The monsoon rains that have inundated several central and southern provinces this month have brought the most severe flooding that Fujian, Jiangxi, Hunan and Guizhou have suffered in half a century. Official figures put the death toll in June at at least 235 with a further 119 unaccounted for. At least 379 people have died as a result of flooding so far this year, the deadliest toll since 1998 when 3,600 died as a result of the rains.
On Monday, at least 107 people were buried by a rain-triggered landslide in Guizhou. In all more than 29 million people have been affected, with one in 10 those having to be evacuated from their homes. The economic cost is put at upwards of 82 billion yuan ($12 billion). Emergency relief efforts and fortification of riverbanks continues, as does the torrential rain with more in the forecast.
The value of the yuan was sidestepped in the communique wrapping up the weekend summit of G20 leaders. China insisted that it wasn’t mentioned, so it wasn’t. The closest the communique got was some lilly-livered language asserting that market-oriented foreign exchange rates reflecting fundamentals help sustain global stability. We love mom and apple pie, too. While the subject was certainly discussed, the main split at the meeting was between the U.S. and Europe over the question of stimulus versus deficit reduction. We don’t belittle the matter. Getting the timing right country by country for scaling back on stimulus spending to promote recovery and embarking on what will be painful fiscal consolidation is central to the sustainability of the next cycle of global growth. But as the global financial crisis passes the G20’s limits as a global economic policy coordinator are being shown up more and more. And that may ease pressure on Beijing to revalue the currency on anything but its own timetable.
Filed under Economy, Markets
This Bystander will be convinced that the supposed groundswell of factory workers’ discontent with their pay and conditions is a significant force once the strikes we have seen in recent weeks that have hit car production at Honda and now Toyota plants spread beyond foreign-owned factories to domestically-owned ones. One of the purposes of the news blackout on these strikes is to forestall that happening through copycatting. There is no sign that the authorities will tolerate widespread illegal industrial action or the circumvention of government-sanctioned unions at Chinese-owned factories.
On Tuesday, for the first time since it announced on Saturday that it would be restoring its managed exchange rate regime, the People’s Bank of China has raised the centre point of the yuan’s official trading band. Our excitement barely knows any bounds.
Central bank Q&A on the exchange-rate regime.
The death toll from the rains inundating the south has risen to at least 175, Xinhua reports, with a further 107 unaccounted for. Approaching 2 million people have been evacuated and relief and rescue efforts are struggling to keep up with rivers in Fujian, Jiangxi and Hunan swelling and more rains in the forecast, though the rainstorm alert has been lowered from orange to blue, the lowest level. The flooding and landslides caused by the torrential rain have washed away roads, rail and power lines, and affected more than 25 million people, causing 29.6 billion yuan ($4.3 billion) in estimated economic losses, according to the Civil Affairs Ministry.
First day of China’s newly re-instituted managed exchange rate regime was very much like the last day of the dollar peg it replaces. The People’s Bank of China left the yuan-dollar rate unchanged Monday–though we can’t say we were surprised. Days two through four, ahead of the G20 meeting next weekend, may bring some cosmetic appreciation in the Chinese currency. Thereafter we continue to expect the yuan to rise only slightly if at all against the dollar with the central bank continuing to be unbending in its flexibility.