieved catch-up growth since World War II. China today meets those basic common characteristics that are required of being a catch-up economy.
China needs to value its manufacturing industry more than ever and work to consolidate the country’s manufacturing foundation. Otherwise China will risk hollowing out its real economy before it grows strong enough.
It seems that only large Malaysian enterprises that have links with their Chinese counterparts stand to make gains. If this practice continues, local fervency toward Chinese investment will fade.
As IPR awareness in Chinese firms grows, the companies have a vested interest in respecting and asserting IPR. Such a tendency will likely reinforce IPR protection and enforcement in China, and will benefit both domestic and international firms.
China should adapt to the changing situation. It is time for Chinese authorities and policymakers to reduce the tax burden on businesses without increasing fiscal deficits or debt levels, and kick off a tax regime reform to make it reflect the market more. Since there is room for reducing the high level of labor taxes and turnover taxes, this could be a clue as to where a breakthrough in tax reform can be made.
With the global economy and trade still sluggish, the RCEP’s finalization in the shortest possible period of time would convey a positive signal that trade liberalization will continue. But it can’t be said it will supplant the TPP.
The legal setbacks Chinese smartphone manufacturers have experienced are partly due to their lack of patent awareness.
This is also why governments and international organizations tend to offer direct food aid instead of engaging in value-added agricultural cooperation.
The impact of a strengthening US dollar is being felt equally across the globe. The forecast that China would be the worst hit is outright nonsense.
Even if the yuan breaks the 7 mark against the dollar, there is no need to panic. The lifeline of the yuan’s exchange rate lies in China’s economic fundamentals which remain intact. As long as China works to bolster its real economy, upgrade its manufacturing industry and properly control capital outflows, its economy will stabilize with an “L-shaped” growth trajectory and the yuan will not tumble. Even if the yuan rate fluctuates, China has the capacity and resources to keep it stable. Deliberately reigning in a further fall will only backfire.
In following the market economy path, China has become the forerunner of global trade. Developing a market-based economy is at the centerpiece of China’s economic reform and the country should stick to its agenda.
China’s stock market is never short of liquidity. Enormous accumulations of private capital have made each round of the “Chinese-style” bull market much more relentless than overseas markets. The most significant strategic importance of the Shenzhen-Hong Kong Stock Connect by no means lies in promoting capital inflows into the A-share market that is already associated with big fluctuations, but in the yuan’s internationalization, especially as the Chinese currency faces challenges in its exchange rate and interest rate.
There are a number of reasons which lead us to believe that inflation will rise to 2.5 percent next year. The rebound in inflation will probably impact monetary policy, which might shift to neutral next year.