The United States has started inflation in April 2021, and it once reached 9.1% this year, with the actual inflation rate higher than the data. Under the pressure of high inflation, the Federal Reserve began to hike interest rates after the outbreak of the Russian-Ukrainian war. It has raised interest rates by 75 basis points for two consecutive months in June and July this year, which is the highest single rate hike since 1994. In just less than four months, the Fed raised interest rates from 0 to 2.25% to 2.5%. According to the Fed's meaning, the Fed will raise interest rates by at least 75 basis points in September, and will raise interest rates to more than 4% from the end of this year to the beginning of next year.
market now set the fixed point of Fed rate hike at about 4%, but accounts for about 5%, and the time will be around the middle of next year. The Fed's crazy interest rate hike will bring serious economic consequences to the world, and 's global economy will likely have a hard landing.
Just as the US economy was severely inflationary and crazy interest rate hikes, another situation occurred in China: interest rate cuts and lowering the deposit reserve ratio of . On September 15, Bank of China , China Construction Bank , Industrial and Commercial Bank of China , and Agricultural Bank of China all issued announcements to adjust the interest rate of RMB deposit listing from now on. Data shows that the 3-month, 6-month, 1-year, 2-year, and 5-year fixed deposit rates all fell by 10 basis points; the 3-year fixed deposit rates were lowered by 15 basis points. Over the past period of time, it has been lowering the reserve requirement ratio and lowering interest rates.
Interest rate is the currency price. Judging from the current interest rate, the currency price of the RMB is obviously cheaper than the currency price of the US dollar. We all know that in general, the more developed the country's monetary capital is, the richer the monetary capital, the lower the monetary price; conversely, the less developed the country's monetary capital is, the scarce the monetary capital, the higher the monetary price.
However, the situation is reversed now. As the most developed country, the United States has a higher currency price than China. Moreover, as for monetary policy , when the Federal Reserve was raising interest rates wildly, China not only did not follow the interest rate hike, but instead took measures to cut interest rates. What is the logic?
If you still remember the situation more than ten years ago, you should remember that when international oil prices rose, our inflation was more serious than the United States, and our currency price was much more expensive than the United States. So, what has caused major changes in this over the past decade?
In Zhan Hao's view, there are three most fundamental reasons for all this:
1. China's industrial upgrading has achieved remarkable results
When international oil prices rose sharply, why did the United States take the lead in severe inflation while China did not experience severe inflation?
As for China, the reason is very simple. After the rapid industrial upgrading of the past ten years, the social division of labor has been more refined, and the added value of social production has been higher, which has caused the proportion of energy prices in the entire social economy, operating cost , to drop significantly compared with 10 years ago. So everyone has seen that our inflation data has not increased much when oil prices rise this time.
So, why is the United States in inflation? There are two reasons. One is that the inflation in the United States is not just the push up oil prices, but the money is driven up. The fundamental reason is that the Federal Reserve has released $6 trillion in liquidity in more than a year; the other is that the United States has further deteriorated its industries in the past decade, and its social division of labor has been further simplified. Its energy is used in direct consumption rather than social reproduction, which has led to the US economy being more sensitive to energy price fluctuations than in the past.
Our economic growth over the past decade has been achieved by the real economy, while the United States has achieved by the virtual economy. This is the most fundamental reason for this change in China and the United States. To a certain extent, it is precisely because of our continuous industrial upgrading that China and the United States have changed their positions in offense and defense in their strategic direction. In the past, the United States could use interest rate hikes as a weapon to harm our country, just like the United States now harms other countries through interest rate hikes. However, the current rate hike in the United States has caused great harm to itself, and compared to the damage to China, the rate hike in the United States will cause greater harm to the United States.
Someone may ask again, why does the interest rate hike cause great harm to the United States? Because if interest rates are not raised, there are two consequences of allowing inflation to rise: one is that society is in turmoil and the economy is in a serious crisis; the other is that the US dollar will become waste paper and the United States will lose its monetary hegemony status. Therefore, it is more beneficial to the United States by raising interest rates and transferring the crisis to other countries. Of course, the harm to itself is also obvious. The United States itself may also have a hard economic landing.
