A few days ago, the Chinese Communist Party organization “Communist Youth League Central Committee” launched a microblogging campaign against the Swedish company H&M, which said it refused to use Xinjiang cotton, the storm of Xinjiang cotton quickly spread to Nike, Adidas and many other international brands. The outside world noted that H & M’s statement was actually issued a year ago, why now bring up the old story, set off a round of boycott of foreign goods storm?
On related issues, the Voice of Hope reporter interviewed Mr. Wu Jialong, an overall Taiwanese economist and doctoral candidate in economics at Columbia University.
Reporter: What is the purpose of the Chinese Communist Party’s initiating a boycott of foreign goods?
Wu Jialong: Ostensibly it is a kind of national emotion catharsis, the self-confidence generated by the rise of China’s great power, as if friction with foreign forces has collided, so it seeks some foreign companies, such as off the shelves, no longer buy similar to this. The usual reason is the political aspect, for example, this Time the European sanctions against human rights violations in Xinjiang, the Chinese Communist Party on the counter-sanctions retaliation, retaliation, Europe will be more angry, so he met with Chinese ambassadors abroad, nine countries for an appointment, and then the original EU and China to sign the investment agreement on hold, should not be over. Xi Jinping spent a lot of effort to fight for it, so now things have become as if to expand this side of the conflict. China originally wanted to fight Europe together against the United States, or at least split the relationship between the United States and Europe, but now it seems that Europe is back on the side of the United States. There is a logic here to say that Europe will at first put up a pro-China posture, called the pro-China route. For example, Germany wants to sell cars to China, because now the developed countries are saturated with cars, only China still has growth, Germany’s auto industry is very important, cars drive machinery, steel and so on, so Germany wants to sell cars to the Chinese market, so the German chancellor will visit China, and China to do friendship, but so the United States jumped up, the United States will come out to speak, greeting. But China in order to retain Europe, to retain Germany will give benefits, give some economic benefits, this time may be the United States will increase the code, or some other threats, etc., Europe this time back to the United States side, often like this. You see the United Kingdom originally said to huawei to tender, the results are also not allowed to Huawei in. So the European countries are at first to China goodwill, and then wait for the United States to increase the code, to call the price, and finally Europe will return to the United States side. All play this way, all the way to play now.
Russia is even more serious, Russia wants to talk to China about de-dollarization and internationalization of the yuan, which is digging a hole for China to jump into, because challenging the status of the dollar, the United States will absolutely do the end, this is a dead end. The United States, of course, will draw Russia in, and China will draw Russia in, and Russia will benefit from both sides. Russia would not want China to have conflicts with the United States, there are conflicts, confrontation, the situation becomes very complicated, into say, the United States to unite all allies, so you now see Europe in Xinjiang cotton this issue with the Chinese Communist Party has friction. But this problem is this, because from the 2019 presidential election in Taiwan, the mainland began to cut the free flow of land visitors to Taiwan, the group of visitors also cut, not allowed to come, this thing was then the political reason, is to warn Tsai Ing-wen government, not to let her engage in Taiwan independence. Later, the Australian side said to independently investigate the virus, the Chinese Communist Party will not buy its beef, not to buy its wine, lobster, agricultural products and iron ore, etc., to crack down on the Australian economy, but also do not allow tourists to travel to Australia. In fact, from Japan to the United Kingdom to France, some private department stores used to have a large number of Chinese tourists, but now they have disappeared. Because there are a lot of passports such restrictions can not travel abroad, this is in the limit of foreign exchange spending on tourism, there is such an economic effect. It is the friction with foreign countries are on political grounds, but the economic results are the same, that is, to control foreign exchange spending.
Later I went to pull out some financial statements, the People’s Bank of China’s financial statements, its foreign exchange reserves originally had 3.1 trillion U.S. dollars, now it has 3.2 trillion U.S. dollars, an increase of 100 billion, but last year’s trade surplus plus the inflow of foreign capital, plus the issuance of dollar bonds abroad, the acquisition of U.S. dollar funds of about 500 billion U.S. dollars, but the People’s Bank of China’s foreign exchange reserves only increased by 100 billion This raises the question of whether there is an outflow of funds and a flight of funds. If you look at the level of foreign exchange reserves of 3.2 trillion or 3.1 trillion, the amount borrowed is about 2.1 trillion US dollars of debt issued abroad, so that the deduction is about 1.1 trillion. But this includes foreign direct investment, which brings money into China and then converts it into RMB for domestic use, and this amount is estimated to be about 1 trillion dollars according to internal mainland estimates. Of course, now the foreign capital is withdrawing, not all, even if the withdrawal of half, 1.1 trillion, after the 500 billion, there are 600 billion left. But now China’s agricultural imports, plus energy and natural gas and oil imports will be more than 400 billion, in addition to chips, raw materials, industrial equipment imports, also more than 200 billion to 300 billion, these add up to 600 billion on hand will be almost used up, so foreign exchange is very tight. So now the Chinese Communist Party would rather preserve foreign exchange reserves, not like before. I heard that each person can have 50,000 U.S. foreign exchange quota, but now are not allowed to close, someone dollar deposits into the deposit, to withdraw dollars are not allowed to withdraw, instead of RMB. In other words, from all the signs, the Chinese Communist Party is tightening the foreign exchange reserves and protecting them, so theoretically speaking, there should not be enough foreign exchange reserves. So from this indication, it is using political reasons to take many foreign brands off the shelves and not sell them, in fact, it has the effect of saving foreign exchange spending and controlling foreign exchange spending. Each of these things has its own reasons, whether for Australia, for the EU, for the United States, each has its own reasons to protect national sovereignty, dignity or nationalist sentiment, in the final analysis, the effect is in the control of foreign exchange.
