At a time when prices are falling, why are there still many people around me crazily exchanging for US dollars!
Recently, the interest rate cut of the US dollar has led to a significant appreciation of the RMB, making it even more difficult for the already struggling export business. Many friends in the cryptocurrency circle have complained that holding US dollars has also been cut, but the bosses in traditional industries around me are taking advantage of this wave of RMB appreciation to accelerate their exodus!
Let me briefly explain the logic:
- The ratio of China's debt level to GDP. Here, we can only obtain data from 22 years. Currently, China's overall debt level is 337 trillion RMB, equivalent to 47.73 trillion US dollars. In the past two years, local government debt has become more serious, with urban investment as the hidden debt entity, and the scale will only be much larger than 88 trillion. However, during the same period, China's GDP in 23 years was 17.89 trillion US dollars, with a debt/GDP ratio of 266.8% (data from 23 years).
The US debt mainly consists of federal government debt + household debt + institutional debt, with government debt at 30.2 trillion US dollars + 15.5 trillion + 2 trillion, totaling 47.5 trillion US dollars. The US GDP in 23 years was 27.37 trillion US dollars, with a debt/GDP ratio of 174.2% (data from 23 years).
M2 growth rate. China's average M2 growth rate over the past 10 years is 10.12%, while the US's average M2 growth rate over the past 10 years is 6.69%. The M2 growth rate can be understood as the speed of currency overissuance.
The visible economic conditions of China and the deteriorating situation that China can actually perceive. In the past three months, regardless of CPI, PPI, or PMI data, none of them are optimistic, indicating a worsening deflation. Especially as a major manufacturing country, China's PMI has been below the boom-bust line since May. Coupled with the recent appreciation of the RMB, export data will be even more challenging!
As mentioned above, most of the recent hype about RMB appreciation is just for show for outsiders, while insiders see the tricks. As for the traditional industries, the actions and movements of frontline bosses who have been in the business for many years will be more representative and wiser! Now is a good time to exchange for US dollars, rather than the other way around!
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