The US is caught in a difficult situation in the Sino-US financial war. Is the interest rate cut a "new conspiracy" to curb the Chinese economy?

The financial war between China and the United States has been going on for three years. Has the winner been decided?The United States originally thought that it could completely destroy the Chinese economy by exploding the Chinese real estate market, and in the process reap trillions of high-quality assets. It would use China as a fat sheep to make up for its own deficit of 35 trillion dollars and continue to be the world hegemon for another 100 years. Unfortunately, after two years of violent interest rate hikes, the Chinese economy has not shown any signs of collapse. The United States cannot figure out what the problem is.

This matter has to start from the beginning

China's economic take-off began in 2001. In fact, at the beginning of China's rise, it was the former US president who helped us. At that time, we had been working hard for 15 years to return to the world trade system, but Western countries had a deep misunderstanding of China and had always kept us out.

In particular, the United States has been making things difficult for China at every turn, even insulting China to its face by saying that even dogs in the United States might not eat the meat we produce.

However, the negotiations in 2001 were suddenly successful, and it was the then US President Clinton who helped China. In fact, it was the US Congress that really opposed China's entry into the WTO. They were worried that China was too big, and if it took off through the WTO, it would become a strong competitor of the United States in the future. But the young Clinton didn't think so. He grew up in the era of the rise of the US economy and was full of confidence and pride in his country. He felt that China's large size was not a problem, but an advantage. A large size means more assets, and the more assets, the more wealth it can bring to the United States. And weren't Latin America and Japan fattened up by the United States before and then harvested? They were also powerless to fight back, so why couldn't China be the next one? So after persuading a group of congressmen, Clinton single-handedly facilitated China's entry into the WTO.

China's performance after joining the WTO has indeed made the United States very satisfied.

The hardworking laborers have become the base of the world's low-end manufacturing industry. China's abundant cheap labor force produces a large number of goods and exports them to the United States at extremely low prices. A T-shirt that costs 8 RMB is sold to the United States for 9 RMB, making only 1 dollar, while the United States can mark it at 5 dollars and make more than 20 dollars. If we want to buy high-tech products, we have to spend a lot of US dollars, and all the hard-earned money is returned to the United States.

There was once a saying in the field of foreign trade that the profit from China's export of 800 million shirts can buy an A380 Airbus aircraft, which is not an exaggeration. However, "for the rise of China" is a belief that the entire nation has always kept in mind. We will never give up on this road. While the United States is complacently relying on sucking blood from China to maintain economic prosperity and wanton consumption, China is keeping a low profile and accumulating strength to prepare for a showdown with the world hegemon one day.

After joining the WTO, China experienced a period of rapid development.

The trade volume has increased from $509.6 billion in 2001 to $4655.9 billion in 2020, a 10-fold increase in just nine years. China has become the world's largest country in terms of total merchandise trade, contributing an average of 30% of global economic growth each year. Seeing that China is about to take off, the United States is getting anxious. It doesn't care about the dignity of a great power, and it has started to use all kinds of dirty tricks on China. Trade war, technology exhibition, financial war, as long as it can curb China's rise, it will do anything.

In fact, the United States could feel the threat from China as early as 2008. In Obama's autobiography, he admitted: "In 2008, he realized that it was difficult for the United States to compete fairly with China." After joining the WTO, China's economy has been soaring. By continuously attracting foreign investment to expand domestic production, its economic rise has been unstoppable. However, the United States has been trapped in war for many years. Although it has realized China's rise, it has no ability to stop it. In July 2009, the Obama administration proposed a strategy to return to the Asia-Pacific region, intending to increase sanctions and suppression on China, but it still could not prevent China's economy from surpassing Japan and becoming the world's second largest economy. However, in 2015, the United States still dug a big hole for China. In those years, China's real estate began to stage the miracle of "raising prices and reducing inventory", and all capital was frantically leveraging real estate.

Not only that, the RMB exchange rate against the US dollar has also been falling due to the impact of the US interest rate hike. At that time, the exchange rate of the US dollar to the RMB was 1:6.5, and borrowing 10 billion dollars could be exchanged for 65 billion RMB. But now the exchange rate has reached 1:7.3, and it will take 73 billion RMB to repay 10 billion US dollars, which is 8 billion more. In this way, Chinese real estate companies have lost 12% of their profits without doing anything. The United States has really made a good calculation. Not only has our real estate market fallen into a dilemma, but the sharp increase in US interest rates has also strangled our foreign trade and stock market. Everyone knows that the stock market is short of money, so naturally it can't be much better.

What about foreign trade? Why is it also affected by the US interest rate hike? Because the situation is like this. With the US interest rate hike, hot money from all over the world has flowed back to the US, and everyone has become poorer. Naturally, there is not much money to buy our goods, so our foreign trade has been affected. So starting from 2022, our economic growth rate began to slow down. In the final analysis, it was because hot money went to the US. The Chinese market as a whole lacks money. No one invests, factories cannot expand production, and corporate profits will decrease.

However, the "economic collapse" that the United States expected has never come. Why? Because China's economy is too stable and state-owned banks are too powerful. Large amounts of real money have been used by the state to rescue the market, support the bottom, and stabilize the economy. As early as September 2021, we introduced the "Three Red Lines for the Real Estate Market". At that time, many people did not understand this policy. Now looking back, this is to burst the bubble and digest part of the risk before the United States raises interest rates. It is precisely because of this prediction that when the United States raised interest rates to explode our real estate market, we did not see the situation of a sharp drop in housing prices in a short period of time like Japan.

Moreover, at the same time when the United States was raising interest rates without regard to the consequences, we also accomplished several major events that are worthy of being recorded in history. One is that Huawei broke through the blockade of Western technology, which greatly boosted the confidence of the Chinese people and made the US strategy of technological blockade fail. Another is that China's new energy vehicles have swept the world and industrial upgrading has achieved great success. According to statistics, in 2023, the national real estate-related industries will drive sales of 23.76 trillion yuan. The sales driven by the automobile industry have reached 7.44 trillion yuan. It accounts for 1/3 of the real estate. If the growth of chips, large aircraft, shipbuilding and other high-end industries is added, it is a completely achievable goal for us to get rid of our dependence on real estate in the future. The third thing is the Chang'e 6 lunar landing plan. China has demonstrated a number of black technologies and even in some areas has far surpassed the United States.

Time is our friend but America's enemy.

On August 23, Federal Reserve Chairman Powell said: "It is time to adjust policy." The United States is likely to officially enter a rate cut cycle from September. Although there is still no substantive action, once the interest rate is cut, a large amount of US dollars will flow back into the markets of various countries. Looking at the world, the current Chinese market is the most cost-effective, with huge development prospects and cheap listed companies. A large number of high-quality assets will attract capital to flow into the Chinese market like a tide.

With more money in the market, companies will have an easier time, and there will be enough funds to accelerate industrial upgrading and technological research and development to revitalize the Chinese economy. The US interest rate cut will also lead to a depreciation of the US dollar and an appreciation of the RMB. In order to gain additional benefits from the appreciation of the RMB, foreign capital is likely to directly invest in Chinese assets to contribute another wave of momentum to the economy. Therefore, whether it is raising or lowering interest rates, the United States is now in a dilemma and can't get any benefits. When we compare the situation in 2024 and 2021, we can find that the United States has in fact failed in the Sino-US financial war, but they are unwilling to admit it, and are still gritting their teeth and holding on! #美联储何时降息？ #美降息25个基点预期升温 #美国大选如何影响加密产业？ #比特币年底能否突破10万美元？ #特朗普哈里斯辩论未提及加密货币