China is preparing to fight back.

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The financial war has rekindled, and China is now launching a strong counterattack to seize capital in the global market and the United States! After the US lowered interest rates, many people thought that the financial war was over and the US had surrendered. Who would have thought that the US's consecutive rate hikes ultimately failed to blow up China, but instead led to the US suffering a crushing defeat and the failure of its goal of pulling off the financial war strategy of raising rates to destroy China's economy and harvest Chinese assets. The US has suffered a humiliating defeat in the financial war for the first time since World War II. Why did this happen? It's because the US's current economic situation can no longer bear the weight. Today, the US has a fiscal deficit of $1.5 trillion before October 2023. This means it has effectively become bankrupt in terms of fiscal policy, and administrative effectiveness is completely collapsing. What does this mean? To put it simply, the US's 2023 GDP is $27.36 trillion, while its fiscal revenue in 2023 is about $4.4 trillion. If you subtract some statutory expenses, you can use about $2 trillion. Of these $2 trillion, one year (until December 2023) will be used for interest payments. At present, 10 months of the fiscal deficit already reaches $1.7 trillion. How should this hole be filled? The US's financial situation has not collapsed due to the fact that the US dollar is a global currency, and the US is using its credit to finance its debt. Another desperate reality is that the Federal Reserve currently has almost nothing key physical assets left, including gold, oil, industrial products, and major resources. If the US's credit is exhausted, then the US really has nothing at all. Now, after the US admitted defeat, according to logic, the financial war should be over. However, the financial war is raging again now. This time, it's not the US that is on the offensive, but rather China that is launching a counteroffensive. The country has launched measures in various areas such as the stock market, real estate market, fiscal system, and financial sector, with the People's Bank even promising to provide an additional 5000 billion yuan to 10000 billion yuan worth of securities swap facilities. This facility was created for the first time in 2008 when the US was facing the sub-prime crisis. In March 2020, during the pandemic melt-down, the Fed activated this facility again. According to conservative estimates, there may be around $500 billion in foreign reserves that have yet to be converted into dollars, and if the RMB continues to appreciate against the USD under conditions where the US economy is expected to weaken in response to its continued rate hikes, the conversion volume could further boost the appreciation rate. These funds once converted into dollars will naturally find their way back to other purposes. Apart from the $500 billion in foreign reserves that remain unconverted, there are also more than 1 trillion yuan of overseas Chinese capital and speculative capital that still exist. The US's admission of defeat made it clear that the US's financial war was over. But why is the financial war still raging now? After all, the US has been struggling with inflation. The Fed has raised interest rates three times so far this year, and each time by 25 basis points. This clearly signals the Fed's intention to tighten monetary policy. So how can the world's capital markets believe the Fed's words now? In my opinion, the financial war has entered a new phase. It is now China's turn to play out. How much courage and determination do we have? Can the People's Bank actually launch another round of financing? Can we raise enough money? Can we withstand the pressure from capital flight? The US Fed has also panicked. The US Federal Reserve Chairman Jerome Powell said that the US doesn't need to lower interest rates immediately. There will only be two rate cuts this year, each with a cut of 25 basis points. This clearly emphasizes the Fed's intentions regarding future interest-rate policy. In reality, the Fed is warning the global capital market that the US economy isn't as weak as it seems, and that the Fed's interest-rate-cut policy won't be as aggressive as the first time. With the US economy weakening, capital flight will accelerate, and the US will face a liquidity crunch. The US has little room to maneuver politically or economically, and it has nowhere else to go. In addition, the US's economic weakness will eventually lead to a recession, which will directly damage the US's economy. For China's moves, the US Fed has also panicked. Chairman Jerome Powell said that the US doesn't need to lower interest rates immediately. There will only be two rate cuts this year, each with a cut of 25 basis points. This clearly indicates the Fed's intentions regarding future interest-rate policy. In reality, the Fed is warning the global capital market that the US economy isn't as weak as it seems, and that the Fed's interest-rate-cut policy won't be as aggressive as the first time. With the US economy weakening, capital flight will accelerate, and the US will face a liquidity crunch. The US has little room to maneuver politically or economically, and it has nowhere else to go. In addition, the US's economic weakness will eventually lead to a recession, which will directly damage the US's economy. For China's moves, the US Fed has also panicked. Chairman Jerome Powell said that the US doesn't need to lower interest rates immediately. There will only be two rate cuts this year, each with a cut of 25 basis points. This clearly indicates the Fed's intentions regarding future interest-rate policy. In reality, the Fed is warning the global capital market that the US economy isn't as weak as it seems, and that the Fed's interest-rate-cut policy won't be as aggressive as the first time. With the US economy weakening, capital flight will accelerate, and the US will face a liquidity crunch. The US has little room to maneuver politically or economically, and it has nowhere else to go. In addition, the US's economic weakness will eventually lead to a recession, which will directly damage the US's economy.