[Watch China, April 23, 2024](Watch interviews and reports by Chinese reporters Liang Lusi and Li Jingyao) After Yellen ended her visit to China, she returned to the United States and continued to talk about China’s overcapacity problem. Now everyone is speculating that the US-China trade war is about to start again. What impact will the trade war have? Because the yuan will depreciate, Chinese export companies are rushing to hoard dollars. “Looking at China” interviewed economist Dr. Luo Jiachong on this issue. He said that China will not be able to withstand this trade war. With the trade war starting, Chinese exporters want to make another big profit, so hoarding dollars will not be as easy as before.
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China’s uncompromising trade war is about to begin
Yellen has concluded her visit to China, and there is speculation that a trade war is about to begin.
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In this regard, Luo Jiacong said that a fight should be fought. “In fact, the United States has expected that the CCP will persist to the end, but it still has to go through the procedures and negotiate with China. The United States has prepared a set of measures and will start to fight back if the negotiation is not successful. There is news “The United States will take the matter to the WTO and I believe it will take action.”
“As for mainland China, there are constant voices of criticism, which shows that China has no intention of giving in. So it is imperative for the United States to cut it off this time.” The United States seems to be targeting areas it has previously targeted, such as steel and aluminum. If the opponent doesn’t react after the first slash, the second or third slash will be executed.
“If it focuses on key areas, it will be difficult for the CCP to resist. I guess it may be targeted. For example, Tesla went to the mainland to produce and then sold it at a bargain price, which angered the top US officials. It’s like trying to squeeze in but not out. ” Luo Jiacong said that Tesla’s stock price has fallen by nearly half because of its focus on electric vehicles. This shows that the United States is not only targeting China’s overcapacity, but also targeting this type of enterprise.
Biden and allies gang up on the CCP, will Xi strike back?
In the past, the U.S.-China trade war was fought by the United States alone, but now it is fought together with the Western camp.
In this regard, Luo Jiacong said that this time the United States has learned wisely. “Trump used to do it on his own. He didn’t just attack China, he attacked everyone. Trump’s previous methods were the same as the current mainland, making enemies everywhere. However, Biden is smarter. He enlisted other Western allies to fight together, as well as those in Asia. Some Western allies are really encircling us.”
Luo said that in this case, the effect will be better than before. “Because of the blockade, the buyer’s market has been monopolized by the United States and its allies. You don’t know who to sell your goods to, and your products cannot be exported.”
Can China withstand this trade war? Luo Jiachong said that there is no way to resist. Now they want China to stop dumping and exercise restraint in terms of quantity, otherwise the price will have to be raised. If you raise the price yourself, export volume will also decrease. Otherwise, they will impose additional tariffs.
“The motivation is very clear. The United States wants to ensure its own employment in an election year. Many Western countries are also holding elections this year. Since everyone is in the election, they will take action together. Once they hit it off, everyone is on the same front.”
As the Western camp unites to deal with the CCP, some analysts say that Xi Jinping may jump over the wall and do some “stupid things.”
Luo Jiachong further analyzed that the trade war will have two consequences: first, it will lead to an increase in global inflation. In a trade war, the West will also face inflationary pressures. Second, it (the CCP) is already at the end of its rope. If you push it further, it may go berserk and do some out-of-control behavior.
“I believe that now we are targeting some local areas. If it were Trump, he might target all aspects. In fact, a trade war is not good for the world.”
The more we save unfinished buildings, the poorer we become.
Senior officials of the Chinese Communist Party are considering establishing a national real estate platform company that will be responsible for acquiring unfinished buildings in various places and then converting them into affordable housing.
Luo Jiachong said that many unfinished buildings are caused by the bankruptcy of developers. It will take time to clean up the whole mess. Even if it were possible, first, there would be a lot of vacancies and it would take a long time to resolve. Second, if you do this, property prices will definitely fall. If the quantity is large, the price will definitely fall.
“I don’t think that once the real estate problem is solved, it can also be solved in other fields.” When real estate prices fall, assets will shrink, and everyone will become poor as a result, much like the negative equity in 1997. “We can see from Hong Kong’s experience that it will take several years to recover. In its (China’s) situation, it will take several years.”
Industry insiders also said that establishing a national platform company will encounter many challenges in acquiring unfinished buildings, such as: where does the money come from, how to formulate acquisition standards, how to operate the acquired properties in the future, and how to control various aspects in practice. potential moral hazards in the process, etc.
Chinese companies rush to hoard dollars
According to Chinese media reports, in anticipation of the depreciation of the renminbi, Chinese companies have been hoarding U.S. dollars and depositing them in offshore deposits to obtain high interest returns while waiting for better interest rates before selling them.
Analysts at China Construction Bank estimate that exporters kept dollars in deposits, pushing the foreign exchange settlement ratio, which measures the conversion of export revenue into yuan, to just 51% in February.
The current offshore deposit interest rate is 6%, and the domestic RMB deposit interest rate is only 1.5%, so Chinese exporters choose to make “foreign exchange gains” on the sidelines.
It is reported that the current interest rate gap between the United States and China is the largest since 2007, making Chinese exporters reluctant to convert US dollars into RMB.
In this regard, Luo Jiachong believes that it does not mean that you can just hoard U.S. dollars. “It depends on whether exports make money. Previous exports earned a lot of US dollars. If the trade war continues, it will be difficult to make money again and it will not be easy to hoard US dollars.”
Source: Look at China
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Tags: West encircling suppressing Xis furious counterattack depreciation RMB Chinese companies rushing hoard dollars Video United States China Trade war Unfinished buildings
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