The first trading day of A-shares after the National Day holiday did not satisfy everyone, especially with the Hang Seng Index falling by 9.41% today, and the FTSE A50 Index plummeting by 11.32%, indicating a significant adjustment.

Bloomberg today bluntly published an article stating that China vows to achieve its goals but has not introduced large-scale stimulus measures.

This has led many to wonder whether the surge in Chinese assets has been aborted with the release of strong U.S. economic data?

Change in expectations for Fed rate cuts:

Over the past three years, while central banks around the world were raising interest rates, China went against the global trend by slightly lowering its own rates, becoming a low-interest-rate area in the world.

The People's Bank of China has undertaken the seemingly impossible task of maintaining both interest rates and exchange rates, and has indeed accomplished it.

The exchange rate of the Chinese yuan against a basket of currencies has stabilized around 7, and finally, in September this year, the Federal Reserve could no longer bear the burden of high interest rates and began to cut rates.

Advertisement

Global capital, following the map, has seen the superiority of Chinese assets. Even though the U.S. interest rate is still at 4.5%, and China's interest rate is as low as 2%, there is still capital that would rather forgo dollar assets and buy into China.The FTSE A50 Index has seen a surge of up to 50% since September 20th, and Chinese concept stocks listed in the United States have also generally risen by more than 30%.

Despite the same interest rate cuts, the U.S. cut by 50 basis points, while China's reduction in both interest rates and reserve requirements released a liquidity of 1 trillion. Why can the Chinese yuan appreciate while the U.S. dollar depreciates?

The fundamental reason is the change in expectations. For the Federal Reserve, one interest rate cut implies a series of ongoing cuts, whether the U.S. cuts by 50 basis points or 25 basis points in November.

It cannot change the trend of capital flowing out of the U.S. market; it's just a matter of the speed of the outflow.

Even if foreign capital slightly flows out of A-shares and Hong Kong stocks today, won't it be bought back in the future?

Currently, the only reliable countries in the world with the ability to ensure asset security are China and the United States. Leaving the U.S. means that capital will flow into China.

So, how will the U.S. prevent this from happening?

Foreign media once again short-sells China

Some so-called economists collaborate internally and externally to short-sell China's economy. Search for "China capital outflow" in foreign media, and basically every quarter, mainstream English-language media will publish a series of articles that are bearish on China's economy.Domestic economists have also stirred up pessimistic rhetoric such as "balance sheet recession, China repeating Japan's lost 30 years," and so on.

The upgrade of China's automotive industry has been labeled with negative evaluations like "involution" and "overcapacity."

However, when Chinese assets attract global attention and overseas funds want to buy Chinese assets, they say that China's economic stimulus policies fall short of expectations and future growth space is limited.

In summary, they use various means of public opinion warfare to sing bearish on the Chinese economy, occasionally cooperating with large financial institutions to create panic, which is even more worrying.

Before today's sharp drop in Hong Kong stocks, overseas financial media had been promoting that China would introduce a 10 trillion economic stimulus policy, but the official has never given any hint to the market about such a strong stimulus policy.

But after today's press conference by the National Development and Reform Commission, Bloomberg was the first to attack, commenting that "China wants to achieve economic growth goals, but has not introduced large-scale stimulus measures," attempting to release pessimistic sentiment.

Superimposed on the adjustment of A-shares and Hong Kong stocks, the propaganda effect was also directly maximized.

But what can be done? Can it change the fact of the US economic recession?

It cannot be changed, just like the US economic data is fabricated, it cannot change any facts. After adjustment, the Chinese market will have a longer and healthier slow bull market in the future, but the decline of the US dollar and the outflow of US manufacturing will not change because of media processing.The Renminbi Must Take a Different Path

The enemy of the Renminbi has never been the US dollar. What China desires is to forge a new financial and monetary order, aiming to end the international status of the US dollar, even if it means a fight to the death. China could simply sell off its US dollar holdings and US Treasury bonds without a second thought, which could instantly collapse the credit system that the US dollar has built up over the decades.

However, China places greater importance on the stability of the global trade system. We cannot allow our actions against the US dollar to plunge the entire world into panic and disaster.

The Renminbi aspires to take a different path towards globalization, one that is based on peaceful coexistence and is beneficial for a win-win-win situation for all parties involved. The Chinese have never sought to amass wealth through money printing.

High interest rates and an overvalued US dollar have shattered the American dream of bringing manufacturing back to the United States. The leading manufacturing industries within the country are generally facing difficulties. Intel, the only chip manufacturing factory in the US, is now struggling to survive and may have to sell its factory to stay afloat.

Boeing airplanes are even worse, with accidents happening almost daily, and workers demanding wage increases or threatening to strike. A large number of orders cannot be delivered, and the company ends up laying off employees to protect its profits.

The United States has only one card left to play, which is to raise interest rates on the US dollar. If this still fails to curb China's rise, then the decline of the United States and its eventual fall to the current state of Britain is only a matter of time.

Therefore, do not be overly concerned about the decline of the Hang Seng Index and the FTSE A50 today. The future is still long, and whatever is sold in the future will be bought back in the same manner.