[News Breaking]US-Alliance Financial Exercise vs. China and Russia’s Pseudo-Dollarization | Wu Jialong | Zheng Qinmo | Ukraine

[The Epoch Times, April 25, 2024]Welcome to “Cracked News” on April 24 (Wednesday). The guest of this episode is cracked news guest, senior political and economic commentator Wu Jialong, Department of Diplomacy and International Relations, Tamkang University Associate Professor Zheng Qinmo, host Zhang Dongxu.

Today’s Focus: Will the CCP fully expand if Ukraine is defeated? Blinken visits China to control Russia-China military-industrial ties! RMB foreign exchange reserves cannot support the settlement system at all! Where is the Bank of Japan’s line of defense? Argentina applies to become a NATO global partner!

U.S. Secretary of State Blinken will visit China for three days starting today. On the eve of his departure, Blinken criticized the CCP for committing crimes against humanity and genocide; the U.S. Speaker of the House criticized the CCP as an axis of evil.

The U.S. and the alliance have launched two major nuclear bomb-level warnings: (1) Foreign media revealed that the U.S. intends to cut off some Chinese banks from global connections. (2) Poland has stated that it can cooperate with NATO and the United States in deploying nuclear weapons in its territory. (3) The British Prime Minister visited Poland and announced unprecedented military aid to Ukraine.

China and Russia want to use the BRICS summit mechanism to promote de-dollarization, but Argentina, a major South American country, has applied to join NATO as a global partner. In addition, the yen fluctuates and the United States, Japan and South Korea jointly discuss it. How to interpret it?

[U.S. Secretary of State Blinken criticized crimes against humanity and came to Beijing for a showdown with a list of ultimatums]

U.S. Secretary of State Blinken successively attended NATO and G7 foreign ministers, asking the CCP to choose between Russia and the West. “China cannot achieve the best of both worlds, nor can it afford such consequences.” Before his visit to China, he released the latest human rights report, criticizing the Chinese Communist Party for committing crimes against humanity, genocide, and persecuting Uyghurs and other groups in Xinjiang, as well as Falun Gong and other religious groups.

The Chinese Communist Party’s media publicly called on the United States to “lower its stance.” While the CCP is launching a public opinion offensive, it itself seems to be playing a soft tone.

►Wu Jialong’s interpretation: Blinken’s second visit to China during his tenure and his second visit within a year, “is not here to talk, he is here to fight, and to start a war, it means to be polite first and then to fight.”

Wu Jialong observed that when the United States wants to deal with the Chinese Communist Party’s aid to Russia’s military industry, the entire process has three links: the first is the military production enterprises, the second is the trade level, and the third is the bank settlement. The U.S. is now releasing news that it “will start to launch financial sanctions, maybe starting from small cases, and then gradually and finally it will be effective if it targets the six major state-owned banks (Chinese Communist Party). Now in order to avoid (U.S.) financial sanctions, the CCP (The Chinese Communist Party) also uses some small banks to settle trade with Russia. These small banks do not do U.S. dollar business. The big banks have U.S. dollar business and will not intervene (to aid Russia). The CCP separates them. , are all responding to possible sanctions, so if (the United States) really wants to impose sanctions and have an effect, it must finally involve the six major state-owned banks (Chinese Communist Party) and see how the United States does it and whether it can do it. This step.”

In terms of dealing with the CCP’s military-industrial enterprises, such as China Electronics Technology Group, military-related enterprises, technology industries, etc., if we want to sanction these enterprises, we will target the second generation of the CCP’s red generation and the powerful class, which is called “hitting the snakes.” Seven inches”.

[Supporting Ukraine, Britain announced the unprecedented largest military aid to the United States and Ukraine, and sent additional military advisers]

After the U.S. Congress passed the aid bill to Ukraine, the British Prime Minister visited Poland and announced Britain’s largest wave of military assistance. The United States also plans to send additional military advisers and provide long-range versions of ATACMS missiles for the first time.

►Zheng Qinmo introduced the military aid announced by the British Prime Minister and the positioning of the “axis of autocracy.”

Zheng Qinmo said that according to information from U.S. intelligence agencies, the CCP has been strengthening and reshaping the Russian military industry, mainly starting from the second half of last year. When everyone was highly anticipating Ukraine’s summer counterattack, when Russia was in a sluggish state, the CCP began to assist military industry companies. “During the more than two years of the Russo-Ukrainian war, the CCP was relatively cautious at first, but later became more and more bold. I think behind this was of course the West’s appeasement. Especially when Russia may have been unsustainable, the CCP stepped up its assistance. ”

Regarding the United States sending additional military advisers to Kiev, Zheng Qinmo observed that one of the backgrounds is that the Ukrainian military has a new commander-in-chief Sersky, and the coordination on the front line may be weak, so the United States needs to strengthen this part. In addition, if there are no outstanding results (in the Ukrainian battlefield) and the war situation continues to be sluggish, this will be a relatively unfavorable factor for Biden’s election. “We should expect that since the United States has passed the aid bill, it will strengthen the entire battlefield tactical command and provide necessary assistance to Ukraine.”

