China happy yuan is appreciating

The paradox is when being forced to a seemingly disadvantaged position and being accused of suppressing the power and demand of the yuan, the only way out is to join them. Can't beat the propaganda? Then let go. Zen like. Set free. Give what the opponent wants.

And that is what China had been pushed into doing. Doing it indeed so well and have included it in their 5 year economic plan. Let the yuan rise and appreciate to mitigate potentially rising costs of commodities, and daily commodities like sugar and cooking oil. With a stronger yuan, there is a cushioning effect. Plus the citizenry will feel mature economically and have a better purchasing power, and a means to look forward to the future, and retirement. As well as enjoying their life and perhaps a bit of travelling overseas. Travelling even to the next province 20-30 years ago, wasn't even a luxury for most of the low and average earners. It was perhaps even forbidden.

Now, travelling is something an adventure or a "I've made it" signal that everyone wants to fulfill. With budget carrier AirAsia spearheading the route expansion in China, cities like Hangzhou, Guilin, Tianjin - reap the "reward" of choices of travel.

Inflation happens everywhere globally. And the minor 5% appreciation against the US Dollar has able to cushion some form of the negative effects.

In general, inflation is a double-edged sword. Most common folks would equate inflation in the "bad egg" category. But is it? Inflation will cause prices to rise for goods. But in the macroeconomic sense, inflation is a healthy indicator that the cranks and belts are grinding in the economic machinery that causes enough friction to generate inflation.

Another way to see it is does any country hope or wishes for deflation, supposedly the opposite of inflation? No. Think Japan. One of the most powerful and efficient economy today. Deflation in their economy has been frowned for for years. Prices are depressed downwards. Consumers spend less locally. They still spend alot more compared to foreign countries simply because of their purchasing power parity and magnitude. But not textbook economic enough to propel their growth. And that is another portion of the chase. Economic growth. Although personally I see it as a ridiculous chase that will eventually kill the Earth, every country wants economic growth and usually measured in GDP growth.

So back to inflation. It is also a sort of general sweep tax to all and sundry. Inflation of say the cost of petrol (oil), will affect every level, every person and every system within the country that is having that inflation. Cost of travel be it bus or car will rise. Cost of food and meals will rise because they are transported using those vehicles that in turn uses fossil fuel - petrol and oil.

The last laugh alas is a Chinese laugh. For years the United States propaganda was to discredit China even knowing that it is so much more an arduous task to manage over a billion in population with the majority in the low income group, with facilities and infrastructure that is racing to be upgraded to world standards. And the mockery and criticism of supposedly yuan manipulation broke the camel's back in a zen way. China's economic policy accepted whatever was criticised. Take it. Factored it in the economic data and projection. Accepted it. Then made sure now the YUAN will appreciate.

Buy Chinese YUAN bank them in Singapore and Hong Kong

As the yuan rises in prominence and acceptance, it will eventually be a powerful storage of value. Currently only Hong Kong is the official designated off-shore hub for trading in yuan or renminbi - the People's Money.

The Monetary Authority of Singapore is lobbying fast and hard for China to let it become a second hub for yuan monetary activity. Yes activity. The yuan won't be just sleeping in the bank. It will partake in exercises such as dividends, loans, payment, forex and investment products denominated in yuan.
    
If you have not yet opened your yuan savings account, try to do so now. Currently in Singapore and Malaysia, only private banking customers are offered yuan deposits account. HSBC, DBS, Public Bank.

Another method is to make a visit to Hong Kong. Look for Hang Seng Bank (Green theme colour bank) which is found everywhere. It is sort of like the DBS of Singapore, or Maybank of Malaysia. Every Hong Kong resident has an account with Hang Seng Bank. Walk in and apply for a bank account. You will get your ATM CIRRUS card and internet banking as well. Meaning you could withdraw funds everywhere and any country (that has the network).

China tweaking 5 year plan in opposite direction

Recently China has declared a change in their financial planning for the next 5 years. As I wrote previously speculating or postulating this shift, the results will be progressive and finally will see a "be careful of what you wished for" scenario - especially for USA.

