SubscribeChina Scared of U.S. Printing Press
Cheng Siwei, former vice-chairman of the Standing Committee and now head of China’s green energy drive, said Beijing was dismayed by the Fed’s recourse to "credit easing".
"We hope there will be a change in monetary policy as soon as they have positive growth again," he said at the Ambrosetti Workshop, a policy gathering on Lake Como.
"If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies," he said.
"Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not to stimulate the markets," he added.
The comments suggest that China has become the driving force in the gold market and can be counted on to buy whenever there is a price dip, putting a floor under any correction.
My comment: This is a great article and you can see from the comments by the candid comments by the Chinese official that they are not happy with US monetary policy. I have been saying for years that China was going to dump it’s dollars and buy whatever hard assets it could get its hands on. The Chinese are now the worlds largest gold miners and I can just about guarantee that none of the gold mined in China makes it to world markets. The government buys it all as it is a race to get out of paper before the US government completely craters the dollar. If you think gold at $1000 per ounce is fun just wait.
John Polomny
The Real Deal
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Comment by dingyunfeng on 8 September 2009:
in a chinese point of view. it is danger for the west countries, if they don’t cut off the expense in labour and make their products more competive, when chinese produce aircraft with 300 seats , I don’t know what chinese will import from the west countries. this is essential.
but dollar is international paper , RMB not. if dollor devalue, RMB will soon, so where is the way to make west products more competive?
RMB is one of the globe paper is important.
if Citigroup callapse, I’m not sure where America will go. of course , the sun will rise like before, the earth will be same, but America dream will over. do you believe there are a lot of enterprise will setup tomorrow, it is not easy
even the big west investors have more money than chinese government, even the west trader get more profit than the producer in china, but the situation is diffirent. one country export , save little money day after day, another lost jobs, make big money , but just few people.
when chinese save little money day after day , and continue this journey for more than 30 years, little change everyday , but big change now.
even west trader get more money day after day , but the cost will be high at the same time. more and more people lost their jobs, particularly in the civil products, most products in wall-mart are Made in China.
invest in china is so important, but not all investors know how to begin this journey. lost the chance, unforgivable.
Comment by dingyunfeng on 8 September 2009:
china government maybe change dollar to euro, to japan yen, but pay more money to Gold? it is a long way to go. maybe one day 1 killograme:)
America has its competive, it is not easy for china to catch up.
but people get up at 7:00 and go home at 19:00 , one week 6 days work, in the mean time , I don’t think this is a correct way for life, but to most chinese, it is their everday life.
when stock market get more and more mature, experienced, it will give a huge push to the small chinese enterprise. so what will happen the next 5 or 10 years?
be more sensitive .
Comment by dingyunfeng on 8 September 2009:
I write my point of view here, because I want find friends to exchange and share. if you are interested in the same field and china economy , you are welcome.
MSN: dingyunfeng@hotmail.com