All of the statements in this article are based on reliable sources and are reproduced at the end of this article
The Fed has long regarded the mainland as a thorn in its side, and has long been deaf to its long-promised interest rate cuts, and its actions have been affecting China's exchange rate against the dollar.
But in 2023, the National Bureau of Statistics released the latest economic data, and the mainland's GDP growth rate in the first quarter was as high as 5.3%, directly exceeding the mainland's expectation of 5%, which greatly increased the global market's self-confidence in China's economy.
At the same time, the exchange rate of the renminbi against the US dollar also fell to 7.28 percent, which greatly boosted the mainland's economic confidence.
Who will win this US-led currency war?
America's currency wars
On April 16, 2023, the latest news released by the China Foreign Exchange Trade System showed that the exchange rate of the RMB against the US dollar has fallen to 7.28%, and the exact data shows that the central parity of the exchange rate between the RMB and the US dollar is 7.1028, a decrease of 49% compared with the previous trading volume.
The specific data shows that it has dropped to 7.2831%, one of which has fallen to 7.2694% as of the time the reporter issued the report on April 16, but until the end of the report, the final reduced exchange rate is 7.26396%, which has fallen by 0.02%.
In the first quarter of 2024, China's GDP has increased by 5.3% year-on-year, and at the beginning of 2024, it has already shown that it can be very good.
Compared to China's economic growth, the latest data released by the United States showed an increase in the exchange rate of 0.7%, which is far less than China's, but this figure also met their expectations. Wells Fargo released its first-quarter earnings report, showing that Wells Fargo's revenue increased by 18%, although the revenue increased, its profit fell by 7.45%.
The United States' measure to reduce profits is to lower the credit rating of the mainland, and in addition to lowering the credit ratings of China's six major banks of industry, agriculture, China, construction, communications, and postal services, it has also lowered the credit ratings of dozens of large mainland enterprises, Alibaba, Tencent, and dozens of other companies.
It is enough to show the determination of the United States against China.
However, after doing all this, it announced that it was not in a hurry to cut interest rates, and even raised the interest rate back to about 8%.
Later, in order to attract funds from the mainland, Wall Street in the United States introduced a 10% interest rate to Hong Kong, and such a high interest rate only has a one-month deposit period.
You must know that the deposit interest rate on the mainland is only about 2%, and the United States' attack on us has obviously failed, and it wants to attract capital inflows and use the 10% interest rate to shorten the renminbi, so as to bring about a financial crisis, so that Wall Street can accurately hit China.
But we can also see that part of the reason why the United States is eager to attack China is that he is in a hurry, after all, the 10% interest rate a month costs a lot of money to maintain, and it can be said that the United States has invested all its net worth in order to hit China hard.
The U.S.-China currency war
In fact, the depreciation of the U.S. currency is not without reason, the United States during the epidemic, when the national economy was sluggish, the United States in order to show that its economy was not affected at all, so it printed dollars, too many dollars will also lead to inflation, at that time the CPI data in the United States were as high as 9.1%.
In order to deal with this inflation, the U.S. Federal Reserve began to raise interest rates urgently, raising the interest rate from 0.25% directly to 5.25%, even so the blood did not solve the dilemma of inflation, on the other hand, China's cautious treatment of the country's finances was able to maintain a relatively stable economic growth trend.
So this led to the fact that China's GDP grew by 4.5% during the same period, compared to only 1.3% in the United States, which is enough to see that the difference between the Chinese and American currencies is beginning to appear, and the international status of the renminbi has also increased significantly.
Therefore, the U.S. interest rate cut policy was suspended, and instead it began to raise interest rates, which was undoubtedly an attempt to reduce China's currency exchange rate, but in the face of the malicious intent of the United States, China still chose not to raise interest rates, and even implemented 0.25% to the world
This shows that China still maintains its own financial policy and responds indifferently to the United States in the face of a strong attack by the United States.
In fact, whether there is an interest rate hike or a cut, it is within the scope of the mainland's economic strength, so no matter what measures he takes, the mainland will be firm in its own approach and maintain the stability of the renminbi.
If China chooses to raise interest rates in order to deal with the United States for a short time, then if the United States suddenly changes its policy and starts to cut interest rates, then the renminbi will be passively affected.
Laying the foundation for GDP
In fact, if the Fed has always adopted the principle of not cutting interest rates, the dollar will always maintain a strong position in the world, even if each country will adopt a relative policy to face the surprise attack of the United States, it will still cause panic.
However, the economic data released by the Continental Bureau of Statistics has increased the confidence of the mainland people to fight against it, that is, the GDP will grow by 5.3% directly in the first quarter of 2024.
This figure shows us that the mainland's economy is growing steadily, and the growth rate is considerable.
You must know that the mainland's GDP in the first quarter was 296299 billion yuan, an increase of 1.6 percent over the four quarters of the previous year, which shows that the mainland has built a perfect foundation at the beginning of this year.
Every quarter will also be divided according to different industries to divide the growth, compared with before, the mainland's accumulation of the tertiary industry growth momentum has also reached 5%, the mainland's GDP has smoothly reached a higher stage, although the mainland has grown in various fields, but if it wants to be reflected, it depends on the people's disposable income.
In the first quarter of 2024, the per capita disposable income of mainland residents also reached 11,539 yuan, an increase of 6.2% compared with before.
These data all talk about the new trend of the mainland's economic growth, which also gives the mainland the calmness it shows in the face of the currency war launched by the United States, and strength is the foundation of national stability.
Currency wars who have the last laugh
From the fluctuation of the exchange rate, we can see what the Federal Reserve is thinking, the Federal Reserve at the beginning of the big talk will implement the policy of cutting interest rates, giving a wrong signal to countries all over the world, in fact, he has no intention of cutting interest rates at all, just to be able to catch off guard.
However, the US dollar still has a certain influence in the international arena, and even if the Fed does not make those small moves, it will still have a partial impact on other currencies.
With the extreme instability of the U.S. exchange rate, the renminbi will usher in more opportunities to better occupy a certain weight in the global economy, and while the renminbi continues to develop internationalization, it should not follow in the footsteps of the dollar, and should be more cautious in the face of various unstable factors in the world.
The currency war between China and the United States must be the most difficult war to fight, and the economic watershed, and even the international market are waiting for the final winner of this game.
Today's socio-economic development is constantly changing, and the slightest carelessness can lead us into the abyss, but we are fortunate that our strong country has been protecting us.
Key Sources:
This article was originally published in Shangguan News on June 30, 2023 on "Just now, the yuan broke 7.28!
The original article was published on Xinhua Finance's official Weibo on April 17, 2024 on "The central parity of the RMB has been adjusted and depreciated below the 7.1 mark, and the domestic economy will continue to rebound and will still bring support".
This article was originally published in Sichuan Daily on April 20, 2022 on "Sichuan's GDP grew by 5.3% year-on-year in the first quarter
The province's economic operation has achieved a stable start".
This article was originally published on Viewpoint.com on April 19, 2024 on "Standard Chartered Bank Hong Kong Pushes 10% Deposit Rate to Attract Mainland Funds".
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