"A big reversal in the Sino-US game: China switches from defense to offense. What kind of financial and strategic competition is behind it?"

In this round of game between China and the United States, our country has now entered the stage of turning from defense to offense. Many brothers may not understand it yet. Why do I say that? We must first figure out how the United States launched the attack. The US attack began in March 2022. Why at this time? Because the United States started the interest rate hike mode at that time, and the rate of interest rate hike was very fast. Before March, the US interest rate was only 0.5%. As a result, in October 2022, the interest rate soared to 5.5%, an increase of more than 5% at once. What does this interest rate mean? This is equivalent to risk-free return. You don’t have to do anything. You can get more than 5.5% interest by investing your money in the United States. In this way, a large amount of funds will naturally flow back to the United States. After all, who doesn’t want to make more money?

During this period of interest rate hike, many people felt that the United States was targeting our country, and that it was launching a financial offensive against us, with the goal of bringing down the prices of various assets in our country. However, some people felt that this was a conspiracy theory, and that the US interest rate hike was aimed at the world, not just us. This view is not wrong. The US interest rate hike is indeed intended to make the global dollar flow back to the United States, not just targeting us.

But why do we still feel that the United States is targeting us? This is because the United States has introduced two bills. The first is the Foreign Investment Risk Review Act, which specifically targets our country's Chinese concept stocks and Hong Kong stocks. Simply put, the United States prohibits domestic funds from entering these two markets, which has led to a rapid decline in the prices of these two capital markets, and our domestic A shares have also been implicated and followed suit. Therefore, the poor performance of some capital market prices in our country in the past two years is largely due to this bill.

The United States then introduced the American Innovation and Competitiveness Act, which explicitly prohibits investment and technology transfer to our country's companies, which has put many of our technology companies in a difficult situation.

Another thing to know is that the United States is targeting all of our companies. Many of our real estate companies raised a large amount of US dollar bonds in the United States before the United States raised interest rates. After the United States introduced the bill, it required these real estate companies to repay the money quickly. You know, when the real estate companies borrowed money, the exchange rate might be 1:6, which means that if they borrowed 100 million US dollars, they had to repay 600 million RMB. But after the United States introduced the bill, it continued to raise interest rates, and the exchange rate here depreciated, which might become 1:7, so the 100 million US dollars borrowed at the beginning had to be repaid 700 million RMB. If the real estate companies' houses were easy to sell, they could pay back an extra 100 million RMB with gritted teeth, but the key is that the real estate companies have also entered a downward cycle and cannot pay back so much money. The United States has said that if you real estate companies don't pay back the money, you can wait for the thunder. Once the real estate companies are thundered, the United States will start to sing the bad news of our country, because real estate is an important support for our country's economic development, and it is related to nearly 200 industries. Now the overall real estate market is in a downturn, and all walks of life will be affected. The United States predicted that our economy was not doing well, so it started to criticize us. It also did something that made us particularly angry. It went and bought stocks in Japan and India, pushing up the stock markets of these two countries higher and higher. It then used this to show that asset prices were rising along with those of the United States, and that our country was not doing well.

With these three tricks used by the United States, is this financial war launched by the United States aimed at us? The answer is self-evident, it is aimed at us. This has led to a vicious cycle in our country: capital outflow, falling asset prices, and the value of assets in the hands of ordinary people, whether in the stock market or the housing market, is shrinking, and everyone can only tighten their belts to live. Once consumption declines, corporate profits will decrease, and companies can only cut wages and lay off employees, which will further reduce people's consumption. Our Chinese economy has fallen into this spiral downward channel, and everyone feels very uncomfortable.

The United States is very happy, thinking that these three tricks have worked. What is the ultimate result that the United States wants? It is to make our country's core assets, such as PetroChina, COFCO, CSSC, Bank of China, Guodian, etc., completely open to the United States. Once open, the United States can buy our assets at the bottom, just like the United States bought Samsung at the bottom after destroying the Korean economy.

What can we do at this time? Is it really like what the United States hopes, to open up all capital projects and let core assets welcome American funds? This is obviously unrealistic. All we can do is one word - endure. In the process of enduring, many people can't endure it. In the past two years, I often hear people say that they want to release a lot of money. What is a big release of money? In traditional Chinese culture, water represents wealth. A big release of money means letting wealth flow to everyone like a big water, so that the economic problem will be solved. But have you noticed that the strategic determination of our country's top leaders is very strong, and they don't easily believe this statement. Because when the United States attacks us, if we release a lot of money, although asset prices can be pulled up in the short term, the United States can continue to increase the interest rate to 8% or 9% on the basis of 5%, or introduce various bills to restrict investment and crack down on industries, and the final result is still a drop in asset prices.

So at this stage, our top-level strategy is very clear, which is to hold on until September 2024. By this time, the United States' own problems began to gradually expose themselves.

The first problem is the US$35 trillion debt. Under high interest rates, the annual debt repayment interest is more than 1.6 trillion US dollars, while the US fiscal revenue is only 5 trillion US dollars a year, and nearly one-third of the money is used to pay interest. Can the US funds bear it?

The second problem is that American banks have begun to collapse one after another. Why? Because deposit interest rates are too high, which will attract more deposits, but loan interest rates are too high, and the number of people who take out loans will decrease rapidly. Everyone should know that deposits are liabilities for banks. Banks can only earn income by lending money out and generating interest rate differentials. The number of borrowers decreases and the number of depositors increases, which means that the bank's liabilities increase and profits continue to decrease. If this situation continues, what do you think will happen to American banks in the future? Isn't it just a series of collapses? Once the collapse occurs, the US economy will face a financial crisis.

