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The Chinese currency is down, reaching its lowest level in 10 years against the US dollar. You might think it's absurd, but it's very important to all of us. This is bad news everywhere.
First, it will bother Donald Trump. He may know a lot about real estate, enjoys a unique communion with the American people and has a mystical understanding of the woman, but he knows little about the economy. As he always does, he will accuse the Chinese authorities of "manipulating" their currency downward. What he understands is to make Chinese exports more competitive and expand America's trade deficit with the People's Republic. To be fair, it was a Beijing habit in the past; but that's not why the money is being sold.
The reason why the yuan is now being dumped is that investors are worried about a trade war between America and China, a war triggered by Trump.
This means, like all trade wars, that both sides will lose and the wider world economy too, while orders are being lost and consumers and businesses around the world are paying higher prices for goods and raw materials – or are suffering from "dumping" of exports formerly destined for America, which must now be sold hastily. But all these beautiful Apple gadgets manufactured in gigantic sheds in China will be more expensive than they would otherwise be for American buyers, for example.
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Coca-Cola paid £ 3.9 billion for Costa coffee. A coffee chain is a new venture for the global soft drinks giant
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A funeral procession for payday loans took place in London on September 2nd. The future of payday lenders is uncertain after Wonga, the largest in Britain, was administered on August 30th.
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Elon Musk concluded that Tesla would remain public. Investors and company executives were unhappy that Musk unexpectedly tweeted that he was considering privatizing Tesla and that stock prices had dropped in the following weeks.
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On July 5, 2018, Jaguar Land Rover, the iconic British automaker, had warned that a "bad" Brexit deal could jeopardize the planned investment of more than $ 100 billion, thus increasing business pressure as the government embarks on crucial negotiations.
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Spotify was publicly traded for the first time on the NYSE on Tuesday. However, the company does not issue shares but rather shares held by Spotify's private investors that will be sold.
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The deadline for awarding a blue British passport manufacturing contract after Brexit has been extended by two weeks as a result of a request from the Bidder De La Rue. This decision comes after the anger provoked by the announcement of the announcement of British passports by the French-Dutch company Gemalto when the contract of De La Rue will end in July.
The UK company said that Gemalto was chosen solely because the competition was lower than the competition, but the UK company also admitted that it was not the cheapest choice in the call process of & # 39; # 39; offers.
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Phillip Rasmussen, chief financial officer of the technology company IQE, was killed in an accident during his vacation this weekend. The company confirmed that the 47-year-old man had died while cycling in Menorca. A 25-year-old American was arrested for drunk driving after failing a roadside breathing test.
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The Beast from East received £ 4 million from Flybe's earnings due to flight cancellations, airport closures and delays, according to estimates by the low-cost airline. Flybe has announced that it has canceled 994 flights between March 31 and March 31, compared with 372 during the same period last year.
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Coca-Cola paid £ 3.9 billion for Costa coffee. A coffee chain is a new venture for the global soft drinks giant
Pennsylvania
2/8
A funeral procession for payday loans took place in London on September 2nd. The future of payday lenders is uncertain after Wonga, the largest in Britain, was administered on August 30th.
Pennsylvania
3/8
Elon Musk concluded that Tesla would remain public. Investors and company executives were unhappy that Musk unexpectedly tweeted that he was considering privatizing Tesla and that stock prices had dropped in the following weeks.
Getty
4/8
On July 5, 2018, Jaguar Land Rover, the iconic British automaker, had warned that a "bad" Brexit deal could jeopardize the planned investment of more than $ 100 billion, thus increasing business pressure as the government embarks on crucial negotiations.
AFP / Getty
5/8
Spotify was publicly traded for the first time on the NYSE on Tuesday. However, the company does not issue shares but rather shares held by Spotify's private investors that will be sold.
AFP / Getty
6/8
The deadline for awarding a blue British passport manufacturing contract after Brexit has been extended by two weeks as a result of a request from the Bidder De La Rue. This decision comes after the anger provoked by the announcement of the announcement of British passports by the French-Dutch company Gemalto when the contract of De La Rue will end in July.
The UK company said that Gemalto was chosen solely because the competition was lower than the competition, but the UK company also admitted that it was not the cheapest choice in the call process of & # 39; # 39; offers.
7/8
Phillip Rasmussen, chief financial officer of the technology company IQE, was killed in an accident during his vacation this weekend. The company confirmed that the 47-year-old man had died while cycling in Menorca. A 25-year-old American was arrested for drunk driving after failing a roadside breathing test.
8/8
The Beast from East received £ 4 million from Flybe's earnings due to flight cancellations, airport closures and delays, according to estimates by the low-cost airline. Flybe has announced that it has canceled 994 flights between March 31 and March 31, compared with 372 during the same period last year.
If Trump's response is to intensify his trade war with China, he will then create a vicious circle, and the end of this war should worry the White House and the American people. He can not accept the basic truth about China. that is, it makes things very cheap because it has a large, low-wage workforce and has invested in the manufacturing sector. It's as simple as that. There is no perverse plot. They are simply better at making America's Great America t-shirts, steel and baseball caps than their American counterparts.
China has its own weapons in this fall – the equivalent of nuclear weapons in economic terms. China holds about $ 1.2 trillion worth of US government bonds. It's there that they have hidden all the trade surpluses accumulated with Americans over a quarter of a century.
Imagine if they decided to sell them on the bond market. Huge disruptions – and a global economic shock. Or even to shoot them in an orderly fashion. The result would be higher interest rates hitting the US economy, whether Trump likes it or not. It would stifle American growth and could even push it into recession. The dollar would be devalued as never before – which would help the US trade position and exports, but would also cause a surge in US inflation and a compression of living standards. The people in Trump's heart would feel poorer and poorer.
Imagine if a sustained and aggressive Chinese counterattack of the US economy made Trump lose the next election. And this is in addition to the slowdown already caused by the trade wars and the nervousness that has hit the global stock markets. All this concerns everyone in Europe too.
By the way, in this context, no one cares much about Brexit, if only a small symptom of a worldwide trend – from Sweden to Brazil – to extremism and economic irrationality.
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Perhaps eccentrically, I keep a 1-yuan coin on my keyboard to remind me that it's the most important currency in the world. Not as widely traded as the dollar, nor used as the default reserve currency – America remains the largest economy in the world, when all is said. But the fortune of the yuan or the renminbi (the "people's currency", as it is sometimes called), matters a lot, because China is a very important player nowadays. It is a country with reserves, with trade surpluses, which buys assets from farms and mines in Africa to real estate in London and New York.
They are the only other world superpower, because unlike Russia, they have the industrial and commercial weight to stand on a level playing field with the United States, while possessing a nuclear arsenal and armed forces. about 2.3 million. Any kind of war with China would be hard to win.
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