Xi Wants Strong Yuan in Push to Make China a 'Financial Power'(bloomberg.com)
bloomberg.com
Xi Wants Strong Yuan in Push to Make China a 'Financial Power'
https://www.bloomberg.com/news/articles/2024-01-16/xi-wants-strong-yuan-in-push-to-make-china-a-financial-power
1 comments
Mostly agree with this. Would also financial freedom/transferability also plays a part... to have a "reserve" currency, assets denominated in that currency should be easily exchangeable. If you're hotel california - you can only buy into a currency / not sell, makes it harder to have your currency accepted by others.
"of course you can have this fine oil, but I am only going to accept Rupees if you let me spend it on your vast array of Indian made 155mm cannon shells and electronics which the Americans don't want me to buy"
Rubles were for a long time, worth a lot more than the pound. Didn't mean people wanted to trade in roubles, and a lot of Russian trade was barter to avoid the currency shennanigans. I mean back to Tsarist days, a rouble was worth a LOT of gold.
So have a weaker currency. You can export shitloads of goods and services but you have to cover the pain of dealing with forex, on the other hand your factories and mines are busy. You can't buy as much crap overseas, but if you are the factory for the world, it's not such a bum deal. Anyway your diaspora loves aunty and will send baby formula home in bulk for you, and dropship in reverse all those cool western toys.
Xi needs to decide what he really wants. Because what his people want is consumer goods, a good house, some certainty in the future around their declining years and a lack of political tension.
PS, wars are sometimes counterfactual to currency strength. If you're willing to peg your currency you can have a strong currency and bomb the living bejesus out of neighbours. And, you can still make those bombs if you have a weak currency. So this doesn't have to affect your military posture.
"it depends"
[not an economist. please, roll in here and correct me]