Chapter 8 Lecture 07 Has RMB Appreciation Made You Richer?

●What if the elevated highway is built?To dismantle it and build it underground, anyway, the government has many investments, so it doesn't matter how much it repeats. ●The proportion of consumption in our GDP is too small, and the proportion of fixed asset investment is too large, so we are forced to export a large number of products to other countries to earn some dollars that must depreciate. ●You must not think that saving is a virtue.Because our social security conditions are insufficient, you are forced to save. With the continuous development of the economy, China's foreign exchange reserves continue to increase.Under the pressure of the United States, Japan and other countries, the exchange rate system in which the RMB is closely pegged to the US dollar has changed. On July 21, 2005, the People's Bank of China officially announced the implementation of the floating exchange rate system.On the same day, the RMB exchange rate against the U.S. dollar was raised by 2.1%, and the RMB exchange rate is no longer pegged to a single U.S. dollar. On January 11, 2007, the RMB broke through the 7.80 mark against the US dollar, surpassing the Hong Kong dollar for the first time in 13 years. On April 10, 2008, the central parity rate of the RMB to the US dollar exceeded 7.00... The continuous appreciation of the RMB has made the currency in the hands of Chinese people more valuable. So, has the appreciation of the RMB made you richer?

Hello everyone.Today I want to ask you a question.What do you think is the biggest driving force for our economic development over the past 10 years?To answer this question, we must first compare the United States with China, starting with the GDP of the United States.What is GDP? GDP is called Gross Domestic Product, what does this mean?For example, if you earn 100 yuan a year, your personal GDP is 100 yuan, do you understand what I mean?It is enough to replace the individual with the country here. The GDP of the country is the money the country makes every year, it is as simple as that.Our media announced that GDP is growing at a rate of 10% every year, which means that the country earns 10% more money every year than the previous year. GDP is an indicator to measure the wealth of a country. Its meaning is equivalent to saying how much your personal assets are, or how many houses you have.

Let's look specifically at the GDP of the United States.70% of the U.S. GDP is generated by consumption, that is to say, normal eating, drinking and having fun boosts the U.S. GDP.Do you know how much consumption accounts for in China's GDP?It is about 35%, that is, the proportion of consumption in the composition of our GDP is half that of the United States. How is GDP or wealth created?As far as you are concerned, it is created through your hard work, stock speculation, house speculation, work, part-time job... that's how you create it.How is wealth created for a country?One is government investment, and the other is consumption.I buy things, and when I buy too much, I stimulate production.The more things are produced, the richer the country will be, so consumption is also a way to create wealth.Then nearly 50% of our country's wealth and our country's GDP are created by investment in fixed assets, while the figure in the United States is less than half of ours.

What is fixed asset investment?It is the highways, elevated roads, bridges and various high-rise buildings that you see.Together, these create almost as much as 50% of GDP.In other words, our economic development for so many years has never depended on our people to buy things, but on what?Rely on local governments to boost GDP to create.How to lift it?Very simple, building a highway can lift it.For example, in a city, what if the elevated highway is built?To demolish it and build it underground, anyway, the government has made a lot of investments, so it doesn't matter how much it repeats.This is how our GDP is created, that is, government investment creates nearly half of the country's wealth, while the proportion in the United States is half of ours, at about 25%.The problem is very clear, that is, the proportion of consumption is too low, so this is an unhealthy GDP growth.If you think about it again, we have so many factories that produce so many products, but our consumption is only half of others, so what should we do if we can’t consume it?Just let others consume it, and consume it for foreigners.

I have to talk about Japan.Japan is a relatively export-oriented country, and their trade surplus accounts for a relatively high ratio of 4.5% to GDP.How do we compare to Japan?Because our GDP has too little consumption and too much investment in fixed assets, we are forced to export a large number of products to other countries to earn back some US dollars that must depreciate.As a result, our trade surplus as a percentage of GDP is twice that of Japan.In other words, 9% of our country's GDP is created by trade surplus. What does 9% mean?It will make my country's foreign exchange reserves jump from 1.2 trillion to 1.3 trillion in a short time, jump to 1.4 trillion in a few months, and jump to 1.5 trillion in a few months... However, this kind of accumulation is not normal Accumulation is a kind of accumulation created by investment to stimulate economic growth, and consumption is insufficient.

