China's currency is worth double that of USD. WTF? How is this possible?

BillyBones

full member

Activity: 168

Merit: 100

Quote from: mcplums on April 30, 2015, 05:19:25 PM

I do not understand how China's currency can be almost twice the value of USD? USD GDP is almost double that of China, PLUS USD is the global reserve currency, so there's even more of it out there than there otherwise would be.
Please, someone explain this to me!?

According to http://www.investopedia.com/articles/forex/09/chinas-peg-to-the-dollar.asp | Despite a slowing growth trajectory that saw the economy expand by “only” 7.7% in 2013, China appears to be on track to surpass the United States as the world’s largest economy sometime in the 2020s. In fact, based on purchasing power parity - which adjusts for differences in currency rates - China may pull ahead of the U.S. as early as 2016, according to a report on global long-term growth prospects released by the Organization for Economic Cooperation and Development in November 2012. (It should be noted that such bullish estimates about China’s long-term growth prospects are viewed with considerable skepticism by a growing number of economists and market watchers.)

Year 2015 is coming to an end, and have you seen any such results as mentioned above regards to china, there is long way to go and it is very hard to topple U.S Currencies.

HarHarHar9965

hero member

Activity: 994

Merit: 1000

China's economy is dependent on US and vice versa. China does have a large economy as it has a large market, but when calculated according to the market of america, its contributions aren't as much as US on a global scale. The size of economy won't make it as strong as USD but its acceptance will.

bryant.coleman

legendary

Activity: 3654

Merit: 1217

They are inflating the money supply, by adding the M1 and M2 components. In mid-2015, the CNY money supply was as follows:

M0: ¥7.65 trillion ($1.22 trillion)
M1: ¥34.81 trillion ($5.57 trillion)
M2: ¥130.74 trillion ($20.9 trillion)

For the USD, the money supply is as follows:

M0: $3.95 trillion
M1: $3.0 trillion
M2: $11.937 trillion

So it is clear that the M0 money supply for CNY is much lower than that of the USD.

Erdogan

legendary

Activity: 1512

Merit: 1005

It is the demand for money, from savers. They have a lot of savers.

stallion

full member

Activity: 182

Merit: 100

A perfect analogy from amph:

' It's like the anecdote of what is the most widely spoken language, while Chinese is the language that is spoken the most, English is the language that is more widespread'.

You can't fuck with dollar right now, but things change. The only thing inevitable in this world is change.

Clint

sr. member

Activity: 378

Merit: 250

Don't really know how that's possible. Always knew China had a big economy, maybe population demand is higher. But isn't China Yuan already a reserve currency? Just think about the market use world wide, it's not surprising to me its double USD.

Cinnob0n

member

Activity: 116

Merit: 10

-Credits (CRE) Miner/Enthusiast

You have to consider the GDP China contributes. They have about have of that of the United States. If you're wondering why, just look just China ghost town on google. Tongue

Meuh6879

legendary

Activity: 1512

Merit: 1011

Quote

I do not understand how China's currency can be almost twice the value of USD

When china use funds of deposit, they "keep" 18% in real cash in vault.
In Europe, 0,5%.
In USA, ... they have QE.

that why they have value for Yuan ... this ... and a real knowned reserve of GOLD.
it's why USA don't communicate on the FED Gold reserve for example.

umair01

hero member

Activity: 602

Merit: 500

Chinese yuan has huge foreign reserves, the yuan is traded in various countries of Eu,USA and UK ,even used in their domestic ports and stores, thereby strengthening the yuan currency,the fact that you turn anything over around you and see the 'made in china' and bilateral diplomatic relations have made that possible

Miracal

sr. member

Activity: 350

Merit: 250

It is not possible in the near term! America is still the largest economy based on the GDP although Chinese growth rate is about 7% every year, faster than America, replaced Japan as the second largest economy!

peeveepee

full member

Activity: 211

Merit: 100

Quote from: mcplums on April 30, 2015, 05:19:25 PM

Per https://i.imgur.com/rhArHSS.jpg

I do not understand how China's currency can be almost twice the value of USD? USD GDP is almost double that of China, PLUS USD is the global reserve currency, so there's even more of it out there than there otherwise would be.

