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China Moves to Stabilize Currency, Retreating From Effort to Ease Control by Keith Bradsher. NYT | DealBook - May 26, 2017
HONG KONG — China has made a big show of gradually loosening its grip on the value of its currency, an effort meant to mollify critics like President Trump
and experts both inside and outside the country who have long urged
Beijing to let markets fix worsening financial problems in the world’s
Late Friday afternoon, however, the Chinese government said, in effect, “never mind.”
officials said they were “considering” a change in their procedures
that would reinforce their control of the currency, a turn of phrase
that suggested the change had already been approved. The move will
essentially bring more short-term stability to China’s financial system,
already the subject of renewed focus after Moody’s Investors Service downgraded its credit rating on China’s bonds on Wednesday, citing the country’s mounting debt.
longer term, the currency move signals that China is retreating from
promises it made to the world in recent years that it would open up its
financial system — and many economists say China needs to open up its
financial system if it wants to continue to grow at a healthy,
China Foreign Exchange Trade System, which is controlled by the central
bank, said it may change the way it sets a value each morning around
which the country’s currency, the renminbi, is allowed to fluctuate
through the day.
weekday, the government sets a benchmark value for the renminbi against
what is supposed to be a basket of currencies, although the dollar
dominates. The renminbi is then allowed to rise or fall in value only 2 percent from the benchmark during the day.
Friday, the government said it was considering introducing a
“countercyclical variable.” A better name might have been “fudge
factor.” Basically it means that the government will no longer have to
follow the previous day’s closing price in setting that day’s benchmark.
Starting in the summer of 2015, when China’s stock market crashed and when Beijing shocked the world by abruptly weakening its currency,
a lot of money left China. Many in China did not want to hold stocks,
bonds or other assets in a currency that was losing value in the broader
In response, Beijing tightened its already considerable limits on money leaving the country. Still, the potential for the currency to weaken further, amid doubts over China’s debt woes and slowing growth, has lingered over markets.
financial regulators generally do not announce they are considering a
shift in something as essential as the value of the currency unless they
have already approved it, so the announcement on Friday was widely
viewed as a signal to financial institutions, corporations and investors
that change was on the way.
Who Wins and Who Loses?
Chinese government contends that the winners are Chinese companies and
households. Their assets are less likely to rise and fall quickly in
value because of whatever is happening in financial markets. The Trump
administration also will likely be pleased, because although it amounts
to Chinese currency manipulation, it will keep China’s currency from
weakening. If the renminbi weakened further, it could help Chinese
exporters at the expense of American manufacturers.
longer term, the change marks a big step back from China’s goal of
turning the renminbi into an international currency like the dollar and
the euro. Global investors want their currencies to move predictably
along with financial markets, not based on decisions made behind closed
doors in Beijing.
broadly, it signals that China isn’t in a hurry to lower its financial
barriers with the rest of the world. Those barriers create long-term
imbalances that could rattle the global economy if they become severe
Is China Breaking Commitments?
China loosened currency trading to woo the International Monetary Fund,
which rewarded Beijing in the fall of 2015 by agreeing to add the renminbi
to a group of currencies that includes the American dollar. The
renminbi actually joined the I.M.F.’s elite club of currencies last
fall, giving the Chinese currency more credibility.
the I.M.F. is unlikely to get upset with China. Its general stance has
been that China is now such a big part of the world economy, and
particularly of global trade, that to ignore its currency would be a
By Joseph Marks 13-17 minutes THE KEY President Trump delivers an address about border security amid a partial government shutdown on Jan. 8. (Carolyn Kaster/AP) The partial government shutdown that's now in its 18th day is putting key cyber policy priorities on hold and leaving vital operations to a bare bones staff. But the far greater long-term danger may be the blow to government cyber defenders' morale, former officials warn. With the prospect of better pay and greater job security in the private sector, more government cyber operators are likely to decamp to industry, those former officials tell me, and the smartest cybersecurity graduates will look to industry rather than government to hone their skills. That’s especially dangerous, they say, considering the government’s struggle to recruit and retain skilled workers amid a nationwide shortage of cybersecurity talent. About 20 percent of staffers are furloughed at the De
washingtonpost.com By James Hohmann _________________________________________________________________________________ President Trump and Chinese President Xi Jinping visit the Great Hall of the People in Beijing last November. (Andrew Harnik/AP) With Breanne Deppisch and Joanie Greve THE BIG IDEA: If Democrats win the House in two weeks, it’s a safe bet that one of the oversight hearings they schedule for early next year would focus on President Trump’s use of unsecured cellphones. The matter would not likely be pursued with anywhere near the gusto that congressional Republicans investigated Hillary Clinton’s use of a private email server during her time as secretary of state. Leaders of the minority party have higher priorities . But Democratic lawmakers made clear Thursday morning that they will not ignore a New York Times report that Trump has refused to stop using iPhones in the White House, despite repeated warnings from U.S. intelligence offici
Morning Market Briefing Thu May 13 09:01 2010 Commentary May 13, 2010 Stocks Poised For Lackluster Open Amid Mixed Market Sentiment - U.S. Commentary Stocks are on pace for a mixed start to Thursday's session, as a mostly upbeat jobs report continued to relieve the markets while some consternation regarding the European debt crisis remained on traders' minds. The major index futures are little changed, with the Dow futures down by 4 points. Full Article Economic News May 13, 2010 Weekly Jobless Claims Edge Down To 444,000 First-time claims for unemployment benefits showed another modest decrease in the week ended May 8th, according to a report released by the Labor Department on Thursday, although the number of claims exceeded estimates due to an upward revision to the previous week's data. Full Article May 13, 2010 Malaysia's Decade High Growth Triggers Policy Tightening Malaysia's economy grew at the fastest pace in a decade in