China and the TPP

Economics, Premium POM

The Integration of Western and Eastern Trade-Blocs

By JC Collins

Last week a special United States-ASEAN summit was held in California. The purpose of the meeting was to align trade strategies and have all members of the ASEAN trade bloc join with the Trans-Pacific Partnership.

In October of 2015 I wrote a piece titled TPP and the AEC – Parallel Trade Agreements. In that post we reviewed how the TPP and the ASEAN Economic Community were two parts of the one hinge which acted as the point of integration between the United States and China within the multilateral monetary framework.

From that post:

“There is as much confusion and misinformation about the relationship between the Trans-Pacific Partnership (TPP) and the ASEAN Economic Community (AEC) as there has been regarding the integrated relationship between the International Monetary Fund and the Chiang-Mai Initiative Multilateral, and to a larger extent, the BRICS led institutions.”

The Effects of RMB Appreciation

Economics, Multilateral Investment Strategies, Premium POM

And Why the TPP and AEC Trade Agreements Offset the Negative Aspects

By JC Collins

Back in October of 2015 I wrote a post titled TPP and AEC – Parallel Trade Agreements. It presented the trade agreement aspect of the monetary transition and suggested that both agreements are intended to address the changes to the international trade model as the US dollar begins to share reserve responsibilities with the Chinese renminbi.

It also discussed another previous post from May of 2015 titled The Secret of the TPP – The Coming Interest Rate Increases and Dollar Depreciation. Both articles together lay the groundwork for understanding the short-term measures and long-term strategies which China and the international community as a whole, are implementing in order to capitalize on the forthcoming appreciation of the renminbi and depreciation of the USD. The negative aspects of these exchange rate changes are also considered within the developing framework of these agreements.

Has the “Made in America” Dollar Depreciation Begun?

Economics, Premium POM

Just as American Exports Are Set to Explode

By JC Collins

When we hear that the Chinese renminbi has depreciated against the US dollar we automatically think that the RMB is weakening everywhere. After all, the USD is the global benchmark on currency valuation. But we need to consider that the renminbi’s valuation is also based on a basket of trade weighted currencies. (See post China Just Ended the Dollar Peg…for the most part) Under this exchange regime the RMB has remained stable, even though Chinese monetary authorities have lowered the daily fixed rate against the dollar.

Over the last few days the dollar has been depreciating, which has caught many by surprise. Most POM readers will understand that this depreciation of the dollar has been expected, and in fact, has been a strategy of the both the Federal Reserve and the US Treasury for many years now.