Tuesday, February 16, 2016

A Brief Summary Of The China Central Bank Chief's Million-Word Interview

The guy talks almost as much as Marc Andreessen.*
From FT Alphaville:

Governor Zhou: “The central bank is neither God nor magician that could just wipe the uncertainties out”
Which is sad, but at least he’s talking and talking at length.

Before we get to that though, it’s worth having a read of George Magnus and Eric Burroughs on Chinese capital outflows, reserves and the country’s ongoing FX trilemma — China cannot “pursue more than two of an independent monetary policy, a fixed exchange rate, and free capital movements simultaneously”. They’re good catch ups on where China is now and the prospects of a float, devaluation or increasing capital controls.

It’s also broadly what PBoC governor Zhou discussed, among other things, in a lengthy interview to Caixin over the last few days — after a long period silence — and a transcript of that interview is now pixelated and ready for your eyeballs.

We thought we’d aid that eyeballing and pick out some sections of the interview and put a summary of sorts near the bottom. It’s best to skip down to there if you’ve already read the full thing. The extracts are chunky, as was the interview — which you could maybe read as some 10,000 words of PBoC versus the speculators.....

.... Read the full thing — there’s genuinely lots more in terms of detail and topics, including sections on emoney in China and macropru — but here’s our effort at a summary of what he wanted us to hear:
  • Soros, Kyle Bass and other speculators be damned
  • Volatility will likely be used to damn them
  • The RMB is about the basket of currencies, not the USD, and its reference to that basket will be continuously adjusted
  • Perceptions have been skewed by the appreciation of the USD, and further USD strength will determine the speed of the RMB’s adjustment
  • The path of that RMB adjustment will be gradual and, as UBS put it, “opportunistic and mindful of spill-over effect”...

*Marc Andreessen In the New Yorker:
13,000+ words....  

...Possibly also of interest:
New York Magazine's Million Word Interview With Mark Andreessen