[The United States plans to cut off the Bank of China from the global system and Russia says that Russia-China trade has been de-dollarized]

Teacher Wu analyzed on the program last week that the CCP’s perfunctory response to Yellen would be a serious misjudgment by the leader of the CCP. Before Blinken arrived in China, the Wall Street Journal reported on the 23rd that the United States planned to impose new sanctions to cut off Chinese banks from the global financial system. The United States is drafting sanctions that threaten to cut off some Chinese banks from the global financial system. It provides U.S. envoys with diplomatic leverage, a move that officials hope will deter Beijing from supporting Russian military production and exports and prevent Russia from emerging as the winner in a war of attrition between Russia and Ukraine.

The day before (22nd), Russian Foreign Minister Lavrov suddenly claimed that Russia-China bilateral economic and trade relations have been almost completely de-dollarized, and more than 90% of mutual settlements have been converted into national currencies. Putin claimed at the BRICS Summit last August that the BRICS countries were seeking to reduce their reliance on the U.S. dollar in mutual transactions, and that the U.S. dollar was in the “objective and irreversible” process of losing its global role and that the economic relations between the BRICS countries were “destroying.” The process of “dollarization” is gaining momentum, and we are working hard to formulate effective mechanisms for mutual settlement and financial and monetary supervision.

►Wu Jialong explains: De-dollarization between China and Russia? Yellen visited Beijing in early April and said that the two countries’ financial supervision needs to be like military hotlines. Over the past few months, they have practiced the collapse of large banks in both countries many times… Is this a big move behind the hint of a relationship?

(1) Wu Jialong observed that Treasury Secretary Yellen and Secretary of State Blinken visited China successively, all of which were courtesy first and then war, preparing for tougher and more severe sanctions to be introduced later. The core issues were focused on the CCP’s support for Russia’s defense production capacity and aid to the establishment of The consumption of replenishing ammunition in the production line; “What the United States needs to control now is the military cooperation between China and Russia to prevent Russia from finally winning in the war of attrition in Ukraine. Therefore, the United States’ sanctions against the CCP should have already been announced. “This will escalate the trade war between the United States and China, and the financial war will follow.”

The United States wants to prevent Russia from finally winning in the war of attrition. The United States must take action now, and it must hit the Chinese Communist Party’s military industrial enterprises and banks, and then it must keep its word. “If the United States has prepared so much and said so much, “What tough words. If the sanctions are not implemented in the end, then the tough talk of the United States and what Yellen said will have serious consequences will become empty words.”

“If the United States cannot actually fire the first shot of financial sanctions by then, then Blinken’s visit (to China) will be in vain. It is estimated that if he is willing to come, the United States should have both evidence and determination to start financial sanctions. Once started, it will probably start from a small start, and eventually the six major state-owned banks (of the CCP) will be involved, otherwise it will not be a nuclear-bomb-level financial countermeasure. “And when it comes to sanctioning the CCP, the United States should have enough. Evidence and legitimacy must win the cooperation of allies. For example, the euro zone will also follow up with the dollar zone, and sanctions will be effective. Otherwise, the CCP will evade and use the euro for settlement.

Wu Jialong analyzed that if settlement cannot be made in U.S. dollars, “this is called nuclear bomb level (sanctions), and all of China’s trade will have problems, because it cannot be settled (in U.S. dollars), so it will fall back on domestic demand, which is equivalent to (China’s) entire foreign trade.” , (if) it is not completely blocked, it will probably be blocked to a large extent; its energy, food, raw materials, machinery and equipment, industrial imports, etc., cannot be settled in US dollars.” “If the other party. (Foreign businessmen) are willing to accept RMB, so it’s easy to say. The problem is that the other party accepts RMB and can exchange (when), it (foreign businessmen) also attempts to exchange it for US dollars immediately, and then it will still attack you (China) Foreign exchange reserves. So if (China) is really sanctioned by the United States, China’s economy will indeed be seriously injured, and other countries may also pay some price; but in the end, it is very likely that (the United States) will have no choice but to do this (sanctions) ”

(2) Yellen visited Beijing in early April and said that the two countries’ financial supervision needs to be like military hotlines. In the past few months, they have repeatedly practiced the collapse of large banks in both countries. The host asked, if the US sanctions hit the CCP’s big banks, China would already be facing financial systemic risks. What kind of financial situation might it face? Moreover, for foreign investors, the risk of entering China has become even greater. Is it possible that China’s financial system and huge debt problems will not be alleviated, and the risk will be realized?