Please, someone explain this to me!?

Where you get the figure from and how is the value measure?

lucasjkr

hero member

Activity: 644

Merit: 500

m2 money supply is not equal to GDP.

Its not m2 related, but China is known t have vast foreign exchange reserves, and is consistently one of the biggest buyers of US government debt. China's got money. Is your question how did they get that much of it? Manufacturing. Nearly everything in the first world is manufactured there.

aso118

legendary

Activity: 1918

Merit: 1012

★Nitrogensports.eu★

Quote from: Amph on May 02, 2015, 11:55:40 AM

the dollar is still more used even if it losing value against the chinese fiat...

The nominal exchange rate really doesn't matter when you look at volume of transactions. Look at Bitcoin in 2013. It appreciated hugely in value against the dollar, but that doesn't say anything about its usage compared to dollar usage.

Amph

legendary

Activity: 3206

Merit: 1069

the dollar is still more used even if it losing value against the chinese fiat, it's like the anectode of what is the most widely spoken language, while chinese is the language that is spoken the most, english is the language that is more widespread

chmod755

legendary

Activity: 1442

Merit: 1021

Population of the U.S.: ~318.9 million

Population of China: ~1.357 billion

Many trades are denominated in U.S. dollars (oil, gold, ....), but that doesn't affect the M2 money supply.

ashour

sr. member

Activity: 490

Merit: 250

This doesn't surprise me at all. The Chinese economy is dependent on the US economy and vice versa, china made diplomatic deals with Russia and Britain in 2014 and 2013 to directly trade goods in Yuan instead of dollar.

pitham1

legendary

Activity: 1232

Merit: 1000

Quote from: mcplums on April 30, 2015, 07:25:21 PM

Quote from: pedrog on April 30, 2015, 05:39:32 PM

Quote from: mcplums on April 30, 2015, 05:34:08 PM

But still, USD is more common a reserve currency. So how can it only be half the value?

That I don't know, I had no idea Chinese economy was that big, apparently the biggest one.

Maybe there's something wrong with those numbers...

The Chinese economy is not that big compared to US though, barely over half the size.

Figures prepared by Peter R, bitcointalk.org.
Who is Peter R?

marcus_of_augustus

legendary

Activity: 3920

Merit: 2349

Eadem mutata resurgo

Quote from: mcplums on April 30, 2015, 05:19:25 PM

Per https://i.imgur.com/rhArHSS.jpg

I do not understand how China's currency can be almost twice the value of USD? USD GDP is almost double that of China, PLUS USD is the global reserve currency, so there's even more of it out there than there otherwise would be.

Please, someone explain this to me!?

They printed the hell out of it over the last 6 years to keep the global economy afloat and you know how everyone is saying the chinese currency is massively over-valued? Guess what, it is. China is gonna have a huge bust.

Erdogan

legendary

Activity: 1512

Merit: 1005

Generally, the value of a money type is dependent on the demand, which is the demand to hold, and the supply, the demand to hold less. There is no magic.

JackRipper

full member

Activity: 210

Merit: 100

Quote from: mcplums on April 30, 2015, 07:25:21 PM

Quote from: pedrog on April 30, 2015, 05:39:32 PM

Quote from: mcplums on April 30, 2015, 05:34:08 PM

But still, USD is more common a reserve currency. So how can it only be half the value?

That I don't know, I had no idea Chinese economy was that big, apparently the biggest one.

Maybe there's something wrong with those numbers...

The Chinese economy is not that big compared to US though, barely over half the size.

The U.S. produces a little over 22% of the world GDP while China produces about 9%.

Topic: China's currency is worth double that of USD. WTF? How is this possible? (Read 1615 times)