The Cover Pic Indicator
The world economy
Stuck in the middle
Emerging markets are being squeezed by America’s recovery and China’s slowdown
Aug 15th 2015
China’s delusions of regional hegemony
Other Asian states want to squash Beijing’s leadership ambitions, writes Philip Bowring
We the People of Europe
Laszlo Bruszt, David Stark
AUG 11, 2015 .
China Yuan Fall Won’t Ease Pressure on Economy
Beijing’s delicate currency adjustment leaves a great deal of room for things to go wrong
By Aaron Back
Shockwaves from China’s yuan devaluation will be felt by all kinds of investors, and will likely prompt questions from U.S. politicians. Heard on the Street’s Aaron Back and Abheek Bhattacharya discuss. Photo: Reuters
Beijing is hoping that a more flexible currency will help stabilize China’s sputtering economy. But this monetary high-wire act carries enormous risk.
In a shock move, China on Tuesday set the yuan’s central parity, the rate around which it is permitted to trade against the U.S. dollar, 2% lower. The People’s Bank of China also said it will base the daily rate more on market conditions, a heavy hint that the currency will be allowed to fall further.
This will take some pressure off Chinese exporters. The yuan has been basically fixed against the U.S. dollar since March, but it has appreciated against other global currencies, eroding competitiveness.
Chinese imports have been even weaker than exports, though, largely due to falling commodity prices. As a result, China’s trade surplus in the first seven months of the year actually doubled, to $306 billion. This suggests the trade balance wasn’t the primary motive for the currency move.
August 10, 2015 5:38 am
US consumers are less healthy than investors hope
Rise in spending unlikely as wage inflation fails to take hold
THE CRASH OF 2016