So how do we increase consumption?For example, what you are most happy to hear is that a long holiday will start tomorrow, and consumption will be stimulated through the long holiday.But my point of view is very clear, how can a long holiday stimulate consumption?Think about it, do you guys dare to spend?Are you worried that your parents are seriously ill?What if your parents are seriously ill?Medical expenses are endless.Your children want to go to school, what about the tuition fees?Do you want to live and work in peace and contentment and buy a house?The house price is so high, what should you do if you can’t afford it?So, it forces you to save a lot, you know?You must never think that saving is a virtue.Saving is not a virtue, because our social security conditions are insufficient, forcing you to save.Do you know that we Chinese are very industrious?Do you know that we Chinese work very hard?We are much more industrious than Americans. American entrepreneurs get off work after 5 o'clock, and our entrepreneurs dare not leave work after 12 o'clock in the evening, and dare not turn off their mobile phones. Do you know why they are so hardworking?

You have to work hard.Because we have no way to guarantee the basic life of everyone, the basic social security is not enough, this is the status quo.If you think about it, 9% of our country's wealth is the trade surplus of exports minus imports, so we quickly accumulate our foreign exchange, and it is a dollar foreign exchange that will definitely depreciate.Think about the next topic again. When you accumulate 5 trillion U.S. dollars in foreign exchange, you will give European and American countries the best excuse to further force the renminbi to appreciate.So, what is the result of this appreciation?You become richer, you go to Hong Kong to buy things, you purchase in Hong Kong, our RMB is very valuable, that's why you are rich.

Audience: Hello, Professor Lang, I am from China National Economic and Trade Securities Co., Ltd.I would like to ask you a question, what is the reason for the appreciation of the RMB?Is it active or passive?Is there any way to solve the problem of RMB appreciation? Lang Xianping: According to what I just told you, our economic development over the years is not necessarily export-oriented, but investment-driven economy.The investment-driven economy has led to insufficient consumption in our mainland. In essence, manufacturers are forced to be export-oriented.Therefore, our import surplus is very high, which has resulted in a large accumulation of foreign exchange.

I am very afraid that we will repeat the mistakes of Japan and accumulate a lot of foreign exchange.Although we signed the same "Plaza Accord" as Japan, European and American countries continue to put pressure on our RMB on various occasions.In addition to the unfavorable factors of GDP composition, the second factor is foreign conspiracy theories.How to explain this phenomenon?Everyone, please note that when Japan signed the "Plaza Accord", it was stated in the Plaza Accord that the yen will gradually appreciate. What does Japan's signature mean?On behalf of the yen must appreciate.International speculators will know that all kinds of hot money flowed into Japan to speculate on the yen, and the yen was forced to appreciate. Everyone saw that it had really appreciated, causing more hot money to enter. The Japanese economy collapsed.In China, we are mainly investment-oriented, with relatively little consumption, so we have to export products.And the large amount of foreign exchange accumulated by exports has created serious problems.I made a speech in Guangdong in 2003, and I said: "You only need to make a hole and you can't stop it." So I have repeatedly appealed to the central bank not to raise the exchange rate.We promised not to raise the exchange rate at the beginning, do you still remember?But one night in 2005, it suddenly improved.If you say no increase and then increase, the consequence is to destroy your credit. If you swear not to increase next time, international speculators also know that the value will increase, and from then on, it will never stop as I predicted.

International hot money suppresses the appreciation of the renminbi through different channels. In 2006, a large amount of international hot money flowed in, from which two countries did it flow?One America, one book.Let's recall again which two countries were the most active in forcing the appreciation of the renminbi in the first half of 2006?How is it such a coincidence?Yes, it's such a coincidence.Renminbi appreciation has its internal factors: first, the composition of our GDP is problematic; second, our renminbi has fallen into international financial competition.The appreciation of the renminbi is not enough, and international speculators have greatly increased the value of international products, causing severe inflation. This is the current status quo.The rate of RMB appreciation is not enough, which will bring infinite problems to the government.But apart from the composition of GDP, other factors affecting the exchange rate are all controlled by international financial speculators.

