Just as Yellen's visit to China came to an end, the United States began to short China. First, the American rating agency Fitch timed the downgrade of China's sovereign rating outlook, and then it accumulated strength to short the offshore Renminbi. Moreover, the CEO of the largest bank in the United States even threatened that the United States would not only not lower interest rates but also might raise interest rates to 8%. It seems that they will not rest until they blow up a medium to large economy. The financial war between China and the United States has escalated again.

Shorting China Again

The United States has begun to exert maximum pressure on China again, preferring to damage itself by a thousand, and continuing to short China. Before blowing up China, the United States will not lower interest rates. How should we respond?

With the expectation of a rate cut in the United States in June once again falling through, the offshore Renminbi has plummeted. Of course, it's not just the Renminbi; the yen's exchange rate has also hit a new low since 1990.

Everything seems to go against economic laws. The yen should appreciate with interest rate hikes, but it's exactly the opposite. The underlying purpose is still to support the dollar to remain strong.

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Continue to force global capital to flow back to the United States. In fact, the offshore Renminbi has a strong arbitrage attribute. Once it encounters sensitive news such as interest rate hikes, the reaction is relatively intense.

To offset this force, we quickly raised the overnight interest rate of the offshore Renminbi to 6.3%, maintaining the stability of the Renminbi and giving a blow to the funds that take the opportunity to make waves.

In addition, just after Yellen left office and out of sight, Fitch, one of the world's three famous rating agencies, immediately downgraded China's sovereign credit rating outlook, changing its rating outlook to "negative". It is obviously deliberately shorting again, and the tense situation of the financial war between China and the United States is intensifying.The bearish forecasts of China's economy by American rating agencies and their concerns about Chinese debt have become weapons for the United States to manipulate and short the Chinese capital market. The U.S. uses the dollar, the World Bank, the International Monetary Fund (IMF), and institutions like SWIFT to control the global economy, with the Federal Reserve being the core institution for implementing dollar hegemony. In addition, the three major American rating agencies—Standard & Poor's, Moody's Investors Service, and Fitch Ratings—are also tools for the U.S. to manipulate the world economy. They have significant influence over a country's external financial activities, such as issuing bonds, overseas listings, and attracting foreign investment.

Taking China as an example, if it wants to issue dollar bonds and attract funds from the U.S. to promote domestic economic development, it must gain recognition from the three major rating agencies. If the rating is low, China would have to pay a higher interest rate; conversely, it would only need to pay a small amount of interest. Therefore, the scale of a country's bond issuance can range from billions to tens of billions of dollars, with significant interest rate differences, allowing the three major U.S. rating agencies to manipulate other countries at will according to their preferences.

For instance, during the 1997 Asian financial crisis, the three major rating agencies downgraded the sovereign ratings of many Southeast Asian countries overnight, further exacerbating the crisis. However, today, Fitch, one of the three major rating agencies, announced China's sovereign credit rating. Although China's credit rating remained unchanged, its outlook shifted from "stable" to "negative."

It seems that the U.S. is determined not to stop until it has completely exploited China. At the same time, since Yellen did not gain much benefit from her visit to China, the U.S. has used the CEO of its largest bank to issue the latest threat.In the context of the United States not meeting expectations for an interest rate cut in June, he further stated that the U.S. could potentially raise interest rates to 8%, although this is somewhat of a bluff to a certain extent.

However, let us not forget that in order to burst the bubbles of Japan and the Soviet Union, the U.S. once raised interest rates to over 20% in the 1990s.

So with U.S. debt already reaching 35 trillion, with annual interest payments of 1 trillion dollars, and an average debt of $100,000 per American, is the U.S. not afraid?

Why doesn't the U.S. stop?

Given the high level of U.S. government debt, why does the U.S. delay interest rate cuts and even consider raising rates, what does this imply?

The CEO of JPMorgan Chase has warned that U.S. interest rates could reach as high as 8% in the coming years, suggesting that the Federal Reserve will not only not cut rates but may also adopt more contractionary policies.

This statement indicates that the investment bank is cautious about the Federal Reserve's rate cuts and even predicts that the Federal Reserve will continue to raise rates to 8%.

The growth of the U.S. economy relies on large-scale government deficits and stimulative measures, which could lead to inflation and interest rates remaining at higher levels, even exceeding market expectations.

The U.S. economic growth is mainly driven by government deficits and stimulative measures, with inflation and interest rates likely to continue to be higher than market expectations.If this prediction comes true, the global economy may be affected, especially the United States, which may harvest wealth from other countries by raising interest rates. However, whether this situation will occur remains to be seen.

Firstly, the strong performance of the U.S. economy is an important support for its ability to further raise interest rates. According to the latest data, the number of non-farm employment in the United States has greatly exceeded market expectations; at the same time, the unemployment rate has dropped to 3.8%, lower than the expected and previous 3.9%.

Secondly, inflationary pressure remains high. The latest data released by the United States shows that the inflation in March was as high as 3.5%, returning to the upward channel and reaching a new high since September 2023.

The goal of the Federal Reserve to control the long-term inflation in the United States within 2% is getting further and further away. In such a situation, Yellen has stated that the prices of goods exported by China are too low.

It is obvious that this is contradictory. The purpose behind the United States is to harvest China as much as possible.

At present, the international crude oil price is hovering around $90 per barrel, which is very dangerous. In the past, high oil prices harvested China, and low oil prices harvested Russia.

However, in the past two years, the United States has imposed sanctions on Russian oil trade, perfectly achieving a dual-track system for international oil prices, that is, the United States sells high-priced oil, and Russia can only sell low-priced oil.

