From Sina): China is experiencing a global currency war

We have repeatedly warned against currency tightening to protect precious domestic demand. If the Central Bank can effectively make the supply of money expand passively as the economic pull increases, China's economic domestic demand will inevitably boost. Because the measures taken by the central Government to protect domestic demand are gradually increasing, domestic demand stability within a year or two can still be expected.

Given that various economic policies have been effectively switched, investors should adjust their sentiment towards the stock market, and the necessary vigilance-should, too pessimistic-is not necessary. However, it must be noted that the important premise for the stock market to improve is that monetary policy will not be tightened by CPI. That is to say, if the Central Bank does not take the initiative to relax the currency, it does not matter; but it must not take the initiative to tighten. As long as the initiative is tight, the stock market is still weak.

We are experiencing a global currency war (or exchange rate war) initiated by developed countries ). The "unlimited and unconditional bond acquisition plan" of the euro zone is actually the most significant monetary policy decision of the euro zone, with a much greater significance than N interest reductions. The United States qe3 (the third quantitative easing) has launched, it is also a global heavyweight monetary policy.

Europe's "unlimited debt purchase plan"-the choice of this monetary policy has its own principles. First, it will kick off the endless wrangling between the IMF and Germany on the European debt issue. Second, it can effectively suppress international debt and currency speculation and reduce the interest rates of heavily-debt countries, providing sufficient liquidity for the heavily debt-paying countries, providing time to fully solve the debt problem, and helping the heavily debt-paying countries reduce their debt burden as soon as possible.

More importantly, the "unlimited debt purchase plan" can enable the euro zone to adopt a more flexible follow-up policy to combat the significant appreciation that the US qe3 may bring to the euro, the economic disaster brought to the euro zone. In the past, the euro zone used the so-called European debt crisis to weaken the euro against the dollar due to QE, and maintained a relatively stable exchange rate between the euro and the dollar over the past two years, this prevents the euro zone from being hijacked by the sharp devaluation of the dollar.

However, there is a weakness in this approach, that is, the euro has been pushed up by rating agencies and International Speculative forces to the cliff of disintegration step by step. Therefore, after taking over his tenure, he began to gradually change his approach. He never wanted the euro to be destroyed by himself, so he had the "Unlimited bond acquisition plan" we now see ". I firmly believe that with the formal launch of Europe's "Unlimited bond purchase plan", the European crisis is no longer a big problem, and it can be said that it has ended.

In my opinion, the pace of delivery of the euro currency is estimated to keep an eye on the exchange rate of the euro against the dollar (1.3105,-0.0008,-0.06%. This ensures the exchange rate stability in the euro zone and prevents the United States from passing through qe3, qe4 ...... It constantly forces the dollar to depreciate and the euro to appreciate, thereby compromising the economic interests of the euro zone. Europe shows a gesture of "how many currencies are you putting in the United States, and how many currencies are you putting in Europe" to keep the exchange rate stable against the dollar.

Qe is a "trick" for the US to solve the US economic problem. The unlimited bond purchase plan is a "trick" for the euro zone to solve the euro zone problem. But these two moves are for developing countries like China, they are all "damage tactics" that make no profit. They are all rogue tricks that make China and other debt-holding countries forced to accept debt monetization. At this moment, we do not want to depreciate the renminbi-the adoption of a relatively loose monetary policy is tantamount to being put into operation.

However, we do not advocate "proactive loose monetary policy", but prefer to adopt a "passive loose" monetary policy-aiming at stable interest rates in the currency market, it fully satisfies the monetary needs of the real economy, and passively increases monetary investment with the positive degree of fiscal policy. Such a currency investment is bound to make the RMB depreciate gradually, which is also a necessary means for China to stabilize its "external needs. We believe that the stability of external needs must first solve the problem of excessive appreciation of the renminbi against the US dollar and the euro.

Data shows that China's "general trade deficit" has narrowed by 23.6% with the devaluation of the renminbi, but there is still a deficit of $44.4 billion. This shows that there is still room for RMB depreciation.

(We have almost always depreciated so many foreign currencies)