Chinese Economics Thread
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bluewater2012
Junior Member
News is three weeks old but worth mentioning since the thread was closed.
China accuses George Soros of 'declaring war' on yuan
Chinese state media has stepped up a salvo of biting commentaries against George Soros and other currency traders as the yuan comes under pressure, with the billionaire investor accused of “declaring war” on the unit.
At the annual World Economic Forum in Davos last week, Soros told Bloomberg TV that the world’s second-largest economy – where growth has already slowed to a 25-year low according to official figures – was heading for more troubles.
“A hard landing is practically unavoidable,” he said.
Soros – whose enormous trades are still blamed in some countries for contributing to the Asian financial crisis of 1997 – pointed to deflation and excessive debt as reasons for China’s slowdown.
The normally stable yuan, whose value is closely controlled by Beijing, has come under pressure in recent weeks and months in overseas markets and from capital outflows. Authorities have spent hundreds of billions of dollars to defend it.
China’s official Xinhua news agency on Wednesday said that Soros had predicted economic troubles for China “several times in the past”.
“Either the short-sellers haven’t done their homework or … they are intentionally trying to create panic to snap profits,” it said.
An English-language op-ed in the nationalistic Global Times newspaper blamed “westerners” for not “accepting responsibility for the mess” in the world economy.
The comments came after the overseas edition of the People’s Daily, the official mouthpiece of the Communist party, published a front-page article Tuesday titled “Declaring war on China’s currency? Ha ha” that was widely shared on Chinese social media.
Soros “publicly ‘declared war’ on China”, the paper said, citing the 85-year-old as saying that he had taken positions against Asian currencies.
But some readers questioned whether the official rhetoric could fuel Chinese investors’ fears.
"They say a lot of loud slogans, but do official media even know that Chinese investors are in hell?” said one poster on social media network Weibo.
“I’m afraid that Chinese investors will die in a stampede before Soros even shows his hand.”
In the 1990s Soros led speculators in bets against the Bank of England, which unsuccessfully sought to defend the pound’s exchange rate peg.
“The Chinese left it too long” to change their growth model from dependence on exports to a consumer-led one, Soros said, even though Beijing had “greater latitude” than others to manage such a transition because of its currency reserves, which stand at over US$3tn.
China accuses George Soros of 'declaring war' on yuan
Chinese state media has stepped up a salvo of biting commentaries against George Soros and other currency traders as the yuan comes under pressure, with the billionaire investor accused of “declaring war” on the unit.
At the annual World Economic Forum in Davos last week, Soros told Bloomberg TV that the world’s second-largest economy – where growth has already slowed to a 25-year low according to official figures – was heading for more troubles.
“A hard landing is practically unavoidable,” he said.
Soros – whose enormous trades are still blamed in some countries for contributing to the Asian financial crisis of 1997 – pointed to deflation and excessive debt as reasons for China’s slowdown.
The normally stable yuan, whose value is closely controlled by Beijing, has come under pressure in recent weeks and months in overseas markets and from capital outflows. Authorities have spent hundreds of billions of dollars to defend it.
China’s official Xinhua news agency on Wednesday said that Soros had predicted economic troubles for China “several times in the past”.
“Either the short-sellers haven’t done their homework or … they are intentionally trying to create panic to snap profits,” it said.
An English-language op-ed in the nationalistic Global Times newspaper blamed “westerners” for not “accepting responsibility for the mess” in the world economy.
The comments came after the overseas edition of the People’s Daily, the official mouthpiece of the Communist party, published a front-page article Tuesday titled “Declaring war on China’s currency? Ha ha” that was widely shared on Chinese social media.
Soros “publicly ‘declared war’ on China”, the paper said, citing the 85-year-old as saying that he had taken positions against Asian currencies.
But some readers questioned whether the official rhetoric could fuel Chinese investors’ fears.
"They say a lot of loud slogans, but do official media even know that Chinese investors are in hell?” said one poster on social media network Weibo.
“I’m afraid that Chinese investors will die in a stampede before Soros even shows his hand.”
