http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan Slower Chinese Growth and the Yuan Markets are waking up to the fact that the near miraculous economic growth of China is coming to an end. ABC News reports that Asian stocks are down on China growth doubts. China’s Shanghai Composite shed 1.3 percent to 3,637.21 and Japan’s Nikkei 225 dropped 0.2 percent to 19,718.56. South Korea’s Kospi lost 0.1 percent to 2,034.38. Hong Kong’s Hang Seng sank 0.6 percent to 24,351.20. Australia’s S&P/ASX 200 rose 0.2 percent to 5,965.10 but other regional markets were down including indexes in Taiwan, Malaysia and the Philippines. CHINA WORRIES: China’s manufacturing fell to the lowest level in nearly a year as new orders shrank. HSBC’s preliminary manufacturing index based on a survey of factory purchasing managers dropped to an 11-month low of 49.2 in March, from February’s 50.7. The index is based on a 100-point scale on which numbers above 50 indicate expansion. China’s economy expanded 7.4 percent last year, its slowest pace in nearly a quarter century, and economists predict growth will slow further this year and the next. As China’s economic growth slows to the lowest numbers in almost 25 years the question is, what about slower Chinese growth and the Yuan? Forex traders will want to follow events in China as its economy slows and its real estate bubble collapses. Chinese Real Estate Bubble According to the New York Times, things have gotten so bad in the Chinese real estate market that Chinese banks have provided a $16 billion credit line to prop up an endangered Chinese developer. Chinese banks have extended $16 billion in credit lines to shore up one of the country’s largest and most heavily indebted home builders, as pressure mounts on developers short of cash in a slumping property market. The move by a group of mainly state-run banks to bolster the builder, Evergrande Real Estate Group, which is controlled by the billionaire Hui Ka Yan, is the latest sign of tumult in China’s sprawling housing sector. Developers are rushing to secure financial support as sales volumes and housing prices plunge, weighed down by a growing overhang of unsold homes. The Kaisa Group, once a favorite of foreign investors, nearly defaulted on its offshore debt this year before being rescued by another developer. China has been famous for its ghost cities where developers have built and investors have purchased property only for building after building after mall to remain empty. The bubble has begun to deflate in the Chinese real estate market and the government is worried as shown by the bailout of Evergrande Real Estate Group. Along with slower Chinese economic growth the collapse of real estate price will suck equity out of the Chinese economy and likely drive the Yuan downward. Why does this matter for Forex traders?

1. Slower Chinese Growth
and the Yuan
By www.TheForexNittyGritty.com

2. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
Markets are waking up to the
fact that the near miraculous
economic growth of China is
coming to an end.

3. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
ABC News reports that Asian
stocks are down on China
growth doubts.

4. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
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5. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
China’s Shanghai Composite
shed 1.3 percent to 3,637.21

6. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
Japan’s Nikkei 225 dropped
0.2 percent to 19,718.56.

7. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
South Korea’s Kospi lost 0.1
percent to 2,034.38.

8. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
Hong Kong’s Hang Seng sank
0.6 percent to 24,351.20.

9. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
Australia’s S&P/ASX 200 rose
0.2 percent to 5,965.10

10. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
But other regional markets
were down including indexes
in Taiwan, Malaysia and the
Philippines

11. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
CHINA WORRIES: China’s
manufacturing fell to the
lowest level in nearly a year as
new orders shrank.

12. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
HSBC’s preliminary
manufacturing index based on
a survey of factory purchasing
managers dropped to an 11-
month low of 49.2 in March,
from February’s 50.7.

13. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
The index is based on a 100-
point scale on which numbers
above 50 indicate expansion.

14. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
China’s economy expanded
7.4 percent last year, its
slowest pace in nearly a
quarter century, and
economists predict growth will
slow further this year and the
next.

15. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
As China’s economic growth
slows to the lowest numbers
in almost 25 years the
question is, what about slower
Chinese growth and the Yuan?

16. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
Forex traders will want to
follow events in China as its
economy slows and its real
estate bubble collapses.

17. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
Chinese Real Estate
Bubble

18. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
According to the New York
Times, things have gotten so
bad in the Chinese real estate
market that Chinese banks
have provided a $16 billion
credit line to prop up an
endangered Chinese
developer.

19. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
Chinese banks have extended
$16 billion in credit lines to
shore up one of the country’s
largest and most heavily
indebted home builders, as
pressure mounts on
developers short of cash in a
slumping property market.

20. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
The move by a group of
mainly state-run banks to
bolster the builder,
Evergrande Real Estate Group,
which is controlled by the
billionaire Hui Ka Yan, is the
latest sign of tumult in China’s
sprawling housing sector.

21. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
Developers are rushing to
secure financial support as
sales volumes and housing
prices plunge, weighed down
by a growing overhang of
unsold homes.

22. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
The Kaisa Group, once a
favorite of foreign investors,
nearly defaulted on its
offshore debt this year before
being rescued by another
developer.

23. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
China has been famous for its
ghost cities where developers
have built and investors have
purchased property only for
building after building after
mall to remain empty.

24. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
The bubble has begun to
deflate in the Chinese real
estate market and the
government is worried as
shown by the bailout of
Evergrande Real Estate Group.

25. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
Along with slower Chinese
economic growth the collapse
of real estate price will suck
equity out of the Chinese
economy and likely drive the
Yuan downward.

26. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
Why does this matter for
Forex traders?

27. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
The Yuan as a
Reserve Currency

28. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
Bloomberg reports that China
would like the Yuan to be
the World’s 5th reserve
currency.

29. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
This will require that the
currency trade more freely
with other currencies and will
attract traders.

30. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
China is a step closer to
obtaining Special Drawing
Rights status for its currency
from the International
Monetary Fund, a move that
would see the yuan joining the
greenback, euro, yen and
British pound.

31. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
At a forum on Sunday, central
bank Governor Zhou
Xiaochuan swapped the topic
of a panel discussion so he
could pitch the renminbi’s
readiness for reserve status to
his co-speaker, IMF Managing
Director Christine Lagarde.

32. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
Premier Li Keqiang told
Lagarde in a meeting Monday
that China hopes to get the
IMF’s seal of approval,
according to the government.
It may have worked.

33. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
China wants special drawing
rights to show that it has
arrived as a genuine world
leader

34. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
To reduce borrowing costs, to
increase the demand for Yuan
as an international currency

35. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
And to counter the dominance
of the US dollar which is
currently part of 85% of all
Forex trades.

36. http://www.theforexnittygritty.com/forex/slower-chinese-growth-and-the-yuan
If this comes to pass the Yuan
will be traded more heavily
and issues such as slower
Chinese growth and the yuan
will become major Forex
issues.