China fatigued by debt as flexible yuan turns 10

July 21, 2015

The world’s economic growth engine abandoned the dollar peg a decade ago. Beijing may have given up on a cheap yuan, but its pro-market resolve is in doubt. And while the People’s Republic’s debt-creating trade surplus has shrunk, domestic leverage is rising at a worrying pace.

Fed policy creates crunch moment for Chinese yuan

August 11, 2011

China’s suppression of its currency creates more problems than benefits. The U.S. Federal Reserve’s pledge to keep rates near zero for the next two years provides the perfect reason to do something about it. The yuan’s rise in the last three days sets the right tone.

Wen paves way for yuan depreciation

November 21, 2011

China’s premier said the currency should be more flexible “in either direction”. The idea of devaluation might sound strange, but the Chinese trade surplus is shrinking and inflation is cutting into the yuan’s real value. This could be a good time to let the market decide.

Beijing will face fresh yuan dilemma

December 30, 2011

The yuan’s six-year rise is likely to end, if not reverse, in 2012. The trade surplus is shrinking, inflation has eroded the currency’s real value and foreign investors are selling. But the U.S. still wants a revaluation. That would only increase the chance of a hard landing.

China’s march to currency dominance just got longer

March 1, 2012

When the yuan looked bound to rise, investors abroad were desperate to hold it. That boosted the currency’s global profile. Now expectations have changed, and yuan deposits in Hong Kong have fallen 8 percent in two months. There are no short cuts to displacing the dollar.

China’s trade deficit is sign of things to come

March 12, 2012

Unusually poor demand from Europe and extraordinary purchases of copper and soybeans helped create a rare $4.2 bln trade deficit in the first two months of 2012. But as China imports less to process for export and more to consume, monthly deficits will get more frequent.

Freer yuan sends the right message

April 17, 2012

Widening the Chinese currency’s trading band will make the central bank’s life easier, and greater volatility should deter foreign inflows. A more hands-off approach should also pacify trade partners. It’s a small but decisive step that shows deeper reform is still on the agenda.

Iran’s yuan oil payments won’t catch on, yet

May 9, 2012

Sanctions have pushed the Islamic Republic to accept part-payment in the Chinese currency. While the yuan may play a big role in crude settlements by the end of the decade, trading restrictions and Gulf politics suggest Iran’s shift won’t be the catalyst for broader acceptance.

Hong Kong’s yuan IPO buyers should heed history

April 26, 2011

China likes financial experiments, but they don't all end in success. The latest yuan innovation may be one of them.

China FX swap may blur Bank of England mandate

January 28, 2013

The central bank is under pressure to set up a swap facility with its Chinese counterpart. Doing so would boost renminbi trading in London. But the BOE’s main concern should be financial stability, not the City’s competitiveness. Confusing the two would be a mistake.