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Opportunities from struggle between the U.S. and China, economist says


Chinese language authorities have promoted using the yuan worldwide, whereas the U.S. greenback dominates world transactions.

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BEIJING — A Chinese language economist’s keynote speech at a significant asset supervisor’s funding technique occasion final week centered on worldwide politics moderately than the expansion outlook.

“We’re present process a cognitive revolution, so as we speak my discuss is not going to be the dissemination of an financial report,” stated Liu Yuhui, director of a finance analysis division at a authorities suppose tank, the Chinese language Academy of Social Sciences.

That is in response to a CNBC translation of his Mandarin-language speech Friday at asset supervisor ChinaAMC’s funding technique convention. Based in 1998, ChinaAMC is among the nation’s largest mutual fund managers and claims 1.54 trillion yuan ($240.63 billion) in property beneath administration.

Liu’s discuss was billed by the organizers as a dialogue of macroeconomic points for the second half of the 12 months. However the presentation slides have been titled “The bipolar world beneath the U.S.-dollar super-expansion cycle — The Chinese language capital market’s ‘cognitive revolution.'”

The occasion got here nearly two weeks for the reason that ruling Chinese language Communist Get together simply celebrated its one centesimal anniversary on July 1, when President Xi Jinping referred to as once more for the “nice rejuvenation” of China.

Liu, additionally chief economist at Tianfeng Securities, echoed that line when talking confidently of China’s means to realize its purpose of turning into a “nice nation.”

He added that once-a-century alternatives would emerge from a “wrestle for supremacy” between the U.S. and China.

The U.S. is the most important economic system on this planet, whereas China is the second and catching up. The 2 international locations have been embroiled in rising tensions over the previous couple of years, starting with commerce and spilling over into finance and know-how.

Serving to China, in Liu’s view, is the American embrace of a dollar-printing coverage for the reason that coronavirus pandemic. To Liu, that coverage displays an irreversible change that, amongst different issues, has direct penalties for China’s purpose of controlling inflation domestically.

Nonetheless, Liu didn’t go away room for doubt on whether or not China might achieve sustaining its development. Echoing confidence in Beijing, he stated China’s resolve would permit the nation to face up to the consequences of U.S. coverage, weakening the U.S. economic system and strengthening China’s.

‘Fashionable financial idea’

In Liu’s view, the U.S. is counting on the idea of “fashionable financial idea,” which holds that governments with a robust forex can print cash to assist their home economies with out worrying a lot about finances deficits.

One of the vital well-known proponents of contemporary financial idea is Stephanie Kelton, previously chief economist for Democrats on the U.S. Senate Price range Committee and a senior financial advisor to Bernie Sanders′ 2016 presidential marketing campaign.

Learn extra about China from CNBC Professional

The U.S., beneath the Trump administration and now the Biden administration, has saved rates of interest low and launched trillions of {dollars} into the economic system to assist development within the wake of the pandemic.

The stimulus program has drawn criticism for its scale. At conglomerate Berkshire Hathaway’s annual assembly in Could, U.S. billionaire Warren Buffett’s longtime enterprise companion Charlie Munger stated fashionable financial idea could be “extra possible than everyone thought. However I do know that should you simply maintain doing it with none restrict it is going to finish in catastrophe.”

Crypto

To Liu, staying in keeping with Chinese language authorities directives will probably be much more crucial for home funding in mild of developments like Alibaba founder Jack Ma’s controversial speech final fall and the next suspension of Ant Group’s IPO.

Since Chinese language coverage will concentrate on guaranteeing nationwide safety and reducing carbon emissions, he stated mainland Chinese language shares with the best likelihood of huge features will probably be these within the new power, seed, optics and semiconductor industries, amongst others.

As for digital currencies, on which Chinese language authorities have intensified their crackdown this 12 months, Liu solid them in geopolitical phrases as nicely.

“In my opinion,” he stated, “it is simply the U.S.’s approach to tempt Chinese language capital.”



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