(September 4, 2012, New York) For so long a thorn in the side of China's trade partners, the yuan now appears to be not only China's currency but China's problem too. Driven by fears of a bumpy economic landing, the yuan is now clearly in a two-way market, being roughly flat over the past year against the dollar and with forward delivery markets discounting a loss in the coming 12 months. This has radically changed psychology about the yuan, both in China and abroad, and has greatly complicated the job of the People's Bank of China of mitigating the impact of the global softening in economic growth. This issue will be discussed at China Leaders Forum 2012, "Will the Chinese Tiger Come Roaring Back After the Crisis?", October 2nd, New York City.
For years, starting in 2005, the yuan was one of the surest things in financial markets, marching seemingly ever upwards against the dollar after China allowed it to begin appreciating after keeping it artificially cheap. That rise was driven by fundamentals -- strong growth in exports and foreign direct investment, as well as by the psychology that always attends hot assets.
That has clearly changed, and the change, once struck, poses problems for easing the impact on China of its slowdown. It may also, if it lasts, fundamentally recast global financial market patterns.
China's second-quarter balance of payments recorded a net outflow of $71 billion in the capital and financial accounts, against a near $60 billion inflow in the current account. Export growth, for so long booming, is now flagging, with June showing only a small increase on the year before.
That means slower growth in the PBOC's reserves, which are growing at about a 2.5 percent clip, and which even conceivably could begin to shrink. Also, as reserve growth is de facto monetary stimulation, any fall in the PBOC balance sheet, driven by hot money flow or any other source, would come at a bad time, tightening just as China grapples with what is, for it, a very hard landing.
Trouble shared, trouble halved? As it will be discussed at China Leaders Forum 2012, "Will the Chinese Tiger Come Roaring Back After the Crisis?", New York, October 2nd (http://www.ChinaLeadersForum.com), the impact of a weakening or even two-way yuan is mixed, with costs and benefits strewn around the world. Trade partners won't welcome it, especially at a time of generalized fierce competition for exports as China's main competitors seek to earn their way out of their accumulated debts.
China Leaders Forum 2012, "Will the Chinese Tiger Come Roaring Back After the Crisis?", October 2nd, New York City, will provide attendees with the responses to the above-mentioned questions and the most up-to-date review of where the Asian giant stands and the challenges and opportunities for businessmen looking to expand their business with China when others only see growth contraction. Topics that China Leaders Forum 2012 will discuss include:
· Internationalization of the Renminbi
· Post- crisis relationship between US and China
· The Euro Debt Crisis and How it will Affect the Chinese Economy
· China's Investments in Europe: To Save or Not to Save the Euro?
· What steps China will need to perform in order to maintain its growth and success?
Recognized experts, regulators, and strategists, will return to China Leaders Forum 2012 in its fourth edition to provide the information practitioners are looking for in an open and unbiased environment, highly conducive to the most efficient and effective networking.
China Leaders Forum 2012 is produced by Golden Networking (http://www.goldennetworking.net), the premier networking community for business executives, entrepreneurs and investors. Panelists, speakers and sponsors are invited to contact Golden Networking by sending an email to email@example.com.