The most core factor that China can withstand the weapon of the United States is that China's industrial upgrading is done well. Of course, it is precisely because of the industrial upgrading over the past decade that the United States has fought a technological war with China. In the eyes of the United States, if it does not stuck China's neck, there will be no tools to stuck China's neck.
2. China has abundant financial capital, and the excess liquidity in the United States can no longer flow into the Chinese market on a large scale
Compared with the past, China's financial capital is now very abundant. Among the top ten banks in the world, there are four of China's top ten banks. Therefore, compared with the United States, China now has strong ability to create currencies, especially the liquidity in the Chinese market is mainly RMB liquidity. It is also based on this environment that the sensitivity of the Chinese market to US monetary policy has dropped significantly compared with the past. Of course, this is also because the United States released more than 6 trillion US dollars of liquidity in this round and did not flow into the Chinese market on a large scale. In the past, the companies that borrowed "low-priced" US dollars in the Chinese market were mainly real estate developers. Now many of China's real estate developers have collapsed, and the United States dare not borrow it. Therefore, this round of liquidity mainly flowed into the US stock market, which made this round of interest rate hikes in the US dollar have little impact on the Chinese market.
3. China's real economy is solid and there is more room to release liquidity
China's economy currently has no inflation, but at the same time, due to insufficient market confidence and the impact of the epidemic in the first half of the year, growth has also encountered difficulties. However, compared with the United States, China's real economy is solid, and there is more room for investment in infrastructure projects, so we can release more liquidity to the real economy through advanced construction and stimulate economic growth.
Under such circumstances, the Federal Reserve's interest rate hike has little impact on China, China has no inflation, and economic growth needs stimulus. At this time, appropriate reserve requirement ratio cuts and interest rate cuts are China's policy space. Frankly speaking, this is the strategic advantage over the United States that China has achieved in all aspects over the past decade. With this advantage, China is more calm than the United States in terms of policy adjustments, so the United States raises interest rates and China cuts interest rates.
So, what are the benefits of China's strategic advantage to the United States?
In Zhan Hao's view, the benefits are mainly two directions:
One is the domestic direction. We have such policy space, and of course we can further stimulate the economic development of through policy regulation and stabilize the economic situation. Of course, our monetary policy is relatively cautious, because the final anchor of the monetary policy is to hurt the economy itself with severe damage. As strong as the United States, it desperately used monetary policy, and finally reached the point where hyperinflation and had to raise interest rates sharply, and even risked the economic landing.
The second is the international market. The crazy interest rate hike in the United States will inevitably lead to a shortage of US dollar currency in the international market, which is obviously conducive to the internationalization of the RMB. When other countries are short of currencies, China can lend them to avoid a plunge in asset prices. In this way, the United States will no longer have the opportunity to take advantage of the falling asset prices in other countries to engage in financial robbery. For the whole world, as long as the United States is preventing it from cutting leeks, it is a win. Moreover, the more China is willing to provide such support, more countries will be willing to deepen cooperation with China, which is beneficial to the long-term development of China and the world. Of course, the only country that has no benefits in all this is the United States, so the United States hates China to the core but can do nothing.
Next, what China needs to do is to not only do its own various precautions against the United States and stabilize its economy, but also join forces with more countries to prevent the United States, and everyone will work together to stabilize development and economy.Of course, if everyone wants to defend the United States at the same time, they must deepen cooperation with each other. So we see that the countries of , SCO , , BRICS, and must accelerate their expansion!
It is the economic transition between China and the United States that has led to the current hysteria of the United States, which has stuck China's neck in technology, put more pressure on China to play the "Taiwan card" on geopolitical terms, and even provoked the Russian-Ukrainian war... However, as Chairman Mao said, the United States will inevitably make trouble, fail, make trouble again, fail again! There will be no second result!
