1. Yuan plunge hints at China’s distress over economy

   TODAYonlineAug 13 01:53 PM

   HONG KONG - Whenever China's economy swooned in recent downturns, its currency never buckled: The yuan either held steady or strengthened, even while China's neighbours or trading partners scrambled to cut the value of their own currencies to deal with the...

2. China frees its currency - Which African nations have the most to fear?

   Mail & GuardianAug 13 05:43 AM

   Beijing says its move on the yuan is all about its own economy. But if you live in Africa, you might want to buckle up.

3. China’s Currency Devaluation Brings Stocks to a 'Death Cross'

   The Fiscal Times via Yahoo! NewsAug 12 04:15 AM

   Gold and silver are perking up. The catalyst was a surprise move overnight by the People's Bank of China to devalue the yuan by 1.9 percent in response to weak trade and inflation data over the weekend. This is the largest one-day drop since China ended its dual-currency system in January 1994. 

   Yuan plunge hints at China’s distress over economy

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   Published: 4:17 AM, August 14, 2015

   (Page 1 of 1) - PAGINATE

   HONG KONG — Whenever China’s economy swooned in recent downturns, its currency never buckled: The yuan either held steady or strengthened, even while China’s neighbours or trading partners scrambled to cut the value of their own currencies to deal with the fallout.
   However, with the Chinese yuan now having taken its biggest plunge in two decades, the worry is that the country’s already slowing economy is even worse off than officially reported, and that the government is panicking. Yesterday, at the daily fixing, China allowed the yuan to weaken significantly for a third consecutive day.
   

   The situation is shaking the aura of supremacy surrounding President Xi Jinping and the Communist Party, which has portrayed a sense of ultimate authority. But the Chinese government’s response to the country’s financial woes is creating concerns about its ability to manage a slowdown.
   Mr Jonathan Fenby, an author and co-founder of the research firm Trusted Sources, said: “People are used to growth and rising living standards … and the leadership has to convince them that slower growth is in their long-term interests and that it is in control.”
   By the official measures, the Chinese economy is growing at 7 per cent, right in line with government targets. It is a steady pace that the leadership has indicated can support decent job growth and put more money into consumers’ pockets.
   But a look below the surface shows a different, more worrisome picture. Core parts of the economy, such as construction, are languishing as the real-estate industry struggles. Consumer spending, which was supposed to pick up the slack, is not that strong. And financial services, a major driver of economic growth when the stock market was booming, are slipping.
   The data coming out of China, too, is suspect. Many economists now wonder whether, despite official figures showing growth, some provinces and regions could be dealing with outright recessions. “I don’t think that it is properly measured. Definitely, there is a slowdown. You can have an argument about what level it is, but it’s not 7 per cent,” said Mr Viktor Szabo, a senior investment manager at Aberdeen Asset Management, referring to the rate of economic growth.
   The government’s aggressive action on the currency this week has brought the economy into sharper focus. At about 6.4 yuan per US dollar, the Chinese unit has fallen by more than 3 per cent over the last three days. On a typical day, the yuan rises or falls just a small fraction of a percentage point.
   While the government said the decision was intended to make the currency more market-oriented, the devaluation is a gift to exporters: It makes China’s shipments of goods, such as clothing or electronics, more affordable to consumers in the United States or Europe.
   “I don’t see this mini-devaluation as some kind of outrageous act,” said Mr George Magnus, an economic adviser to Swiss bank UBS and an associate at Oxford University’s China centre. “But, it is part of an array of other economic and financial stimulus measures designed to shore up the flagging growth rate.”
   The Chinese government has taken the usual stimulus steps by cutting interest rates and freeing up more money for banks to lend. But the leadership has also turned to more unconventional means in recent months to try to cushion the blow, as the economy’s once-runaway expansion sinks back to earth.
   It relaxed a rule that banned investment companies tied to local governments from piling on debt. When the stock market slumped, it aggressively moved to halt the slide, by encouraging borrowing to buy stock and pouring money into the system. It has also pledged tens of billions of dollars in support to state-controlled policy banks for loans to favoured projects.
   China’s plan has been to wean itself off a debt-driven growth model that has led to wasteful, government-led investment. Instead, policymakers want consumers to become the main engine for the economy, but that will take time.
   Consumers are not yet able to shoulder the burden of driving the economy. While incomes are rising, the job market has started to show signs of stress. Vacancies are declining across the market as companies reduce hiring in response to slowing business growth.
   The stock market slump has also taken a toll, with the main Shanghai Composite stock index down about a quarter from its peak two months ago, resulting in consumers spending less. Retail sales grew 10.5 per cent in July from a year earlier, near the slowest pace in a decade.
   In the first half of the year, the flurry of new share sales, strong brokerage business and other market-related activities also helped mask some underlying issues. Without that boost, China’s gross domestic product would have risen notably less than the 7 per cent reported rate. Instead, it would have been about 6.2 per cent in the second quarter and 6.5 per cent in the first, economists at Standard Chartered estimated last month. THE NEW YORK TIMES
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   Yuan plunge hints at China’s distress over economy