IMF Staff Completes 2016 Article IV Mission to China
Press Release No. 16/277
June 14, 2016
A mission from the International Monetary Fund (IMF), led by Mr. James Daniel, Assistant Director of the Asia and Pacific Department, visited Beijing, Shanghai and Inner Mongolia from June 1 to 14 to conduct discussions on the annual Article IV review of the Chinese economy. The mission held highly constructive and candid discussions with senior officials from the government, the People’s Bank of China, private sector representatives, and academics to exchange views on economic prospects, reforms progress and challenges, and policy responses.
The IMF's First Deputy Managing Director, Mr. David Lipton, joined the final policy discussions and met with Vice Premier Ma Kai, People’s Bank of China Governor Zhou Xiaochuan, Director of the Office of the Leading Group on Economic and Financial Affairs Liu He, Minister of Finance Lou Jiwei, China Banking Regulatory Commission Chairman Shang Fulin and China Securities Regulatory Commission Chairman Liu Shiyu, among other senior officials.
At the end of the visit, Mr. Lipton made the following remarks:
“China continues its transition to a sustainable growth path and is making progress on many dimensions of rebalancing. The success of this transition, while difficult and bumpy at times as we have witnessed over the past year, is crucial for China and the rest of the world. Our discussions this week in Beijing focused on the policies needed for achieving the transition and the urgency of implementing such policies………….
“The renminbi exchange rate is becoming more flexible and market-based, following changes introduced since last year. The mission encourages the authorities to continue this progress, with a goal of achieving an effective float within the next couple of years. While the external position remains moderately stronger compared to the level consistent with medium-term fundamentals, the renminbi is assessed as broadly in line with fundamentals, similar to our assessment in last year’s Article 4 consultation...........
CNBC - It's an inevitable question: Could U.S. 10-year yields turn negative now that German 10-year yields have fallen below zero for the first time ever and Japanese 10-year yields have dipped to record lows of negative 0.17 percent?According to Dennis Davitt, partner at Harvest Volatility Management and a noted options market veteran, it may well happen. "I think you could see negative rates in the U.S. If Germany and other countries in the world go even further negative, it turns into a number line game. So where zero lies on the number line, who knows?" Davitt said Tuesday on CNBC's "Trading Nation.”
He sees rates being driven lower by two factors in addition to overall slow global growth: Stimulative central bank policies and regulations.
"The European banks under their Basel regulations, much like our Dodd-Frank, are forced to hold a certain amount of assets on their balance sheet [and] those assets have to be government-issued debt. So they're forced to own those assets."
On June 23rd, a vote will be held in the United Kingdom to determine if Britain will stay in the European Union or not. This is most commonly known as the “Brexit” vote, and that term was created by combining the words “Britain” and “exit”. If the UK votes to stay in the European Union, things over in Europe will continue on pretty much as they have been. But if the UK votes to leave, it will likely throw the entire continent into a state of economic and financial chaos. And considering how bad the European economy is already, this could be the trigger that plunges Europe into a full-blown depression.
So if things will likely be much worse in the short-term if Britain leaves the EU, then it makes sense for everyone to vote to stay, right?
Unfortunately, it isn’t that simple. Because this choice is not about short-term economics. Rather, the choice is about long-term freedom.
The “leave” movement got a big boost just recently when the Sun officially endorsed that position. The following is an excerpt from the editorial that announced this decision…
WE are about to make the biggest political decision of our lives. The Sun urges everyone to vote LEAVE.
We must set ourselves free from dictatorial Brussels. Throughout our 43-year membership of the European Union it has proved increasingly greedy, wasteful, bullying and breathtakingly incompetent in a crisis.
Next Thursday, at the ballot box, we can correct this huge and historic mistake. It is our last chance. Because, be in no doubt, our future looks far bleaker if we stay in.
I must say that I agree entirely with the Sun. However, everyone needs to understand that a Brexit would be incredibly painful for the UK and for the rest of Europe in the short-term. I think that Ambrose Evans-Pritchard of the Telegraph made this point very well in his recent column…
Let there be no illusion about the trauma of Brexit. Anybody who claims that Britain can lightly disengage after 43 years enmeshed in EU affairs is a charlatan or a dreamer, or has little contact with the realities of global finance and geopolitics…….
And let us not forget that major stock indexes all over Europe are already in a bear market…
Meanwhile, German stocks are in a bear-market, with the DAX down 23.2% from its April 2015 peak. The French CAC 40 is down 21.8%. The Spanish Ibex 35 and the Italian MIB are down 31.4% and 32.6% respectively.
Here in the United States, the smart money is dumping stocks like crazy right now, and major investors such as George Soros are feverishly buying gold.
So why are these things happening? Do those “in the know” have some information regarding what is about to happen over in Europe?
For a long time, I have been sounding the alarm about Europe. If the British people vote to stay in the European Union on June 23rd, the crisis in Europe will certainly continue to escalate, it will just be at a slower pace. But if the British people vote to leave (which they should) that could be the trigger that changes everything.
I don’t know exactly what is going to happen on the 23rd, but without a doubt we should all be watching the outcome very, very closely…
The Chinese yuan dropped on Wednesday to a five-year low against dollar. The Chinese Central Bank fixed the yuan exchange rate at 6.6001/$1 after on Tuesday the yuan closed at 6.5966/$1.
Analysts pointed out several factors that have driven the yuan down. One of the most important among them is strengthening the dollar on expectations of a referendum of Britain leaving the European Union. The vote will take place on June 23.......
China’s Yuan Shudders Despite Beijing’s Campaign to Steady the Currency
The yuan touched its weakest level against the dollar in more than five years after MSCI decision.
BEIJING—Anxiety is building around the yuan, as the Chinese currency briefly fell to its weakest level against the dollar in more than five years on Wednesday.
The yuan’s tumble early in the day was partly driven by MSCI Inc.’s decision not to include mainland shares in its indexes. It was the third time MSCI had turned down China’s push to be included and meant sudden death to prospects of what had been estimated to be hundreds of billions of dollars of capital inflows. Investors reacted by pushing stocks lower and adding to downward pressure on the yuan, which was already weakened by the dollar’s recent rise.
Both the yuan and stocks quickly rebounded, however, which traders said was a sign that the Chinese authorities were acting to try to stabilize the markets......