General

In order to respond to the epidemic and quickly restore the domestic economy, the new US President Biden, the Biden administration recently introduced a 2 trillion banknote printing plan. This huge number is unprecedented in history. At the same time, this plan is bound to cause worldwide concern. Inflation, we can’t help asking: Can China handle this challenge well? Can the renminbi withstand this shock?

The main reason for the recent appreciation of the renminbi is the continued depreciation of the U.S. dollar, and the secondary reason is the huge interest rate differential between China and the United States.

1.

The negative impact of crazy money printing in the United States is beginning to show

The development of the U.S. government in recent years is not very optimistic, especially after the epidemic, the U.S. economic development has been in trouble. In order to boost the economy, the Biden administration has continued to “release water”. This behavior has made many countries holding U.S. debt frightened. Fortunately, China has already started to act.

The most obvious feature of the Biden administration after coming to power is the adoption of a high-value economic stimulus plan. This plan can promote the development of the US economy in a short period of time, but it is not conducive to the development of the United States in the long run. Inflation began to appear in the United States, people's lives were affected, and the actions of the United States caused global capital to shrink, and countries that held U.S. debt were deeply affected. Recently, the U.S. Treasury Department announced its monthly "International Capital Flow Report." In May, China’s U.S. debt holdings decreased by US$17.7 billion from April. China has reduced its U.S. debt holdings for three consecutive months.

2.

Countries take measures to reduce dependence on the U.S. dollaru200d

As the largest holder of U.S. debt, Japan's actions have also attracted worldwide attention. Japan also began to reduce the amount of US debt held in May, which means that the Japanese government is also taking measures to avoid risks. Not only that, Russia and other countries have also begun their own actions to reduce their dependence on the US dollar.

The continued abuse of the dollar's dominance has accelerated the collapse of the US-led SWIFT system. Since last year, the United States has continued to print money for the country’s economic development, which has led to the continuous rise of prices in the United States, and the lives of the people have been severely affected.

Countries have realized the crazy actions of the United States, and have begun to take measures to actively respond. Multi-polarization is a trend, and the payment system should also show diversified development. The hegemony of the US dollar no longer has an advantage. The United States must recognize this.

3.

The epidemic affects the survival difficulties of U.S. companies

This year, when American companies wanted to find other exporters, they suddenly discovered that those factories were closed and relocated. Whether in Vietnam or India, in the past one or two months, there has been a concentrated outbreak of the epidemic. The production lines of the factories in China have been shut down, and the epidemic cannot be resolved. Now it is not a question of how much money is made, but a question of life and death. So how do these countries provide the United States with a huge amount of export products? We have said in the past under the epidemic that whoever controls the epidemic well can quickly restore production capacity, and whoever can resume normal economic growth.

Due to the impact of the epidemic, many factories in other countries have closed down. Only factories in China are operating normally. Think about where Americans do not buy from China. We have said in the past that the whole world has to thank China for this global epidemic. If my country had not quickly controlled the epidemic in March and April last year and allowed industrial production to resume, then we would not have imagined that until today, we would not be able to return. Which country can provide goods to the world like the factories of the world?

Today, our foreign trade export companies have relatively strong bargaining power. On the one hand, many of our companies are export-processing enterprises. You can see the increase in raw materials. Importers can see the huge increase in raw materials. You must increase the price of my export products. On the other hand, if you don’t buy from me, you cannot buy from other countries. The prices in other countries may rise even higher, so you can only choose Chinese products. So we ushered in a once-in-a-lifetime opportunity, that is, on the one hand, the renminbi is appreciating, on the other hand, exports are increasing, which was unimaginable in the past. In the past, if the renminbi appreciates, exports must plummet in a short period of time, which will affect our economy. However, the devaluation of the renminbi can increase exports, but we have not made much money.

4.

Gradually rising China's international status has improved

The rise of a country is not the first time its economic scale, but the status of its currency in the international arena. Before World War II, the British pound was a global currency. Britain had been rigid for more than a hundred years, before the outbreak of World War II. The British pound collapsed, the U.S. dollar became a global currency, and the United States became rigid. In the era of economic globalization, the competition between major countries is actually a competition between the currencies of the two countries. In this world, is it possible to maximize the realization of national interests?

The United States has done so vividly in this regard. The manufacturing liquidity of over-issued U.S. dollars reduces the actual value of its outstanding debts. It is a matter of the next 10 years for the total volume of China's economy to exceed that of the U.S., but the real rise is the replacement of the U.S. dollar by the RMB. A long road to the dollar depends on whether it can be done. Now let’s analyze how difficult this road is. Judging from last year’s trade data, our total import and export volume in 2020 was US$464.6 billion, which accounted for 15.7% of the world’s total. A bumper harvest was also obtained in the first half of this year. In 2021 Trade volume. It is expected to exceed 5 trillion U.S. dollars, and the global share will exceed 17%. In the next 10 years, China will always be the world's largest trading country.

With the development of the world, countries have made progress to varying degrees, and hegemony has gone forever. Strengthening cooperation is the theme of all countries. Countries such as China and Russia have taken measures to reduce their dependence on the US dollar, and have begun to establish digital payment systems, using their own currencies for payment in trade, which have greatly weakened the hegemony of the US dollar. The development of the world requires the joint efforts of every country, so as to promote the progress and development of the world.

It can be said that the United States wants to defeat China through its banknote printing plan. It can be said that it is wishful thinking. China has the ability to deal with the United States' strategic attempt to flood other countries in the world, especially China. The weight of the United States will only make China stronger and the renminbi will one day be complete. Rise, China will rise completely one day!