Now you finally understand why I don't trade in stocks.Only when the stock price falls below 3000 points will you know that Professor Lang is wise.The way I make money is not by stock trading. The way I make money is more profitable. I use other methods to make money. I won’t tell you the specific method.We have so much foreign exchange reserves in China, why not invest?Who says not to invest, we have made a lot of investments, we put part of the money into US bonds, lend money to Americans, and earn interest.We use US dollars to lend to Americans, but the US dollar continues to depreciate, and now it has depreciated by 40%, so we can only get back 60% of the money when it is due.This is our level, it's not that we didn't do it, it's that we did it too badly.If you wanted to invest in euros at the beginning, you would have made a lot of money, but now you have lost a lot of money by investing in US dollars. The debt of Americans has been reduced by 40%.Is there any other way?Lou Jiwei is the chairman of the China Investment Company, the Blackstone Fund, but what happened?If you say that the investment was wrong, forget it, it almost went bankrupt, and I admire its poor level. The US investment bank announced to the outside world: The subprime mortgage crisis suffered the biggest loss, but the investment in China Construction Bank made a profit of 130 billion.You listen to my two-hour class today, you can know the operation methods of many international predators.Can you believe that they never knew what I said today?A person who doesn't know anything wants to do international financial operations, I'm bah. Many audience friends asked, in today's China, does the appreciation of the renminbi make us richer?Then I have to tell you that our appreciation of the renminbi is due to the accumulation of a large amount of bloody foreign exchange that will inevitably depreciate, and the reason is that the overall economic development strategy of our country is investment-driven, so our fixed asset investment is twice that of the United States. Our normal consumption is half of that of the United States. We are a country with a serious shortage of consumption power, and the reason is that the social security system is insufficient.The government's promotion of social security will vigorously promote consumption.What is the magnitude of RMB appreciation?Let me explain in a very vivid sentence: 1 US dollar was exchanged for 8 RMB in the past, and today 1 US dollar is exchanged for 7 RMB. Then you think about it again, who benefits from such an appreciation, imports and exports?I used to sell 1 dollar and received 8 yuan, but now I only receive 7 yuan, which is a big loss.But it is good for imports: I used to spend 8 yuan to import 1 dollar things, but today I spend 7 yuan to import 1 dollar things, which is good for imports.Recently, serious international inflation has occurred. Can the imported inflation be alleviated through this method of RMB appreciation?If you think about it, this is a very important topic. That is to say, in the past, you can earn 8 yuan for selling a product worth 1 dollar, but today you can only earn 7 yuan for selling a product for 1 dollar, which is not good for export manufacturers.This is also the reason why a large number of export manufacturers in Dongguan have closed down.Therefore, the current appreciation of the RMB has brought a heavy blow to my country's export manufacturing industry. Is there any benefit to our appreciation of the renminbi?Of course, there are benefits, and the import is very good.But unfortunately, our appreciation of the renminbi is not large enough, how to say?Not big enough to offset inflation abroad.How serious is inflation abroad?Countries all over the world have suffered from international inflation.In addition to the hype of international speculators, the reason for this kind of international inflation is that the United States deliberately caused this situation.I also need to analyze this phenomenon with you.I also talked about it in the previous episode, the rise in the price of heavy metals, iron ore, rice, and especially the rise in oil prices is not due to insufficient supply and demand.Taking oil as an example, we found that the supply of oil is very sufficient. Not only is it sufficient, but in many countries including China, especially the United States, the supply exceeds demand.According to the theory of economists, with so much supply and insufficient demand, the price should fall, but instead of falling, it rises. Why?It is the hype of international speculators. How do international speculators hype?International speculators just look at what products our Chinese government wants to buy. They buy people in the futures market first, speculate the price so high, and then sell the products to our Chinese government.This phenomenon did not happen in the past, it only appeared from last year to this year, so I call on several other important countries to encircle and suppress these international speculators, this will be a long-term struggle.But be careful in the