http://www.forexconspiracyreport.com/slower-chinese-growth-and-the-yuan/
Slower Chinese Growth and the Yuan
Markets are waking up to the fact that the near miraculous economic growth of China is coming to an end. ABC News reports that Asian stocks are down on China growth doubts.
China’s Shanghai Composite shed 1.3 percent to 3,637.21 and Japan’s Nikkei 225 dropped 0.2 percent to 19,718.56. South Korea’s Kospi lost 0.1 percent to 2,034.38. Hong Kong’s Hang Seng sank 0.6 percent to 24,351.20. Australia’s S&P/ASX 200 rose 0.2 percent to 5,965.10 but other regional markets were down including indexes in Taiwan, Malaysia and the Philippines.
CHINA WORRIES: China’s manufacturing fell to the lowest level in nearly a year as new orders shrank. HSBC’s preliminary manufacturing index based on a survey of factory purchasing managers dropped to an 11-month low of 49.2 in March, from February’s 50.7. The index is based on a 100-point scale on which numbers above 50 indicate expansion. China’s economy expanded 7.4 percent last year, its slowest pace in nearly a quarter century, and economists predict growth will slow further this year and the next.
As China’s economic growth slows to the lowest numbers in almost 25 years the question is, what about slower Chinese growth and the Yuan? Forex traders will want to follow events in China as its economy slows and its real estate bubble collapses.
Chinese Real Estate Bubble
According to the New York Times, things have gotten so bad in the Chinese real estate market that Chinese banks have provided a $16 billion credit line to prop up an endangered Chinese developer.
2. Markets are waking up to the
fact that the near miraculous
economic growth of China is
coming to an end.
3. ABC News reports that Asian
stocks are down on China
growth doubts.
4. Before We Continue…
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12. HSBC’s preliminary
manufacturing index based on
a survey of factory purchasing
managers dropped to an 11-
month low of 49.2 in March,
from February’s 50.7.
13. The index is based on a 100-
point scale on which numbers
above 50 indicate expansion.
14. China’s economy expanded 7.4
percent last year, its slowest
pace in nearly a quarter
century, and economists predict
growth will slow further this
year and the next.
15. As China’s economic growth
slows to the lowest numbers in
almost 25 years the question is,
what about slower Chinese
growth and the Yuan?
16. Forex traders will want to
follow events in China as its
economy slows and its real
estate bubble collapses.
18. According to the New York
Times, things have gotten so
bad in the Chinese real estate
market that Chinese banks have
provided a $16 billion credit
line to prop up an
endangered Chinese developer.
19. Chinese banks have extended
$16 billion in credit lines to
shore up one of the country’s
largest and most heavily
indebted home builders, as
pressure mounts on developers
short of cash in a slumping
property market.
20. The move by a group of mainly
state-run banks to bolster the
builder, Evergrande Real Estate
Group, which is controlled by
the billionaire Hui Ka Yan, is the
latest sign of tumult in China’s
sprawling housing sector.
21. Developers are rushing to
secure financial support as
sales volumes and housing
prices plunge, weighed down
by a growing overhang of
unsold homes.
22. The Kaisa Group, once a
favorite of foreign investors,
nearly defaulted on its offshore
debt this year before being
rescued by another developer.
23. China has been famous for its
ghost cities where developers
have built and investors have
purchased property only for
building after building after
mall to remain empty.
24. The bubble has begun to
deflate in the Chinese real
estate market and the
government is worried as
shown by the bailout of
Evergrande Real Estate Group.
25. Along with slower Chinese
economic growth the collapse
of real estate price will suck
equity out of the Chinese
economy and likely drive the
Yuan downward.
28. Bloomberg reports that China
would like the Yuan to be
the World’s 5th reserve
currency.
29. This will require that the
currency trade more freely with
other currencies and will attract
traders.
30. China is a step closer to
obtaining Special Drawing
Rights status for its currency
from the International Monetary
Fund, a move that would see
the yuan joining the greenback,
euro, yen and British pound.
31. At a forum on Sunday, central
bank Governor Zhou Xiaochuan
swapped the topic of a panel
discussion so he could pitch the
renminbi’s readiness for
reserve status to his co-
speaker, IMF Managing Director
Christine Lagarde.
32. Premier Li Keqiang told Lagarde
in a meeting Monday that China
hopes to get the IMF’s seal of
approval, according to the
government. It may have
worked.
33. China wants special drawing
rights to show that it has
arrived as a genuine world
leader
34. To reduce borrowing costs, to
increase the demand for Yuan
as an international currency
35. And to counter the dominance
of the US dollar which is
currently part of 85% of all
Forex trades.
36. If this comes to pass the Yuan
will be traded more heavily and
issues such as slower Chinese
growth and the yuan will
become major Forex issues.
