Soros: Hard landing for China. China disagrees fully.

China’s advice to Soros: “better” stay away from renminbi and HK$. I read an interesting article from Reuters about China’s state media and George Soros. Earlier, Soros told Bloomberg TV that he sees a hard landing for China’s economy and this will lead to a global deflation. In brief, deflation in economics is a decrease in the general price level of goods and services. Many times, this may be caused by the rising unemployment or a crisis etc which caused most of any investments to stop, demands fall and every seller desperately trying to get a buyer, thus causing general prices to drop. So, why did Soros do? He revealed to Bloomberg that he has personally been betting against the S&P 500, commodity-producing countries and Asian currencies and buying US government bonds. He has mentioned nothing specific about Yuan or HK$.

Well, the People’s Daily overseas edition said this in response. “Soros’ challenge against the renminbi (yuan) and Hong Kong dollar is unlikely to succeed, there is no doubt about that.” The article added further that this is because China’s economic fundamentals remain sound, despite slower growth, volatility in its stock market and the yuan’s depreciation against the US dollar. This opinion piece was written by a researcher at the commerce ministry. The latest announced data revealed that China’s economic growth slowed to 6.8% in the fourth quarter of 2015 and this the slowest quarter since 2009. In terms of yearly growth, the total of 6.9% in 2015 meant it was the worst in 25 years.

I prefer to believe the China’s side of the story because China will be the engine of growth for a long time to come. Sorry, it would not be that recovering economy when we talk about this part of the world. I think every economist is clear about this and only have differences in opinion about the actual time when China would become the largest in the world, economically. That’s one reason why the current restructuring must happen. It’s bitter pill to swallow but we do need a stronger China both in quantity and quality. Xinhua added, “China has been constantly improving its market regulatory system and legal system. As a result, reckless speculation and vicious shorting will face higher trading costs and possibly severe legal consequences.” Happy following the China story.

written on 26 Jan 2016

Next suggested article: Melaka Gateway and RM43 billion China investment

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