Follow us on TWITTER: http://twitter.com/cnforbiddennews
Like us on FACEBOOK: http://www.facebook.com/chinaforbiddennews
While the purchasing power of RMB continues to decline
in Mainland China, the exchange rate has continued to rise.
This phenomenon has troubled Chinese people. People
complain, saying, "RMB should be sorry to the Chinese."
Experts say that the Communist Communist Party (CCP)
currency policy has created huge foreign exchange reserves.
It has also created the devaluation of RMB in China,
high exchange rate overseas, and a burden to China.
As for who is exactly benefiting
from this policy, we will take a look.
In recent years, China has seen depreciation of the RMB
domestically, and appreciation in foreign exchange rates.
Elite groups of the CCP have plundered national
resources and wealth, transferring them overseas.
This is done through buying overseas
properties, real estate, and luxury goods.
This leads to soaring prices in the foreign countries.
Recently, Chinese buyers have purchased
property in Houston, USA, containing nine projects,
and approximately 2,600 rental apartments.
Among them is Boyu Capital, a Chinese private equity fund.
Reportedly, Jiang Zemin's 27-year-old grandson,
Jiang Zhicheng, is a major investor in Boyu Capital.
In addition, Hong Kong, has tried to cool down
the property market, to avoid a property bubble.
Investment from China has made it hard to control.
Jason Ma, financial expert: "RMB
purchasing power abroad is strong.
That's why Chinese tourists have
swamped branded stores in the US.
To those who take advantage of traveling
and shopping, they are the winners.
But to those who struggle to make both ends
meet, they are faced with higher and higher prices."
The US Federal Reserve has decided
it's fund rates unchanged at 0.0-0.25%.
Interbank rates have gone as high as 6% in China.
CCP officials thus take advantage of high interest rate
differentials, and make profits from huge assets they hold.
They do this by transferring them
back to China to absorb the interests.
As a result, inflation is further increased in China.
Economists explain that following the end of the
Federal Quantitative Easing policy, and recovery
of the economy in the US, those funds will transfer
back to the US after absorbing interests in China.
Ren Zhongdao, financial analyst: "Inflow of hot
money will lead to the appreciation of the RMB.
As foreign currency rushes into China to absorb interests,
the central bank will issue RMB to balance the needs.
This will continue."
China has become the world's largest currency issuing country.
As of the end of November, China's broad measure of money
supply, called M2, exceeded 107 trillion yuan ($17.6 trillion).
This is despite the lasting cash crunch
of the Chinese finance sectors.
In the world's second largest
economy, China, people are suffering.
In the past two decades, investment has contributed
to around 50% of China's economic growth.
Low interest rates, as an effective means of
stimulating investment, have led to forced land
acquisition, and forced demolition throughout China.
Among some twenty million petitioners, over 70% of them
are victims of forced land acquisition and forced demolition.
Jason Ma: "To stimulate the economy, the CCP
injects huge amounts of cash, and creates inflation.
The devaluation of the RMB in China
is being caused by the printed money.
However, the CCP also limits free
conversion to foreign currencies.
China relies heavily on exports.
Its policy has thus created shortages of RMB overseas,
and the appreciation of the RMB in foreign countries."
Since the 1994 exchange rate reforms, surplus
has occurred as a result of Chinese industries
and projects with frequent international trades.
Abnormal economic growth has attracted global
capital inflows, and has created further surplus.
Foreign exchange reserves have
increased beyond adequate levels.
By the end of 1993, China's foreign
exchange reserve was $143.2 billion.
After the 1994 foreign exchange reforms, foreign exchange
reserves rose to $448.2 billion at the end of that year.
By the end of 2000, it had reached $1.4291 trillion.
Jason Ma: "China's huge foreign exchange reserves
are not the pride of China, but are the burden to China.
Foreign currencies have become the carriers of wealth.
Once foreign currency is devaluated,
domestic wealth starts to shrink."
An export-led economy has forced the CCP to agree
with trading countries demands to appreciate the RMB.
This is in order to achieve the trade surplus.
Deng Enchong is a lawyer specializing in finance.
Deng Enchong indicates that under centralization, the central
bank's injection of cash has become even more passive.
The CCP's ruling will only become weaker
with a prolonged devaluation of the RMB
domestically and appreciation internationally.
This will also serve as a driving cause