In the 1990s Soros led speculators in bets against the Bank of England, which unsuccessfully sought to defend the pound’s exchange rate peg.
“The Chinese left it too long” to change their growth model from dependence on exports to a consumer-led one, Soros said, even though Beijing had “greater latitude” than others to manage such a transition because of its currency reserves, which stand at over US$3tn.
AssassinsMace
Lieutenant General
I don't know how shorting works but there was an article after the Yuan shot up that Soros lost a lot of money. If it's true then one shouldn't probably try to short an entity that can change the value anytime they want.
antiterror13
Brigadier
This time I believe Soros will lose a lot of money. He made $1.5B in 1992 shorting Pound and also I believe he made a lot of money during Asian Financial Crisis in 1997. I and a lot of people don't like him, he didn't realise that in the end of the day, the people who work hard will suffer, if he win $1.5B, it means somebody else (a lot and lot) would pay the bill ... as simple as that .... in the world of speculators , it is simply a a zero sum game! (same as gambling)
SamuraiBlue
Captain
I wonder why people are over reacting, shorting is not any act of economic war.
Basically what Soros is doing is futures contract, betting that the Yuan is overvalued and is willing to pay a certain price lower then the present market value on a contract date.
So if Soros is right he will be able to collect more if the market value is lower then the contract price Soros had made and he will lose if the market value is higher then the contract price.
This kind of future contract is done all the time to hedge market fluidity such as wheat, oil and/or foreign currency.
Basically what Soros is doing is futures contract, betting that the Yuan is overvalued and is willing to pay a certain price lower then the present market value on a contract date.
So if Soros is right he will be able to collect more if the market value is lower then the contract price Soros had made and he will lose if the market value is higher then the contract price.
This kind of future contract is done all the time to hedge market fluidity such as wheat, oil and/or foreign currency.
antiterror13
Brigadier
You need to read more the history of Soros has done in the past and his intentions and the victims. For the magnitude he has/had and also the margin (1 - 2%), his actions could influence the movement of the currency (and others could follow too) and could collapse small countries. But I don't think he will win on shorting Yuan, China is way too big and being single party country, a lot easier and quicker to make any decisions.
Imagine if Soros shorting let's say Vietnam's Dong or Thailand' Baht or Philippine' Peso or even Singaporean dollars ? and if he won, what would happen to the people of those countries? Think about it mate
SamuraiBlue
Captain
You need fire to see smoke, you can't make money in shorting a foreign currency without the fundamental of a nation being over valued. No matter what Soros or anyone else states, if the fundamental states otherwise then people would not follow.
In other words whether Soros made the statement or not the currency will go under if the fundamental is not there.
antiterror13
Brigadier
There are two important things in currency trading (not sure whether you have done it, but I have) ... technical analysis and emotion ...... both are equally important. Otherwise a computer software would win all the time. And Soros is an extremely big player, he could influence a lot and a lot of players ... no matter what ... perhaps you would need to spend more time googling
It is off topic, I am done with it ...
I will simply add that with all the media crowing about a Chinese slow down and stock market crash, I have noted that China is very quietly selling a huge amount of its USD forex very high and buying a lot of the Yuan very cheap. About $500 Billion was sold last year apparently.
Ultra
Junior Member
LOL, betting against China.
Doesn't he know China a has $3.6 TRILLION in foreign currency reserve that can be used as currency defence? Does he have $3.6 trillion to bet against China? Does he have even $36 billions? (He doesn't. His networth is only $23 billion).
China gets more than $36 billion a year from US treasury bond (US debt - more than $1.2 trillion) they hold alone. China can play this currency game til the end of time if they so choose. I think China only bows to political pressure externally, not because they can't play this game indefinitely.
Doesn't he know China a has $3.6 TRILLION in foreign currency reserve that can be used as currency defence? Does he have $3.6 trillion to bet against China? Does he have even $36 billions? (He doesn't. His networth is only $23 billion).
China gets more than $36 billion a year from US treasury bond (US debt - more than $1.2 trillion) they hold alone. China can play this currency game til the end of time if they so choose. I think China only bows to political pressure externally, not because they can't play this game indefinitely.
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