The recent lowering of the renminbi’s value by the People’s Bank of China can be viewed as a move to further develop the consumer sector of the domestic China market.
When it comes to the value of the renminbi (CNY, quote), the twin engines of economic growth for the Chinese economy oppose each other. About 40% of China’s gross domestic product emanates from exports to the U.S. and Europe. The Chinese real estate market provides about 30% of the economic growth in the People’s Republic.
China has been actively weakening the yuan (CNY, quote) recently in preparation for a falling dollar because of more economic stimulus measures. Due to this market action, major oil stocks such as Ecopetrol (EC, quote) and Sasol Ltd (SSL, quote) are becoming more attractive with dollar strength inversely correlated to the price of crude.
Friday’s best web covers the new Turkey-Tunisia development cooperation agreement, Reliance Industries’ Chevron sale, Gazprom maneuvering for access to Brunei resources, investor confidence in Mexico, and the emergence of the renminbi as the “anchor” currency of Asia.
Former Morgan Stanley chairman and Yale University lecturer Stephen Roach has opined in the Financial Times on ten reasons why China will continue to prosper.