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Old 25-11-13   #1
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Chinese Imports to Get Costlier




"Made in China" goods are not exactly as cheap as they used to be a few years back and it looks like all is set for Chinese goods to become more expensive in 2014.

One of the reasons why Chinese goods are cheap is because the Chinese government artificially suppresses the value of the Yuan. They do this by buying U.S dollars, other foreign currencies and debt that limit the yuan's appreciation.

Last week The People’s Bank of China announced that the it doesn't benefit the country to increase its foreign-currency holdings.

"It's no longer in China's favour to accumulate foreign-exchange reserves," Yi Gang, a deputy governor at the central bank, said on Wednesday. Bank governor Zhou Xiaochuan had earlier said it would "basically" end normal intervention in the currency market and broaden the yuan's daily trading range.Neither Yi nor Zhou gave a timeframe for any changes but I expect this to start in the coming months.

Yi, who is also the head of the State Administration of Foreign Exchange, said the yuan's appreciation benefited more people on the mainland than it hurt.

China’s foreign-exchange reserves surged $166 billion in the third quarter 2013 to a record $3.66 trillion, more than triple those of any other country and bigger than the gross domestic product of Germany, Europe’s largest economy. However even with this intervention the yuan has appreciated 2.3 per cent against the dollar this year.

As most gadgets and computers are made in China, the prices of these look set to rise sharply in 2014 with all the supply chain costs increasing as well. The only thing that could help is if the Dollar declines against the Rupee as well.

More : PBOC Says No Longer in China’s Interest to Increase Reserves
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Old 25-11-13   #2
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Re: Chinese Imports to Get Costlier

Suddenly, China loses interest in US currency. Great!
Now we're gonna hit another inflation milestone :|
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Old 25-11-13   #3
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Re: Chinese Imports to Get Costlier

^^ The thing is that the low prices of Chinese goods are unrealistic and unsustainable. It had to come to an end someday. Even we cant go on importing without exporting in return. The Yuan appreciating is in best interest of everyone in the long term. This will give a boost to domestic production.
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Old 25-11-13   #4
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Re: Chinese Imports to Get Costlier

China is protecting itself !!
Coz Dollar is rising in value again after many years and so Yan has started hurting !

Start to think like grown ups guys and stop beginning to like the media reports !

China also has relaxed its ONE child policy as the whole country is ALREADY old or GETTING old !!

do not compare this to the dollar equation !
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Old 25-11-13   #5
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Re: Chinese Imports to Get Costlier

Now , these shit Indian Mobile Phone companies will have to raise prices, no one will buy them anymore
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Old 26-11-13   #6
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Originally Posted by vijayninel View Post
^^ The thing is that the low prices of Chinese goods are unrealistic and unsustainable. It had to come to an end someday. Even we cant go on importing without exporting in return. The Yuan appreciating is in best interest of everyone in the long term. This will give a boost to domestic production.
I agree
A country where exports almost make up 1/3rd of the annual GDP, a stronger Yuan would just decrease it, and somehow increase the domestic productivity.
But i don't know how a stronger Yuan would benefit us Indians, from an indian's POV.
If everybody starts making their currency stronger, joining US, Japan and now China, i dunno what's gonna happen..

Just like Manish da said, China is protecting itself, again, by making as much money it can without caring for the future.
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Old 26-11-13   #7
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Re: Chinese Imports to Get Costlier

Originally Posted by prateekS View Post
Now , these shit Indian Mobile Phone companies will have to raise prices, no one will buy them anymore
Lol. Thats the 1st thing that came to my mind too.
They'll all go out of business. :victory:
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