Wu Jialong believes that this is the case, and the probability is very high. “So why does the United States need to prepare and negotiate in many aspects? It is to make everyone mentally prepared. So (the United States) put out this posture, did China see it? We don’t know , but they should be somewhat aware of it. “The US is spreading the news step by step,” Wu Jialong explained, “This is saying hello to Wall Street. If Wall Street knows what it means, hurry up! I will give you some time to run.”

(3) On another level, regarding the “de-dollarization” of the CCP and Russia, can they respond to and confront US sanctions?

Wu Jialong observed that there should be no way. The RMB itself has insufficient conditions, and it is just a transition for Russia. This is not true “de-dollarization.” This is just a “transitional period” approach for Russia. Because it is subject to U.S. financial sanctions and excluded from the so-called SWIFT (USD settlement) system, Russian banks are unable to settle in US dollars, so many energy transactions, grain and agricultural products transactions , it is possible to borrow some money from the RMB, for example, at least use RMB to settle transactions with China, or China accepts part of the ruble settlement, which is called settlement in its own currency, the so-called de-dollarization, or reducing dependence on or use of the U.S. dollar; this exists Between China and Russia, it may extend to the CCP, Iran, and North Korea. “But the problem is that ‘de-dollarization’ reflects a temporary (measure) that is a last resort when Russia is under sanctions. Suppose one day ( After the U.S. sanctions are lifted, do you think Russia will continue to use the renminbi? Shouldn’t it be possible to maintain its dependence on the renminbi?”

Wu Jialong pointed out that using RMB to settle internal transactions between the two countries (China and Russia) does not mean that they are truly de-dollarizing. The current situation is that China and Russia have no choice but to use RMB settlement as a transitional method when Russia is sanctioned. “You describe it as saying that the BRICS countries are preparing to engage in so-called de-dollarization. This is self-aggrandizement and a self-spiritual victory method. Strictly speaking, it does not shake the status of the dollar, but is just bluffing.”

Among the BRICS countries, “Will India, Brazil, and South Africa really join this (de-dollarization)?” Because as an alternative to de-dollarization, if you want to use the RMB cross-border settlement system to replace the US dollar settlement system, then you must “The RMB itself is supported by strong foreign exchange reserves. With such a currency issuance system, can the RMB itself do it? There is a big problem. The reserve capacity of the RMB, such as gold, is still far behind the United States. “

Wu Jialong pointed out that the conditions of the RMB itself are very insufficient. Although the CCP hopes to expand the use of the renminbi, establish a cross-border renminbi settlement system, and bring Brazil or Argentina into the fold, this is a direction for its efforts. Basically, the conditions for the renminbi itself must be strengthened, including free convertibility and the bond market including the renminbi. When people are developed, (when) they hold RMB, they can convert it into RMB-denominated bonds; just like when we hold U.S. dollar assets, the assets denominated in U.S. dollars are called U.S. Treasury bonds and the U.S. bond market, so it’s not just foreign exchange. The market, including the bond market, must also be developed so that people can have enough funds to mobilize.

“The conditions for the RMB itself are not yet met. If the RMB can be fully (freely) convertible like the British pound and the Japanese yen, then China’s size will become a plus. But now it is obvious that the Central Bank of China does not dare to really let go. If (the RMB) If it is truly freely convertible, it is very likely that your (China’s) foreign exchange reserves will be immediately liquidated by withdrawals. The CCP does not dare to allow free convertibility now, and there are so-called restrictions on foreign exchange settlement both offshore and onshore; for example. Many Taiwanese businessmen have difficulty converting RMB or Hong Kong dollars into U.S. dollars and taking them away, and the CCP will find ways to make things difficult for you.”

[Europe is preparing for a big move! Poland announced that it will cooperate with NATO to deploy nuclear weapons in its territory]

Blinken revealed to NATO and the G7 the CCP’s secret aid to Russia. The Speaker of the U.S. House of Representatives denounced the CCP as an axis of evil and also invading Ukraine.

Before the British Prime Minister visited Poland, the Polish President released big news. He had previously met with Biden and Trump in the United States. He told the media that Poland was ready to cooperate with NATO and the United States to deploy nuclear weapons in its territory. In addition, South Korea will once again export multiple launch rocket systems to Poland.