Reporter: Will this boycott of foreign goods be counterproductive to its own economic development? For example, the Chinese Communist Party wants to promote consumption to boost the economy.
Wu Jialong: It wants to engage in internal circulation, frankly speaking, it depends on the ability to consume. Because of the employment problem, export problem and so on, it can’t do what it used to do. Here there is a more serious problem, it is that debt crisis, that is, the dollar debt of state-owned enterprises, as well as local governments issued by the debt, there is pressure to repay the debt, the central financial pressure, so I think, regardless of its surface political, military how to get, it is the financial level of this effect, the combination is to point to the control of foreign exchange spending. For example, Hong Kong‘s foreign exchange reserves are 440 billion to 450 billion, I heard that HSBC has lent 400 billion U.S. dollars to Beijing without guarantee, leaving only 450 billion U.S. dollars for the working capital of Hong Kong. Now, we want to turn Hong Kong into a continental city, one country, one system, and set up a fifth municipality in the future, merging Hong Kong with Shenzhen, and then Zhuhai with Macau, adding up to four places with a population of about 20 million, and becoming the fifth municipality. The current situation is that the Chinese Communist Party is trying to find ways to retain foreign exchange reserves, including a new move to open up financial services, allowing foreign financial institutions to come to set up, to do business. If foreign financial institutions come, they must bring in foreign exchange reserves. Previously reluctant to open up the financial markets, they are now ready to do so, ostensibly to meet the pressure from the United States. So you will find that the Chinese Communist Party is trying to support its foreign exchange reserves. If people see that the foreign exchange reserves are not enough, a serious capital flight will break out, which is called a financial storm, a financial crisis, and then there will be trouble, and the RMB exchange rate will dive, and will plummet. Now the RMB exchange rate is still considered strong, but this is a strong outside, because the pressure of the exchange rate is very big, the future of foreign capital to withdraw, and then you need to import dollars, then the problem will erupt, so now try to hold up.
And then the domestic words, the debt of the yuan, like the debt of local governments, previously relying on the sale of land to solve the local finances, now the land is not very good to sell, and now the funds for the maintenance of stability exceeds the funds for national defense, the central government to bear the expenses of maintaining stability, so there may be a lot of disguised taxation, disguised tax increases, this problem will erupt, such as sending party groups into private enterprises, private enterprises simply take the money away, many similar The phenomenon, in fact, is the central financial emergency, foreign exchange is also an emergency, from here it is clear that the economic and financial problems, may be Xi Jinping to close the door to deal with a good problem.
Reporter: You mentioned earlier that the China-EU investment agreement was put on hold, in your opinion, is this an unexpected blow to the CCP. Did it have this in mind before it took retaliatory sanctions against the EU?
Wu Jialong: Yes, you’re right, it’s kind of an unexpected outcome. But if we look at the logic of the game of European powers, basically what I just said, first pro-China, and then side with the United States, it is not offended by both sides, but it can not cut with the United States, the Chinese Communist Party wants to pull Europe over, it may have to pay a lot of benefits to hook, but Europe took the benefits, not really able to hook with the Chinese Communist Party to the end, which requires understanding the political logic of Europe, Europe’s Europe’s national security is protected by the United States, Europe can not end up singing a tune with the United States. But the Chinese Communist Party sometimes wants to draw in European countries, including Germany, France, Italy and even the United Kingdom, but to no avail, it does not understand this point. Their religions and cultures, as well as their economic interests, are all together. Moreover, Europe receives military protection from the U.S., and so does Japan, which also receives military protection from the U.S. It is impossible for them to break with the U.S. in the end. So Europe and China to negotiate a good investment agreement, for the United States is a big loophole and stimulus, I am encircling the Chinese economy, and then you Europe signed an investment agreement with it, and so opened a gap, so the United States will say you do not do this, and then Europe will find a reason, I sanction you, stimulate you, the Chinese Communist Party in turn retaliation, a retaliation after, Europe immediately increase the code. I think this is a set-up.
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