Instead of focusing GDP growth, this strategy and policy will go the opposite. Through the years since the invention and reliance on the "GDP factor" as an economic health indicator, countries around the world blindly followed this capitalist propaganda. Because the proof was sort of in the pudding. It is true, GDP growth means a better consumption rate, better disposable income, better life, more products, bigger homes, car ownership, expansion of the urban sprawl, creating of suburbs (because we can afford to drive an hour to work), better gadgets, improvement in IT products because of demand and thus competition. So on and so forth. And obesity!

So grab that last sentence: obesity. GDP growth if applied to a human body would be like this following short story.
A baby is born needs alot of nutrients, mother's milk, love, care, food, to grow. The cells will multiply. The baby's weight has a superb "GDP growth". Good because that is what a human baby needs. Growth. Then teenage more different types of growth - hormonal, physiological, psychological, mental. Language skills. But the body now grows in different manners. More muscles, more shape. Some acne. Bone growth slows but still growing. So during the 20s, the body literally doesn't grow anymore. If it did, imagine a humongous monster, devouring anything in sight!

Apply this to basic economics whether the experts agree or not. Growing just by GDP is a fallacy. You can grow in other ways. Manage the growth. Grow mentally. Grow the education and healthcare. Grow the mindset - self-sufficiency. Instead of unlimited multi-storey villas and five swimming pools. Do you ever swim like 12 hours a day, every day? And what is with the golf course. This resource intensive "sport" is a very big sin. Water is consumed in the value of 5 elephants per day. Plus maintaining the "green grass". Why not maintain green vegetables? And water for plants and animals? The space itself for a golf course, could have been a nice shady tree-filled park.

Many times I meet people from the First World Countries - and they have nice things to say about Asia. Then one or two times, they will say this. I find it strange Asian always thinking about "saving face". Well saving face is not a concept created in Asia. It was created in the West! Have you noticed that it is quite strangely white those people on TV (politicians, actors, etc) have - for their teeth?!! And bronze lobster-red body with a high potential of the big C - cancer - imprinted? And what about coats and ties, plus unbelievable prices for a dinner and alcohol?

USA is wishing and pressuring China to increase the value of the yuan. Reduce their exports and start importing. Reduce their GDP. So China has been thinking (and perhaps reading my blog and articles through the years) - yes, let us give them what they requested.

So the scenario will surely be good for USA. Or not?
These scenario will eventually happen:
1) The yuan (oh, and if you cannot pronounce it correctly, it is not "you-wan", it is yuan) will increase in value. Those who hold the yuan or earning yuan, will have a better and higher disposable income. Meaning more chance to buy products from another country, or more expensive, higher quality (maybe) products.
2) Treasury Bills will be slowly discarded and buyers will be few. Meaning a direct reduction in the demand for US Dollars. US policies that rely on these loans will be diminished. Meaning US influence and stranglehold (hegemony) will disappear throughout the globe. Military bases will have to be closed because of insufficient funding.
3) As opposed to completely-free democracy, whereby land/property is openly offered, and thus creating property boom and bubbles, such as in USA, UK, possibly Thailand and so on and so forth, China doesn't have such as system. Perhaps they will extend a hand to "overseas Chinese" - those with Middle Kingdom heritage can now purchase property in the motherland. So whatever happens, it will have a loyalty effect. Property will keep growing, wealth flowing into China. Chances are overseas Chinese from Singapore, Canada, French Reunion Island, Indonesia, Malaysia, Antigua - everywhere - could have a shot at buying and owning a property in China.
4) US Dollar would have dropped (gradually) 10%, maybe 40%. Low enough for middle and higher income investors from China to buy out corporations in USA. Or via Mergers and Acquisitions. Not that the anti-trust law will be rearing the protective nationalistic front. So perhaps not. China will instead invest in itself, and other commodity filled countries. Thereby reducing not just indirect investments in USA (T-Bills) and now direct investments - from stocks, corporations and even education.
5) It is possible to employ a maid from the USA for about 2% of your salary - in the year 2020.