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With $27 trillion in savings, Chinese are set to change the world as China opens its capital borders; Mass net outflows could stoke asset prices by depressing long-term borrowing costs
Topic Started: 26 Jun 2015, 07:01 PM (3,762 Views)
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With $27 trillion in savings, Chinese are set to change the world

June 26, 2015, Enda Curran and Jeff Kearns

Few events will be as significant for the world in the next 15 years as China opening its capital borders, a shift that economists and regulators across the world are now starting to grapple with.

With China's leadership aiming to scale back the role of investment in the domestic economy, the nation's surfeit of savings - deposits currently stand at $US21 trillion ($27.2 trillion) - will increasingly need to be deployed overseas. That's also becoming easier, as Premier Li Keqiang relaxes capital-flow regulations.

The consequences ultimately could rival the transformation wrought by the Communist nation's fusion with the global trading system, capped by its 2001 World Trade Organisation entry. That stage saw goods made cheaper across the world, boosting the purchasing power of low-income families at the cost of hollowed-out industries.

Some changes are easy to envision: watch out for Mao Zedong's visage on banknotes as the yuan makes its way into more corners of the globe. China's giant banks will increasingly dot New York, London and Tokyo skylines, joining US, European and Japanese names. Property prices from California to Sydney to Southeast Asia already have seen the influence of Chinese buying.

Other shifts are tougher to gauge. International investors including pension funds, which have had limited entry to China to date, will pour in, clouding how big a net money exporter China will be. Deutsche Bank is among those foreseeing mass net outflows, which could go to fund large-scale infrastructure, or stoke asset prices by depressing long-term borrowing costs.

"This era will be marked by China shifting from a large net importer of capital to one of the world's largest exporters of capital," Charles Li, chief executive officer of Hong Kong Exchanges & Clearing, the city's stock market, wrote in a blog this month. Eventually, there will be "fund outflows of historic proportions, driven by China's needs to deploy and diversify its national wealth to the global markets," he wrote.

Read more: http://www.smh.com.au/business/china/with-28-trillion-in-savings-chinese-are-set-to-change-the-world-20150626-ghy4x1
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Chris
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Wow, a magical fairytale where the opportunities are endless. Forget about a China collapse, there about to send $27Tr of 'spare' cash into the world and our property will boom from it.

Great puff piece, I like the way they call it 'savings'
Edited by Chris, 26 Jun 2015, 07:19 PM.
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Terry
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The age of affluence is about to take off into the stratosphere. Deep house music will be piped into the streets and we will be bathing our toes in Veuve Clicquot.
Chris
26 Jun 2015, 07:18 PM
Wow, a magical fairytale where the opportunities are endless. Forget about a China collapse, there about to send $27Tr of do ash cash into the world and our property will boom from it.

Great puff piece, I like the way they call it 'savings'
One thing I never liked about the Bible was how ascent into heaven or the garden of Eden wasn't available to use here and now on Earth. Well that might all be going to change.
Edited by Terry, 26 Jun 2015, 07:20 PM.
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Chris
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Terry
26 Jun 2015, 07:19 PM
The age of affluence is about to take off into the stratosphere. Deep house music will be piped into the streets and we will be bathing our toes in Veuve Clicquot.

One thing I never liked about the Bible was how ascent into heaven or the garden of Eden wasn't available to use here and now on Earth. Well that might all be going to change.
For you maybe Terry, I haven't been drinking from the same well so unfortunately I cannot rejoice in the second coming.
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Terry
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Chris
26 Jun 2015, 07:57 PM
For you maybe Terry, I haven't been drinking from the same well so unfortunately I cannot rejoice in the second coming.
Be careful. There's quite a bit of religiosity floating around and our guardians at the Morning Herald know how important it is to feel us spiritual nourishment.
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Tick Tock
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Theres no doubt about it China is striving to be the new world 'leader'.

Its taken them many, many years but in the end they will most likely win.

Thats wot 1.2 BILLION population can get you???
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Black Panther
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End Game. The bears are totally screwed. The Transmutation consumes all. EOS.
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Chris
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Black Panther
26 Jun 2015, 08:53 PM
End Game. The bears are totally screwed. The Transmutation consumes all. EOS.
And yet you still feel the need to come in and tell the story, the story that's ended?!

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Loki
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Black Panther
26 Jun 2015, 08:53 PM
End Game. The bears are totally screwed. The Transmutation consumes all. EOS.
You really have no clue do you?


“Talk sense to a fool and he calls you foolish.” - Euripides
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Count du Monet
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Presently the main world floating currencies have operated under the rules of the Basel agreement for over two decades. China wasn't on this system during its growth period but instead adopted the "beggar they neighbor" approach in its crudest form.

To be a real part of the world banking system it will have to do Basel. The problem is its growth period has left it with an inflationary problem and the Chinese central bank has yet to stabilize it.

China just doesn't have track record of operating on the Basel system. So China's entry into the world banking system will be an unknown quantity. Traders are unlikely to trust the Yuan.

Only BP is all optimism! :re:
The next trick of our glorious banks will be to charge us a fee for using net bank!!!
You are no longer customer, you are property!!!

Don't be SAUCY with me Bernaisse
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