encirclement and suppression, they are very powerful, and their interlocking forces can defeat the central bank of the country.These international speculators can use hundreds of billions of dollars to do what they want in a short period of time, and they are closely linked with governments of various countries beyond your imagination. I even suspect that they are the spokespersons of the governments of some countries. They will do whatever the government wants them to do, and they will snipe whoever they want them to attack.It is really unimaginable that international speculators operate with complicated techniques.These three characteristics: the strong ability to mobilize funds, the ambiguous relationship with governments of various countries, and the complexity of capital operations are completely beyond our imagination.Recently, I often hear some ridiculous words, asking whether international speculators and international hot money will come to speculate in our stocks and our property market?I said that of course he will have some funds to speculate, but stocks and real estate speculation are at your level, because you can do anything you can do with the money, you can speculate in real estate and stocks, so you think they can only speculate in real estate and stocks.This is the fifth level.The first-class level drives up the international price, raises the price and earns a lot of profits, and finally causes inflation in China, and the appreciation of our RMB is not enough to offset the impact of inflation.This is why the more the RMB exchange rate appreciates, the more serious the inflation will be.The data released by the government has reached as high as 8.7%, and special products (such as pork, etc.) have almost doubled. Although the RMB appreciation rate is only a few percent, it is enough to destroy most of my country's export manufacturing industry, but the appreciation rate is not large enough to offset imported inflation.If our inflation rate is 8.7% as the government said, that means, the RMB in the bank of each of you will depreciate by 8.7%.You are all smart people, do you know what to do next?Rather than putting it in the bank and suffering a 100% loss, it is better to give it a try, how to fight?Real estate speculation, stock speculation, real estate speculation, stock speculation has a slight chance of winning.In my opinion, under the current high inflation rate, real estate and stock speculation are the most reasonable.The inflation rate is getting higher and higher, the housing price is getting higher and higher, and the stock price is not rising. Although the RMB keeps appreciating, it is not enough to offset the inflation. You feel poorer and can't afford things. When will you feel the benefits of RMB appreciation?This is what our netizens told me: First, it is cheaper to study abroad because the RMB has appreciated.Second, tourism prices have fallen.Third, it is cheaper to buy foreign goods.Other benefits are related to the enterprise and have little to do with the individual, so I won't talk about it.But if you think about it, if a person neither studies abroad, travels abroad, nor buys foreign products, then you will suffer a lot.And if you're unlucky enough to work in export manufacturing you might get fired.Our industry is very strange. We have export-oriented industries, but no import-oriented industries.Many of our intensive industries (such as steel and textiles) import raw materials from abroad to China, and then process them for export.Imported raw materials are cheaper, and re-exports are hit by the appreciation of the renminbi.This is the current state of our industry.Do we have a manufacturing industry that is dominated by imports?Very few, probably PetroChina.We also talked about PetroChina on our program. What kind of company is it?Lack of fiduciary duty.This is the dilemma we face with the appreciation of the renminbi. The continuous appreciation of the RMB has made it increasingly difficult for us to operate the export manufacturing industry, and a large number of export manufacturing enterprises have closed down.Our export-oriented manufacturing province is Guangdong Province.In Guangdong Province, you will find that the more companies that close down, the higher the housing prices in Guangdong, because entrepreneurs closed their factories to speculate in real estate, which explains why housing prices in Shenzhen have tripled or quadrupled.Shenzhen has the largest number of business closures, and a large part of it is due to the rise in the exchange rate that everyone cannot continue to operate. Housing prices in Taipei City bucked the trend, rising by 30% to 40%.According to my theory, the rise in housing prices in Taipei City is due to the deterioration of the investment environment in Guangdong.I found that in 2007, Taiwan’s special foreign exchange settlement banks repatriated as much as 13 billion U.S. dollars from our mainland to Taiwan, most of which should have been remitted back by Taiwanese businessmen who could not continue to operate in the mainland.A large part of the 13 