Chinese Blog

Careful investors are watchfully waiting to see what will happen with the RMB over the next couple of months.  As the Chinese government is the largest holder of US T-bills (there was a recent news article indicating otherwise, but by combining holdings between the Mainland and the Special Administrative Regions, it still is the largest holder) as well as the controller of its currency.  For the government, a balance has to be struck between the value of China’s t-bill holdings (government investment) and the welfare and 购买力 (gou4mai3li4 – purchasing power) of its citizens.  A successful 对冲 (dui4chong1 – hedge/[hedging]) strategy must be struck.  One individual strategy I heard was to use one’s RMB to buy 黄金 (huang2jin1 – gold) or 白银 (bai2yin2 – silver) and keep it in a 保险柜 (bao2(3)xian3gui4 – safety deposit box).  What this does is it permits a liquid holding which is independent of the prices of currency.  From there, depending on what happened in different 领域 (ling3yu4 – region), one could rapidly convert his/her gold/silver into the target currency, wait until a trend develops with both the price of the heavy metal and the direction of one of the currencies, and then convert from the metal to the upward-trending currency.  However, this requires keen reading into 宏观趋势 (hong2guan1 qu1shi4 – macro-scale trends), which is not a common skill.  A recent analysis by the Financial Times noted that the Chinese government has arranged this currency move ahead of the G20 meeting.  The Chinese government will not 屈服 (qu1fu2 – give in [to demands]) when there are high-speed backroom arrangements made at international meetings.  Doing it before the meeting increases sovereignty in decision making.  In the meantime, anyone working in the mainland who travels frequently to the US should opt to be paid in RMB.  It could end up being a daily 提升 (ti2sheng1 – raise), now that’s a reason to work overtime!

While on the train to the Shenzhen border from Hong Kong, I saw a group of 12 people 手忙脚乱 (shou3mang2jiao3luan4 – lit. hand busy foot chaotic, “rushing”)  to fit some objects into their bags.   I had seen this sight before.

There’s an interesting phenomenon in China called 团购 (tuan2gou4 – group purchasing), where large groups of people purchase hot-ticket items at the same time in order to negotiate better purchasing terms.  The trend picked up quickly after Taobao went online, where Singaporean Chinese groups would purchase items en masse.  There are signs of it in the US with websites such as Groupon, but the scale that happens around Hong Kong is visibly impressive.

Part of the reason for purchasing items in Hong Kong has to do with the differences in pricing and 关税 (guan1shui4 – tariffs) compared to the mainland.  However, each person can only carry a certain amount before reaching the law-ordained 限制 (xian4zhi4 – limits).  In this case, a closer look revealed that these 12 people had purchased roughly 100 硬盘 (ying4pan2 – hard drives) and were stuffing them into purses, shopping bags, a fanny pack, and backpacks.

Ever since the 自由行 (zi4you3xing2 – free travel) policy was enacted, the 次数 (ci4shu4 – number) of trips permitted to Hong Kong and Macau has been variable.  The Macau restrictions have been in part to lower the incidence of problematic 博彩 (bo2cai3 – gambling), but I think it has just increased the amount of money gambled since enaction.  The next time you’re at a 关口 (guan1kou3 – port) and see people shuffling around with suitcases, don’t be afraid to ask what the item was.