The Soros incident continues to ferment the People’s Daily as a "declaration of war on Chinese currency"

Editor's Note: Soros, who is known as the "financial crocodile", publicly declared war on China at the World Economic Forum in Davos this year, claiming that he has made a big sale of Asian currencies. Due to his influence, the already existing volatility in the international financial market has intensified, and Asian currencies have clearly felt the pressure of greater speculative attacks.
In this regard, Xinhua News Agency published an article in the early morning of the 23rd entitled "China's economic transformation to test the wisdom and courage of global investors," said that speculative speculation and malicious short-selling will face huge losses, and even severe punishment.
On the 24th, Xinhua News Agency issued a stern warning to Soros, shorting the renminbi. Speculators and malicious short-sellers who are eager to arbitrage are facing higher transaction costs and even serious legal consequences. It is important to understand that a large transitional country with strong will to change and correct resilience has abundant resources and policy ammunition. Make it enough to control the situation.
On the 25th, the People’s Daily published an overseas version saying that short-selling Chinese will eventually lose to the market. Experts interviewed by the People’s Daily said that “it is ridiculous to want to successfully short China.”
On the 26th, the People’s Daily overseas version was published on the front page again: Declaring war on the Chinese currency? "Ha ha". From another perspective, Soros’s “declaration of war” against Asian currencies has also created an opportunity for China to deepen East Asia’s financial cooperation and even the “Belt and Road” financial cooperation. However, Soros’s challenge to the renminbi and the Hong Kong dollar cannot be successful – there is no doubt about this.

Declare war on Chinese currency? "Ha ha"
Source: People's Daily Overseas Edition From last year to this year, Soros, known as the "financial crocodile", has become one of the most intriguing figures at the World Economic Forum in Davos for two consecutive years. Last year, he used this platform to announce “permanent retirement”, no longer involved in financial investment, and instead focused on what he called “political charity”; this year, on this platform, he publicly declared war on China, claiming that I have already made a big sale of Asian currencies. Due to his influence, the already existing volatility in the international financial market has intensified, and Asian currencies have clearly felt the pressure of greater speculative attacks.
However, Soros’s challenge to the renminbi and the Hong Kong dollar cannot be successful – there is no doubt about this.
Despite the slowdown in China’s economic growth, stock market volatility and the depreciation of the renminbi against the US dollar since last year, the fundamentals of China’s economy have been relatively good among the big countries during the period of decline in global economic growth: last year’s economic growth rate was equivalent to the growth rate of the United States. Twice; China's exports fell by 1.8% in 2015, but global trade fell by 10% over the same period; China's industrial structure is still upgrading, emerging advanced manufacturing and emerging service industries are still growing, and have begun to grow in more and more The field leads the world...
All of the above shows that China's macroeconomic stability is far better than that of other BRICS countries and most developed countries. A simple economic shock cannot overthrow China, and China can still maintain a relatively good situation among the global economic powers. At the same time, factors such as the high unity of ethnic composition and cultural traditions have also given China a higher social stability.
In terms of the RMB exchange rate, the RMB has indeed depreciated slightly against the US dollar since the middle of last year, but market participants should also see that, from the average annual exchange rate of the RMB, from US$ 8.6187 in 1994 to US$ 1 in 2014. For the 6.1428 yuan, the renminbi has been continuously appreciated for nearly 20 years against the US dollar, and only slightly repeated in 2000. It is rare for a currency to continue to appreciate against the US dollar for such a long time, so it is normal to have a small correction. Moreover, China has become the world's second largest economy, and the renminbi cannot always be pegged to the US dollar. In a world with a highly liquid capital, China is willing and able to withstand a small, moderate exchange rate in order to achieve monetary policy independence. Fluctuations, market participants will sooner or later recognize and get used to this, thereby reducing the current overreaction.
On a larger background, the strength of the US dollar against most other emerging market currencies is likely to continue for a long time, but it is difficult for the renminbi to do so. Because China's trade balance still maintains a sustained surplus, and the surplus is still expanding; the US economy has been deeply mired in financial “Dutch disease” (an abnormal part of the sector has led to the decline of other sectors) and cannot be extricated. Although the United States wants to re-consolidate its real economic base, its "re-industrialization" momentum is unsustainable, causing its trade in goods to continue to deteriorate as the economy recovers. This round of temporary strength of the US dollar against the renminbi will inevitably be interrupted by the above-mentioned "Triffin dilemma" (confidence and solvency dilemma), and it can be expected that this time may not be too long.
From another perspective, Soros’s “declaration of war” against Asian currencies has also created an opportunity for China to deepen East Asia’s financial cooperation and even the “Belt and Road” financial cooperation. From low to high, international monetary cooperation is divided into international financing cooperation, joint intervention in foreign exchange markets, macroeconomic policy coordination, joint exchange rate mechanism, and unified currency. The direct driving force of deepening usually comes from the pressure of speculative currency attacks.
The current East Asian currency cooperation is still at the level of regional financing cooperation marked by currency swaps and repo nets. Nowadays, emerging market currencies are oscillating, Soros is launching a gun against speculative attacks on Asian currencies. Is it not for China and other East Asian economies to achieve an upgrade from international financing cooperation to joint intervention in the currency market or even macroeconomic coordination? Opportunity?

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