billion US dollars went back to Taipei City for real estate speculation.Let me give you another example. Among the real estate projects in Taipei City, the most popular real estate project is called the Xinyi Project Community. Half of the houses in this community were bought by Taiwanese businessmen who returned to Taiwan from the mainland.This phenomenon is the same as the situation in Shenzhen we talked about earlier: the local investment environment deteriorated, and entrepreneurs went to speculate on real estate in Shenzhen, which led to a sharp rise in housing prices.Similarly, these entrepreneurs have arrived in Taiwan and are speculating on real estate in Taiwan. However, there is one thing that deserves our concern about Taiwan's overall situation. As our netizens said, the appreciation of the renminbi has enhanced the ability of our domestic and mainland enterprises to invest abroad.I would like to explain this point.After the meeting between Hu Jintao and Xiao Wanchang in Boao this time, the three links between the two sides of the strait have brought a very big turning point. Then, at this moment, I would like to make an explanation to everyone: Taiwan will definitely start the three links in a short time, and the three links will Repeat the effect of the mainland on Hong Kong's free travel. Due to the impact of Soros, after 1997, the Asian financial crisis caused Hong Kong real estate prices to plummet, even falling by more than 60%.In this environment, from 1997 to 2004, Hong Kong's economy was depressed. Our central government launched Hong Kong's free travel, which made Hong Kong's economy grow steadily.By 2008, Hong Kong's economy was gradually improving. In 2004, many college students could not find a job. At that time, the average salary of Hong Kong college students was 9,000 Hong Kong dollars; from 2007 to 2008, the average salary of Hong Kong college students was more than 10,000 Hong Kong dollars. The overall employment situation has improved. These are free travel brought. We seize the opportunity of the three links with Taiwan, so we can invest in Taiwan to some extent.This investment is beneficial to us, because you not only take advantage of the appreciation of the renminbi, but also take advantage of the three links.This is why we have a 9-member real estate speculators group, including Pan Shiyi, led by Liu Changle from Phoenix Satellite TV.When these people go to Taiwan, Taiwan’s TV and media say that these mainland real estate developers are as great as gods, and they themselves brag. I’m embarrassed to say his name: “We are not gods, but we are almost like gods. .” I must show them this program.Taiwan gave them the highest standard of reception, and the media reported what clothes they were wearing and what bags they were carrying.But I believe that the real promotion of the three links will make Taiwan's economy continue to improve like Hong Kong's.In the process of continuous appreciation of the renminbi, this change is beneficial.Speaking of this, I ask you to pay more attention to Taiwan's affairs, including the three direct links, stocks, real estate and so on. I'm still a little worried, what are you worried about?I am worried that Taiwan will repeat the mistakes of some parts of our mainland, with real estate as the core of development, and finally housing prices will rise. The economy looks good on the surface, but a dual economy has emerged.If a dual economy is created, it will cast a shadow over Taiwan's economic development. Finally, I would like to talk about the topic I mentioned earlier, which is Rogers' recent attitude towards the RMB.From his attitude, we should be able to see the trend of the RMB.In mid-April 2008, the exchange rate between the US dollar and the RMB broke through 7. As I said earlier, the inflation rate is too high, so we cannot appreciate the benefits of the appreciation of the RMB.You will inevitably lose money in the bank, so it is better to use it to speculate in real estate and stocks, so I think it is reasonable to speculate in real estate and stocks.Foreign investment is also reasonable, including the investment opportunities of the three links I talked to you just now. Rogers said that compared with the U.S. dollar and Hong Kong dollar, the renminbi is the most important investable object.Do you know what he does?I believe he will definitely use Shenzhen as a channel to enter Hong Kong and back and forth to speculate. This hype will increase the rate of appreciation of the renminbi. This is what they will do.Once he makes such an appeal, it proves that international speculators have already set their sights on the renminbi.So, everyone here, can you benefit from the foreseeable continuous appreciation of the renminbi?I suggest that you consider Taiwan and Hong Kong.Especially in Hong Kong, they have fixed deposits in foreign currency.Let me take Hang Seng Bank in Hong Kong as an example: Hang Seng has launched time deposits in two currencies. If I deposit for one year, I deposit 100 yuan today. After one year, I can choose two currencies. Which currency