So, high oil prices seem to have little to do with Russia, which is why the United States is pressuring India and sanctioning India not to import Russian oil. In addition, India deliberately undervalues and demands to continue to import Russian oil at low prices.

Even at the cost of reducing imports and increasing purchases of high-priced oil from the United States and Saudi Arabia to threaten Russia, all of this is in cooperation with the United States.

From this point of view, international energy prices may continue to rise, thereby intensifying inflation expectations.High interest rates have a negative impact on all countries except the United States. Over the decades, the Federal Reserve's frequent interest rate hikes have led to a global repatriation of dollars, reaping many nations.

What we are discussing here is that the United States' non-farm employment figures and inflation data are both manipulable by the U.S. It all depends on what kind of signal the U.S. wants to send to the outside world.

To reduce inflation, they suppress oil prices, which can be seen from the U.S. crude oil inventory data. Low inventory but low oil prices indicate that oil prices have been suppressed, and vice versa.

The U.S. announced a non-farm employment figure of 300,000, exceeding expectations by 50%, indicating a very strong increase in new employment. However, among them, there are 71,000 government employees and 150,000 service industry workers.

This phenomenon is mainly due to the increase in government employees exacerbating the U.S. fiscal deficit and the U.S. debt crisis, while the prosperity of the service industry mainly benefits from the U.S. stock market bubble.

However, the U.S. stock market is not supported by the manufacturing industry. Once artificial intelligence fails to create manufacturing value, the bubble will burst.

Secondly, high inflation in the U.S. has forced many people to take on multiple jobs, thereby driving an increase in the employed population.

Wall Street's attitude towards this is as volatile as a roller coaster. Initially, they predicted seven interest rate cuts, then adjusted to three, and now it has turned to "no rate cuts" or even the possibility of raising rates again.

This news has caused turmoil in the global capital market, with "white horses" instantly turning into "black horses," and the future of the capital market is shrouded in gloom.

Looking internally in the U.S., inflation has not been effectively alleviated. Despite the policy focus over the past year on curbing inflation, the results have not been significant. In addition, the continuous rise in gold and oil prices has put tremendous pressure on the U.S.The international situation is more complex, with the United States' monetary policy decisions seemingly having a clear intention of wealth harvesting. If it consistently refuses to lower interest rates, it may be to trigger a medium or large economy to collapse, thereby saving its own economic downturn.

The key now is who can hold out until the end. U.S. interest rates have remained high at 5.5%, and the debt scale has quickly risen to $35 trillion, with borrowing costs continuously increasing. The economic situation of countries around the world is severe, and they have chosen to wait and see.

If, as the CEO of the largest U.S. bank, Jamie Dimon, said, the current U.S. debt is $35 trillion, with an 8% interest rate, the interest for one year alone would be more than $2 trillion.

And the U.S. fiscal revenue is $4 trillion, half of which will be used to pay interest. How can the United States end up like this?

In addition, in the United States' previous 13 rounds of interest rate hikes, the shortest lasted 4 months, the longest was 69 months, and the average was about 23 months.

The United States started raising interest rates in March 2022, and it has been 25 months now. Excluding the one from 1963 to 1969, it has reached the longest in history.

The United States is now in a dilemma. The financial war has not ended, and the future trend is unpredictable. As for whether it deliberately releases a signal of not lowering interest rates, the propaganda war has always been crucial.

No matter when this financial war ends, the financial tide will inevitably follow, but where it will eventually fall, only the first country that cannot support it will reveal the answer.

And this region or country is definitely not China.Underestimating the Resilience of China's Economy

The United States' interest rate hikes are unlikely to have a substantial impact on us anymore, as our most significant issue is real estate. Currently, the bearish factors in real estate have essentially been cleared out. The bottom bearish factors themselves are a form of good news. Moreover, the United States and its perception of China's determination to save the market and the resilience of the economy are misguided.

As U.S. Trade Representative Katherine Tai said in Europe, China's manufacturing has driven rapid economic development, which Europe and America are completely unable to compete with.

Although Tai's intention was to unite Europe to continue to contain China, her perception is not wrong. If the United States, including the Federal Reserve, believes that it can burst China's economy like other economies by raising interest rates through the dollar, that is a delusion.

The purpose of raising interest rates while downgrading credit ratings is quite simple:

First, it aims to continue to drain hot money in China, causing capital to accelerate arbitrage in China, leading to a decline in Chinese assets. However, the United States should not forget that we have the moat of foreign exchange control, which is completely different from Latin America and other European and American countries.

Under the same conditions, it can burst these countries, but it cannot hurt China. The only thing that needs to be strengthened is to continue to crack down on underground banks.

Second, downgrading credit ratings is largely to burst our real estate companies because for many years, the pillar of our economy has been real estate.

The real estate industry chain has driven a lot of employment. Unlike the U.S. stock market, which is a barometer of the economy, real estate has been a barometer of our economy for a long time.

Almost all real estate companies have issued a large amount of dollar bonds, including Evergrande, Country Garden, Vanke, and so on. Now many dollar bonds have matured, and continuing to downgrade our credit ratings will force these companies to bear higher interest rates when renewing loans.So, the United States' objective is quite clear: it intends to continue exerting maximum pressure, causing us localized difficulties. However, the current issue is that all the bearish factors, including even high-quality companies like Vanke, have already been exhausted, and in reality, it's just not that severe.

If the United States still insists on raising interest rates, the ones who will suffer won't just be China. Japan, Europe, Latin America, and even the United States itself might not be able to hold on. Yet, the United States still hasn't considered how to end this act. If the final interest rate hike ends up imploding the U.S. economy, the U.S. may find itself with no strategies left against China. What will happen then? We should also start making plans early on.