Why China Manipulates Its Currency

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Over the last few years, economists have talked a lot about China's currency manipulation. Using simple terms and informative charts, this presentation explains how and why the world's second largest economy does so.

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  • That's nothing new here. The Yanks had been doing it for years way before China even opened up for foreign trade!! The U.S $ domination/ manipulation was the exact reason that started the Gulf War.
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  • My Dear I agree with you concerning your age and experience. In real life what people say about something or somebody is very often the contrary of the reality.
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  • @davidzayanakabumvunzu Seems we are both cynics, an attribute that comes with age. I agree David
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  • Let us be honest and realistic. To manipulate is to control something or somebody cleverly or deviously. Different life aspects(politics, elections, religions, race & domination concepts, human relationships, science, spying, media,etc) are polluted by the manipulation.The Bible says:.That means what you think of somebody it's what you are, We all heard about HIV as illness. For this word, some scientists got the Nobel Prize.
    Two years ago in South Africa during a Conference, it was asked to scientists(including those who won this highest price) to demonstrate the real existence of the so-called virus. No one is able to say YES or NO, even these US scientists who have announced for the first time the virus existence. It was a manipulation in order to justify the enormous governmental fund. Sometimes, Eastern, Northerner and Westerner countries use it.
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  • Well, to me this all looks like heading - at an ever increasing speed - to a climax.
    I wonder what the world will be like after.
    Hidde from Uganda Martyrs University
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Why China Manipulates Its Currency

  1. WHY MANIPULATES THE YUAN CHINA
  2. China is a CURRENCY MANIPULATOR.
  3. This isn’t an INDICTMENT.
  4. It’s a FACT.
  5. 1970 1975 1980 1985 1990 1995 2000 2005 2010 Here’s the real PURCHASING POWER of the Yuan vs. the Dollar… Source: Federal Reserve
  6. 1970 1975 1980 1985 1990 1995 2000 2005 2010Source: Federal Reserve
  7. This isn’t a MISTAKE
  8. Over the last 4 decades, China has INTENTIONALLY DEVALUED the Yuan
  9. Its central bank PRINTS YUAN.
  10. Then uses it to BUY U.S. DOLLARS.
  11. This increases the SUPPLY of Yuan in currency markets... (which DECREASES the price of a Yuan.)
  12. …and increases the DEMAND for U.S. Dollars. (which INCREASES the price of a Dollar.)
  13. This means that China owns A LOT OF DOLLARS
  14. 1981 1986 1991 1996 2001 2006 2011 Source: Federal Reserve
  15. 1981 1986 1991 1996 2001 2006 2011 $5 billion $3.8 trillion Source: Federal Reserve
  16. In the process, China has become the world’s largest holder of foreign exchange reserves.
  17. By a LONG WAY…
  18. $510 Billion $536 Billion $727 Billion $772 Billion $1,277 Billion $3,820 Billion Russia Switzerland Saudi Arabia Eurozone Japan China Source: Wikipedia Foreign Exchange Reserves
  19. Why does China do this???
  20. China’s economy is based on EXPORTS.
  21. And it sells more exports if the Yuan is cheap.
  22. It’s the reason you can buy a Teenage Mutant Ninja Turtles “Combat Shell” for only $11.39 from Target.* *This example is provided for illustrative purposes only. Source: Target.com
  23. Which is a good deal when you consider…
  24. It looks “just like a Ninja Turtle’s shell.” And showcases your “fiercest ninja moves.” Has room to fit “ninja combat gear weapons.” Source: Target.com
  25. An artificially cheap Yuan is also one of the main reasons that China’s GDP has done this…
  26. 1960 1970 1980 1990 2000 2010 $61 billion $7.3 trillion Source: Federal Reserve China’s GDP in current U.S. dollars…
  27. So, why does China manipulate the Yuan?
  28. It does so to BOOST EXPORTS.
  29. Which, in turn, FUELS ECONOMIC GROWTH.
  30. It’s really as simple as that!
  31. To download The Motley Fool’s FREE REPORT about how America could topple China’s manufacturing monopoly and make the world’s smartest investors RIDICULOUSLY RICH. CLICK HERE
  32. Techin24/iStock/Thinkstock Liang Zhang/iStock/Thinkstock Nebojza/iStock/Thinkstock SeanPavonePhoto/iStock/Thinkstock Henry Gan/Photodisc/Thinkstock Photo credits…

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