China’s Yuan Keeps Rising

China’s Economy Improves

Published Date : September 6, 2014

China’s Yuan is on a roll. For the third straight month, it rallied against the U.S. dollar. Last year, the picture was different as the yuan tanked. As China’s economy continues to improve, the yuan has further room to climb up.

Although the yuan has gained 1.5 percent since last year’s low, the yuan is still down 1.9 percent for 2014. As recent economic data shows better growth, especially in manufacturing and real estate, the Chinese government may be lenient and let the yuan go even further.

Chinese stock markets seem to be doing just as well. The Shanghai Composite Index reached its highest level in seven months, making investors grab more blue chip stocks recently. Also, in the offshore currency market, global investors – especially hedge funds – are betting on more positive currency runs.

China, the world’s second largest economy, averaged 10 percent growth yearly for 30 years in the past. However, recently China is struggling to achieve its target of 7.4 percent growth per year. The IMF recently predicted that China’s economic growth will be 7.1 percent in 2015 and will slow down further in the future.

In the past, especially in early 2014, there were many reports and predictions pointing out the collapse of the Chinese economy. None of them proved to be correct, however, as several recent economic data show that the Chinese economy is not going downhill, but rather climbing upward.

How To Open A Yuan Bank Account

Opening A Yuan Bank Account

First Published Date : February 16, 2011 ADawnJournal.com

Recently, China moved a step forward in terms of economic integration with the rest of the world when it allowed, for the first time ever, accounts in the United States to be opened under their currency; the Yuan. This is a big step for China, which will soon become the largest and most powerful economy on the planet and many see it as a sign China is opening up to the rest of the world.

So, if you are thinking of opening an account in the Yuan, what do you need to do to make it happen? Well, first of all, if you live in the American Midwest, you are out of luck because you are as about as far as you can get away from where you can open up a Yuan bank account, unless of course you live in Alaska or Hawaii.

No, there are only two places in American where you can open an account in the Yuan, and those are New York and Los Angeles, which happen to be on opposites ends of the country from each other.

This is a huge step forward for China because for years the country kept a tight grip on its exchange rate through its restrictions on the number of Yuan bills that could be brought into, and taken out of, the country. China didn’t want a lot of bank accounts being used in the Yuan because if a large group of people take out accounts in Yuan, it pushes up the exchange rate of the currency since there is an increased demand for it. If that happens, then China can no longer offer cheap goods and services to the rest of the world, which would affect its economy in a monumentally horrible way.

As for why you would open an account in the Yuan, the two biggest reasons are because it diversifies your currency portfolio and if the value of the Yuan increases, you benefit.

Now, how do you open a Yuan currency account? Here are a few easy steps.

1. First, go to New York or Los Angeles to a Bank of China office.

2. Next, you will need $500 at least to open up a U.S. dollars to Renminbi (RMB) account.

3. In order to open a RMB account, make sure you have two forms of identification, a W-9 form and a signature card.

4. You will need to fill out an application on a saving account because you cannot open a checking account that is RMB. This means you can put money into the account, but you cannot take money out, as of yet that is.

That is all there is to opening an account that is in the Yuan. In the future, as China becomes more powerful, you will begin to make a lot of money off your decision to use the Yuan in the account instead of the dollar, which itself is becoming weaker as time goes on and we move into the 21st century.

NB – In Canada, Bank of China is not offering a Yuan currency account yet.

China’s Plunging Foreign Reserves

Yuan Continues to Outflow

Chinese currency remains worrisome to the global economy as Yuan continues to outflow causing declining foreign exchange reserve. As the Yuan is losing value, Chinese consumers are rushing to exchange them for U.S. dollars to preserve their value.

As there is a limit of exchanging Chinese currency annually to $50,000, consumers are trying to get around this rule by buying other tangible assets such as real estate, fine art, expensive wine, and so on. Another popular method to get around this rule is to use the quota of other people who have room and sometimes paying to use their quota.

The Chinese government is intervening in the market to stop rapid depreciation of Yuan by selling dollars and buying Chinese currency. However, this intervention is causing the plunging of the foreign exchange reserve. Chinese authorities are assuring everyone that there is nothing to worry about and these fluctuations are normal economic conditions.

January data shows that the foreign reserve declined by $12.3 billion to $2.9 trillion. Also, debt is rising rapidly and growth in GDP is slowing down. And there are more things to worry about as President Trump made it a priority to balance the trade deficit with China. China has been running trade surplus with the rest of the world persistently for the last decade. The USA had a trade deficit of $347 billion in 2016.

A declining Yuan, slowing GDP, and rising debt will likely contribute to bigger surplus as exports to China will suffer the most from all these.