The third problem is the US manufacturing industry. Under high interest rates, the manufacturing industry will think that the profit I earn from hard work in a year is about the same as the interest income from deposits in the US, so why should I engage in manufacturing? If the US does not engage in manufacturing this year, there will be a big problem with employment. Recently, we have also seen that the US unemployment rate has risen rapidly.

So when these three problems were exposed, the United States had to switch from raising interest rates to lowering them. On September 18, 2024, the United States chose to cut interest rates, and it did not cut 25 basis points, but directly cut 50 basis points, which was a large-scale rate cut that exceeded expectations. Does this mean that we have successfully resisted the US attack and won? Once we win, does it mean that a large amount of funds from the United States will flow back to us? Of course it will.

But the United States will not sit idly by and watch the capital flow back, so in September, the United States fanned the flames in various geopolitical areas around us, with the goal of repeating the Russian-Ukrainian conflict here. Because once a geopolitical conflict occurs, foreign capital will not come in when they see that the situation around us is unstable, which is why the United States fanned the flames in geopolitical areas before preparing to cut interest rates.

How did our country respond? Since we have withstood the financial war and won, our country has officially entered the transition from defense to offense. The United States cut interest rates on September 18, and we launched unprecedented policy measures from September 24 to September 27. For example, the overall reduction of mortgage loans for existing houses can reduce the loan repayments of ordinary people by several thousand yuan and reduce the burden on ordinary people. If someone wants to buy a second house or an improved house, the down payment ratio for the second house will be reduced from 25% to 15%. These two policies are aimed at stabilizing the real estate market. Because as long as the real estate market stops falling, our economy can be stabilized.

Then we began to guide funds into the capital market. If 300 billion is not enough, we will invest 500 billion. If 500 billion is not enough, we will invest another 500 billion. The purpose is to completely pull up the capital market. On September 27, the top leaders proposed to stabilize real estate prices and increase the income of ordinary people at the same time. We must persist in practical work. This series of measures is like injecting vitality into our dragon and completely awakening the Chinese economy. This unprecedented stimulus is equivalent to injecting funds to drive asset growth. As you can see in the past four days, the stock market has risen directly from 2,700 points to 3,000 points. How exciting. Once asset prices rise, shareholders with assets will have money, and consumption will increase. Once consumption increases, corporate profits will also increase, and employee income will also increase, which will further stimulate consumption. From the original vicious cycle to the current virtuous cycle, this is the underlying idea behind these policies for the complete recovery of the Chinese economy. Of course, this process will not be achieved overnight as many ordinary people think. There will definitely be repetitions in the middle. This repetitive process is the process of continuous increase in various policies that we will see later. I estimate that the stimulus policies from September 24th to September 27th are just the beginning. I believe that various stimulus policies after October, such as tax cuts and other favorable factors, are worth looking forward to.

We know that this virtuous cycle has many benefits. First, once our asset prices rise, it will be difficult for the United States to short sell and contain us. Foreign capital will return in large quantities when they see that our stock market was originally lying on the floor, but now our assets are rising rapidly, and there are various favorable factors. In the past few days, we have also seen that the RMB exchange rate has returned to below 7, which means that a large number of people are selling US dollars and buying RMB, and using RMB to invest in our assets, which has achieved the goal of breaking the US financial blockade.

Another point is that our country's local governments used to rely mainly on land finance, but if capital market prices rise rapidly, many listed companies are located locally and local governments have equity stakes. Once equity asset prices rise, local equity income will increase. In the future, equity finance may replace land finance, which is very helpful for local development.

The third point is also the most important. The valuations of many excellent listed companies in China are relatively low in the world. Just like our country's exports of home appliances and consumer electronics are the world's first, and ships and various technology manufacturing industries are also the world's first. Since we have achieved the world's first place, the corresponding stock market prices should continue to rise, but the actual situation is that the stock prices of these companies have been hovering at a low level. In contrast, many manufacturing industries in the United States have been hollowed out, but the stock prices of their manufacturing companies are very high. Therefore, once our asset prices rise, the stock prices of these high-quality listed companies will rise rapidly. With the financing money, we can expand our business in overseas markets and earn more foreign exchange, which is also to build new quality productivity.

With these three benefits, will the United States let us have an easy time? Definitely not, he will definitely find ways to make things difficult for us. So at this time, on September 25, we made a move to launch the Dongfeng Express into the depths of the Pacific Ocean. To put it bluntly, it was to deter the United States from creating geopolitical risks in our country. Why can we say that? Over the past year, the United States's Minuteman III intercontinental ballistic missile launch failed, the United Kingdom's Trident launch failed, and even Russia's launch failed. Now only our country has successfully launched it once. Our Dongfeng Express has a range of 15,000 kilometers, which can cover the territory of the United States. The key is that our Dongfeng Express can carry 10 nuclear warheads. This is to show the United States that you should be careful, your territory is not safe, and don't create various geopolitical risks in our country. At the same time, it also allows foreign capital to see the strength of our country and let foreign capital come in boldly. Here, we really have to thank those predecessors who have contributed to science and technology. Because of their research and efforts, we can use our strength today to make the United States choose peaceful coexistence.