Chinese authorities have promoted the use of the yuan worldwide, whereas the U.S. greenback dominates international transactions.
BEIJING — A Chinese economist’s keynote speech at a significant asset supervisor’s funding technique occasion final week targeted on worldwide politics somewhat than the progress outlook.
“We are undergoing a cognitive revolution, so today my talk will not be the dissemination of an economic report,” mentioned Liu Yuhui, director of a finance analysis division at a authorities assume tank, the Chinese Academy of Social Sciences.
That’s in accordance with a CNBC translation of his Mandarin-language speech Friday at asset supervisor ChinaAMC’s funding technique convention. Founded in 1998, ChinaAMC is one in every of the nation’s largest mutual fund managers and claims 1.54 trillion yuan ($240.63 billion) in belongings beneath administration.
Liu’s speak was billed by the organizers as a dialogue of macroeconomic points for the second half of the 12 months. But the presentation slides had been titled “The bipolar world under the U.S.-dollar super-expansion cycle — The Chinese capital market’s ‘cognitive revolution.'”
The occasion got here nearly two weeks since the ruling Chinese Communist Party just celebrated its 100th anniversary on July 1, when President Xi Jinping known as once more for the “great rejuvenation” of China.
Liu, additionally chief economist at Tianfeng Securities, echoed that line when talking confidently of China’s potential to attain its objective of turning into a “great nation.”
He added that once-a-century alternatives would emerge from a “struggle for supremacy” between the U.S. and China.
The U.S. is the largest financial system in the world, whereas China is the second and catching up. The two international locations have been embroiled in growing tensions over the previous couple of years, starting with commerce and spilling over into finance and expertise.
Helping China, in Liu’s view, is the American embrace of a dollar-printing coverage since the coronavirus pandemic. To Liu, that coverage displays an irreversible change that, amongst different issues, has direct penalties for China’s objective of controlling inflation domestically.
However, Liu didn’t depart room for doubt on whether or not China may achieve sustaining its progress. Echoing confidence in Beijing, he mentioned China’s resolve would permit the nation to resist the results of U.S. coverage, weakening the U.S. financial system and strengthening China’s.
In Liu’s view, the U.S. is counting on the idea of “modern monetary theory,” which holds that governments with a powerful foreign money can print cash to assist their home economies with out worrying a lot about funds deficits.
One of the most well-known proponents of contemporary financial concept is Stephanie Kelton, formerly chief economist for Democrats on the U.S. Senate Budget Committee and a senior financial advisor to Bernie Sanders′ 2016 presidential marketing campaign.
The U.S., beneath the Trump administration and now the Biden administration, has stored rates of interest low and released trillions of dollars into the economy to assist progress in the wake of the pandemic.
The stimulus program has drawn criticism for its scale. At conglomerate Berkshire Hathaway’s annual assembly in May, U.S. billionaire Warren Buffett’s longtime enterprise accomplice Charlie Munger mentioned fashionable financial concept is perhaps “extra possible than everyone thought. But I do know that in the event you simply keep doing it without any limit it will end in disaster.”
To Liu, staying according to Chinese authorities directives shall be much more vital for home funding in gentle of developments like Alibaba founder Jack Ma’s controversial speech last fall and the subsequent suspension of Ant Group’s IPO.
Since Chinese coverage will give attention to making certain nationwide safety and chopping carbon emissions, he mentioned mainland Chinese shares with the highest likelihood of enormous positive aspects shall be these in the new power, seed, optics and semiconductor industries, amongst others.
As for digital currencies, on which Chinese authorities have intensified their crackdown this 12 months, Liu forged them in geopolitical phrases as properly.
“In my view,” he mentioned, “it’s just the U.S.’s way to tempt Chinese capital.”