Watch Out for America
Using USD to Buy China
By Jiang Yong
Translated By Jessica Whale
10 December 2012
Edited by Peter L. McGuire
China - Sohu - Original Article (Chinese)
A currency system with virtually no limits leads America, Japan and Europe to wantonly print and spend money. The public is debt-ridden and in a precarious situation. Europe is still experiencing a debt crisis, America faces a looming "fiscal cliff" and Japan's appalling "river of debt" has already surpassed their economic aggregate twice over. In an effort to deflect the risks and avert a crisis, they are working together to achieve "quantitative easing." Because of this, a financial flood is engulfing the world and engulfing China.
Today we have already seen three cycles of "quantitative easing" without limits or boundaries on global investments and which completely lack the intrinsic value found in currency. The American Federal Reserve will continuously give "worthless" U.S. dollars to massive financial institutions, including all types of investment funds (which remain very quiet) and pursue large-scale purchasing of resources, physical assets and corporate shares from various countries around the world. In other words, today the U.S. depends on other countries' wealth (mainly emerging markets) for a foundation from which to issue U.S. dollars. Because of this America is borrowing, at no cost, U.S. dollars to purchase the world and to purchase China.
For many years, China exchanged worthless USD for real resources, products and services (Japan's yen and the euro are reaching a similar state as the U.S. dollar). The more U.S. dollars China spent, the more wealth was lost. This is the real secret behind Chinese people being "hard-working but not prosperous." For years America, with Wall Street investment banks and hedge funds at its core, has implemented a financial attack on gradually developing countries and forced them to increase their reserves of USD.
As of today, 92 percent of U.S. dollars flow out of America. Most of these dollars are invested into emerging markets, including China. To ensure that their dollars, which have absolutely no intrinsic value, do not make their way back into America, for many years America has been "taking strict precautions": other countries' holdings of USD, except for purchasing bonds, cannot be used to buy any assets or resources with actual value from America. This is directly linked to America's economic and national security; otherwise, foreign countries could easily use their massive quantities of U.S. dollars to purchase anything. Therefore, America established The Foreign Investment Review Board, whose important responsibility is to prevent things being "acquired with U.S. dollars." This is the fundamental reason for limitless, unwarranted reviews of ZTE, Huawei Technologies, Sanyi Heavy Industry, and other enterprises.
In recent years, China's private equity has been like bamboo shoots after the spring rains. According to reports, Zhejiang Province alone has tens of thousands of homes, and much of the funding comes from overseas, no-cost, unlimited amounts of USD and extensive purchasing of shares in Chinese-funded enterprises. Given this, China cannot foolishly welcome "foreign investment." Realistically improving industry structure and implementing necessary industry upgrades could also introduce new projects as well as related equipment, technology and regulations. Funding needs to be supported by our domestic currency (renminbi, or RMB) and absolutely cannot be drawn into foreign exchange. The idea is, do not allow even one cent of American investments into China. China can resist increasing foreign exchange reserves of credit currencies like the USD; or, like a "black sheep" can squander the foreign exchange reserves that we do have. Without this step, significant amounts of our foreign exchange reserves will be wiped out by America, Japan and Europe's endless, infinitely large "quantitative easing."
Some writers suggest we use our reserves to acquire shares in enterprises outside of China in order to effectively increase both the public sector's status within the national economy and state owned-enterprises' dominance. Or, a portion of the reserves will be transferred to large, well-known private enterprises, and then be acquired by foreign enterprises. In the future, related Chinese businesses would then pay back China in RMB, thereby solving China's debt problems with social security, healthcare, etc.
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