will appreciate the most in the end? He pays you interest in whatever currency appreciates, you know what I mean?If you want to go to Hong Kong or Taiwan to speculate in this kind of foreign currency deposits, let me give you a suggestion, do you want to listen? If you want to speculate in fixed deposits of two currencies, there is one principle that you must grasp: first, compared to the Hong Kong dollar, you must find a currency that appreciates steadily; To find a currency that fluctuates greatly, it must be these two combinations. You cannot find other combinations. You will have risks if you find other combinations. These two combinations have the lowest risk.The stable currency is the renminbi, which will definitely appreciate against the Hong Kong dollar.Therefore, you must choose the RMB as the first currency, and the Japanese yen as the second currency fluctuates greatly.Of course, you don’t have to listen to me. When you go back, you can go online and draw the past trends of dozens of currencies.Compared with the Hong Kong dollar, pick one that is the most stable and one that fluctuates the most. Combining these two, do you believe that you are invincible?It doesn't have to be stocks.It is better to buy this currency than to speculate in stocks.At present, according to my calculations, it is not easy for you to speculate in Hong Kong stocks, which are more risky than our A-shares.If the renminbi continues to appreciate, you can get huge profits on the fixed deposit of the two currencies. At the end of the program, I will give you a summary.What is the main source of the problem of RMB appreciation?The root cause is that the wealth composition of our entire country is problematic.In other words, economic development over the years has been driven by investment, such as building high-rise buildings, building bridges, and developing real estate, rather than being driven by consumption as in the world, such as buying a teacup or buying a computer.This kind of consumption will promote production, which is considered normal GDP growth.Therefore, in the entire GDP, consumption accounts for 70% in the United States, but only 35% in our country, which is twice that of ours; fixed asset investment in the United States is 25%, close to 50% in our country, and we are twice that of the United States.We do not consume enough, so we cannot consume so many products, so we have to export them to others for consumption. The inevitable result is that our foreign exchange will accumulate rapidly, and the trade surplus from exports minus imports accounts for 9% of our GDP.The increase in foreign exchange from 1.2 trillion to 1.5 trillion will be completed in a short period of time.Under such circumstances, Rogers is also optimistic about the appreciation of the RMB exchange rate. He said that the RMB is the best investment currency, and you can judge that the RMB will continue to appreciate steadily.What good will the continuous and steady appreciation of the renminbi do to our common people? The conclusion is very clear. The problem we are facing today is serious imported inflation. Our appreciation of the renminbi is not large enough to prevent imported inflation, so you will become poorer and poorer.Because of inflation, things are becoming more and more expensive, but what is even more frightening is that although the appreciation rate of our RMB exchange rate is not enough to stop the inflation of foreign imports, it has already formed a serious blow to our export manufacturing industry.When the export manufacturing industry is hit hard, what will entrepreneurs do?He quit, closed the factory, and used the money to speculate in real estate and stocks.This explains the reason why Shenzhen's housing prices doubled in 2007, because Shenzhen's export manufacturing industry closed the most.The increase in real estate prices in Shenzhen and Taipei is due to the loss of competitiveness in the export manufacturing industry. He quit, so he started to speculate in real estate. For us ordinary people, how do we seize this opportunity?In addition to studying abroad, traveling, and purchasing foreign products we mentioned earlier, you can also pay attention to the Taiwan issue and Hong Kong issue, and you can also pay attention to the free travel launched in Hong Kong in 2004.In 2008, Taiwan is about to realize three links with the mainland, which will give Taiwan's economy a shot in the arm and allow Taiwan's economy to rise rapidly.At this time, as the RMB exchange rate continues to rise, it is very beneficial for us to direct investment in Hong Kong and Taiwan, but this kind of direct investment does not necessarily invest in factories or real estate.As I mentioned earlier, you can invest in their foreign currency fixed deposits. Our netizens pointed out that RMB appreciation is beneficial, it is cheaper to study abroad, the cost of traveling abroad is reduced, and it is cheaper to buy foreign famous brands. Of course, this is what we usually want.I propose a new way of thinking, which is different from theirs.This deserves our attention.