►Zheng Qinmo explains the interconnected layout of NATO, the EU, and the United States behind Poland’s actions.

Zheng Qinmo observed that Blinken’s ultimatum to the CCP during his visit to China was “basically the result of the West’s (past) appeasement. Under the nose of international supervision, the CCP can continue to increase its level of support (aid to Russia) like this. Last year, Russia’s Prigg Tianjin mutiny, the CCP instead increased its funding for Russia. “In fact, the CCP’s aggression is all-round. The West once thought that it was enough to say no decoupling and only de-risking. After (the West promoted) de-risking, the CCP started dumping and subsidizing. Then it caused a global economic chaos, and now everyone (Western countries) still has to resort to tariffs to respond to (the CCP).”

Zheng Qinmo observed that if Poland deploys nuclear weapons in Poland, “the main purpose is to offset Russia’s nuclear threat. Every time Putin launches an aggression, he will first raise the so-called nuclear threat and nuclear blackmail. If NATO deploys nuclear weapons in Poland, it will be very close to Russia and Russia.” Especially close to the political center of Moscow, St. Petersburg and other places; because including the use of medium-range missiles (carrying nuclear warheads), there is basically no (much) reaction (time), which can neutralize Russia’s usual nuclear threats.”

[Will the yen rebound from its new low? After communication between the United States, Japan and South Korea, Japan warned that it would intervene in the currency market]

The yen exchange rate reached 154.85 yen per US dollar, a new low since 1990. Japanese Finance Minister Shunichi Suzuki said on the 23rd that last week’s trilateral talks between the United States, Japan and South Korea may have laid the foundation for Japan to take appropriate actions in the foreign exchange market in response to excessive fluctuations in the yen. This was interpreted as Japan’s strongest warning to date on the possibility of intervention in the currency market.

►How does Wu Jialong observe? Why does the yen fluctuate, Japan intervenes in the foreign exchange market, and the United States, Japan and South Korea need to communicate? Bloomberg reported that things must go down when they reach their extremes, and record bearish bets have increased the possibility of a rebound in the yen against the US dollar.

Wu Jialong pointed out that one thing speculators have always done now is to constantly test the central bank’s defensive bottom line. I’m throwing it, do you want to take it? Do you want to come out and guard? If your central bank fails to maintain this level, I will continue to advance.

“The Bank of Japan did make a mistake. Because it has gotten rid of deflation, the Bank is still hesitant and dare not properly promote the normalization of monetary policy, leaving room for speculators to speculate.”

Wu Jialong further explained that in fact, the risk for speculators is very high, because the Bank of Japan is fully capable of intervention. Once it intervenes and the entire market reverses, it will be too late for your investors to sell. If the central bank takes advantage of this “fragility” in the financial market, the central bank can change the (exchange rate) market without sending a single soldier or throwing a silver bullet. This is a basic example of central bank operation. Now the United States must This technique was taught to Japan and even Korea.

Wu Jialong explained that through the Three-Nation Meeting, Japan hopes to increase psychological pressure on speculators and let them know that they must be cautious and not go too far. In fact, if the Bank of Japan really wants to negotiate exchange rate issues with the United States, it can just have a direct phone call. Why hold a three-nation meeting? Therefore, it is a gesture to target the psychology of speculators, letting speculators know to quickly close their positions and buy back the sold yen. The yen will appreciate, so that the Bank of Japan does not need to spend so much money (intervening to maintain the exchange rate). A soldier who defeats others in battle.

Wu Jialong believes that at the same time, this can be used to conduct financial drills during war and prevent financial crises in Asian countries during war. “It is to cope with the fact that once a war breaks out, the exchange rates between Japan and South Korea may have big problems; so now it is like starting to practice in advance, which is to find a way. When the exchange rate fluctuates abnormally, how should the central bank respond? How? By spreading rumors through policy statements, it affects the confidence of speculators and the impulse of speculators to attack a certain currency. Now the yen is equivalent to demonstrating, or the United States is teaching the yen how to demonstrate in the future. The words may be applied to other currencies, including the Korean won, the New Taiwan dollar, or currencies in Southeast Asia. How to avoid the so-called Southeast Asian financial turmoil from happening again.

[ArgentinaappliedtobecomeaNATOglobalpartnerandtheUnitedStatessupportsmilitaryaidtoleveragetheBRICcorneroftheCCP?】

Argentina’s Milai government officially submitted its application to join NATO as a global partner at NATO headquarters on Thursday. For the first time since 2003, it received an estimated 40 million U.S. defense funds to help Argentina modernize and upgrade its military and purchase F-16 fighter jets. Zheng Qinmo interprets the impact.

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