By Nirmal P. Acharya
The decisive battleground in the Sino-US game is finance.
Recently, the Chinese stock market has been hitting new lows, while the US stock market has been hitting new highs. Chinese investors lost their money and wailed. If one loses big, another gains big. It is widely regarded as the smoke of a financial war between China and the US.
The financial battle began on January 16 last year. This was marked by the beginning of the renminbi’s decline, which did not stabilize until mid-September. Then the US began shorting China’s bond and stock markets. In the face of this combination of fists, China has also actively fought, and it is still difficult to solve, and both sides have suffered huge losses. This is the most difficult time for both sides and in the end, we will see who survives.
If China doesn’t survive and collapses, then American investors will come in and harvest Chinese assets. If the US can’t survive and starts to cut interest rates, then China will be stable and start a new round of economic recovery and growth.
The history of the Anglo-Saxon people playing finance is 500 years old. However, the Chinese nation has been exposed to modern finance for less than 100 years. The gap in experience and capability between the two sides is too large, and there is always a feeling that China will lose the US in a financial war.
But China has survived many trials and tribulations. In the 1990s, China successfully weathered the “Asian financial crisis” and avoided the fate of being “harvested”. I wonder if China can pull it off again.
Some analysts believe that the US “interest rate hike cycle” can be maintained until June this year at most, and the Sino-U.S. financial war will be decided before this.
If the US wins, the MCC will take root and blossom in Nepal. If China is not defeated, the US will be trapped in the dilemma of losing its dollar hegemony and being unable to transfer the 34 trillion in national debt to China. As a result, the US will not be able to pay into the MCC, just as it is already unable to pay into Ukraine, as promised.
The views expressed in this article are the author’s own and do not necessarily reflect People’s Review’s editorial stance.
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