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So far this year, the Chinese Yuan had dropped
by about 3% in its value against dollar.
On May 12, the Yuan depreciated by another 44 basis points
to 6.1625 Yuan per dollar, which is the lowest in 8 months.
Experts commented that the Chinese Communist
Party (CCP)'s central banks are attempting to control
the currency market.
It keeps artificial control on exchange rates by holding
a huge amount of dollars.
To incite more exports, the CCP had been systematically
depreciating the Yuan this year.
However, after the truth about China's economic slowdown
was known by the world, China's exports have seen
no real improvement.
Furthermore, the Yuan just kept on dropping and prices kept
increasing in China as the CCP had printed a lot more money
for foreign currency reserves.
On May 12, the exchange rate of Yuan drops to about
6.16 per dollar, 44 basis points lower than
the previous trading day.
That was also its lowest point in 8 months.
A Bloomberg analysis said that the Yuan had been dropping
for four consecutive months,
which is the worst slip seen through a several-month span in
at least 7 years.
This mainly results from investors worry that China's
economic slowdown will get much worse, and the CCP's
central bank is artificially depreciating Yuan.
Hong Kong's South China Morning Post, reported that if
the Yuan increases too fast in value,
China's exports can hardly hit a 7.5% increase per year, which
will lead to a major market deterioration in China.
On the other hand, depreciation of the Yuan are just steps
away from globalization of the currency.
Gong Shengli, a Chinese financial think tank researcher,
told NTD that,
several years ago the CCP's central bank had restricted
Yuan's exchange rates floating within 0.1% and 0.3%.
Now the range has been eased to around 2%.
Gong said; as exports dropped significantly, the CCP's
central bank artificially called for a downturn of the exchange
Gong Shengli:"Currently the CCP is facing a dilemma.
Depreciation of Yuan fails to create more exports,
and appreciation will be a huge strike at Chinese companies.
Without exports the whole state will earn much less.
The biggest trouble with the Yuan is that the Yuan's exchange
rates are not free to balance with other currencies as it is under
In this year's Canton fair, the overall export trading volume
is only $31.6 billion, which drops by 10.9% compared
to the previous year.
In addition, investors mostly agree that depreciation of
the Yuan has becomes a general trend and they are rushing
to sell Yuan for dollars,
which had further speeded up depreciation of the Yuan.
This causes direct economic loss for Chinese companies'
orders from foreign countries.
US Treasury Secretary Jacob Lew said in his visit to Beijing
that China should speed up its reform on exchange rates,
and allow the Yuan to float more freely due to market factors.
Ren Zhongdao, Chinese financial analyst:"The CCP's control
on exchange rates is hurting both itself and others.
The policy is bad for Chinese people and its
It is also damaging to the regime itself because the party
printed too much money that hurts its own economy."
In the first quarter of 2014, the CCP's foreign currency
reserves reached 4 trillion dollars.
In his recent visit to Kenya, Premier Li Keqiang admitted that
huge foreign currency reserves is a huge burden on
the CCP government,
as it may stoke inflation and greatly cast pressure on
The Epoch Times commented that the CCP was forced to
begin the so-called "Economic Reform" in 1978,
as it faced difficulties both inside and outside the state,
especially a collapsing economy.
After that, all levels of the CCP governments seek growth in
GDP, exports and investment over everything else.
They even sell land and manpower at low prices, pollute
the environment and overuse natural resources simply to
get more foreign currency reserves.
Then the party glorifies itself via propaganda by
showing that as the CCP's major "economic achievement".
However, huge amounts of foreign currency reserves are
causing economic loss for all Chinese.
World Bank made a survey of 12,400 companies among
120 Chinese cities in 2005,
and found that the net return of foreign companies in China
is 22%, a shockingly high ratio.
On the other hand, the return of US Treasury Securities
held by the CCP is only 3%.
China has thus suffered an economic loss of over $700
billion between 2008 and 2012.
Since Yuan-to-Dollar exchange rate began to float in 2005,
a stable appreciation of Yuan had attracted a huge amount
of hot money,
including the money transferred by the CCP bigwigs to overseas