Quote:
Originally Posted by FogCityM3
China is in the midst of attempting a "controlled" devaluation relative to the currency it soft pegs, the US dollar. Also buying US dollars only serves to increase the value of the dollar relative to all global currency which isn't something they want.
China has very large problems including constantly intervening in markets, lack of transparency and regulation in a corrupt financial system, lack of true property ownership (all land is leased for 100 yrs from the govt), an economy whose growth is heavily dependent upon infrastructure spending that is wasting resources, lack of a true global and free floating currency, large wealth and social imbalances, demographics that are aging (population will decline) and is dependent upon the US, Asian and European consumers to keep the export machine going.
Capital controls are in place to prevent an accelerating wave of money attempting to flee the country and investing in the US and Canada, including real estate in cities on the West coast and NY metro area.
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Correct. China wants to strengthen our dollar because it owns trillions in US government bonds. Our dollar goes up, the value of those bonds goes up.