Soros Once Again Sang Empty China'S Economic &Nbsp; Said Governance Failure, Hard Landing Risk.

Soros (Soros)

George Soros (George Soros) began to sing empty again, and this goal was aimed at China.

In June 14th, China announced that CPI rose by 5.5% in May, a record high of 34 months.

On the same day, Soros said in an interview that China had missed the opportunity to curb inflation, and the risk of a hard landing may exist in China's economy.

Soros just broke the general concern of recent international investors to the Chinese government.

"There are some bubbles in China's economy, and there are signs that it is losing control."

Soros said.

As early as half a month ago, Societe Generale (601166, stock bar) also expressed concern about inflation in China in a report.

The report describes the process of inflation in China as the three largest.

In just a year, in the eyes of Albert Edwards and Dylan Grays, a global strategy analyst at faxing bank, China's sudden hope of recovering from the global economy has become the greatest danger of the world economy.

Question, is there a bubble in China's economy that can safely achieve a soft landing?

In fact, concerns about the risk of China's hard landing are not only a sentiment among investors, but also affecting the authorities' decisions and judgments. The overhang of monetary policy is rampant. In the face of high inflation, the Central Bank of China has not been able to drop interest rate boots.

In June 14th, the central bank re paid the quantity tools, raised the deposit reserve ratio by 0.5 percentage points, and the interbank market growled.

On the 15 day, Shibor surged across the board, and overnight repurchase, 7 day and 14 day interbank repurchase rates rose by 50.36BP, 202.33BP and 198.16BP respectively.

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A scholar from the Institute of finance of the Academy of Social Sciences told reporters that behind the worries about China's economic or economic hard landing is precisely a series of concerns and controversies, such as whether monetary policy is effective, whether the real estate market will burst, and how big the debt of China's local governments will be.

Is monetary policy ineffective?

"Inflation is like a runaway wild horse, and Beijing tries to manipulate the figures by reducing the weight of food in CPI".

This is the main cause of Edwards, an economist at the Bank of France, and he thinks that behind inflation out of control is just a failure of monetary policy. That is, half of the increase in the Chinese style quantitative easing money supply is attributable to the fixed exchange rate policy. "To keep the exchange rate stable for the US dollar, we must buy US dollars in RMB and print a lot of money for this."

Worries about the effectiveness of China's monetary policy have become a popular view of foreign investment banks.

In June 13th, David Lubin, chief economist of Citigroup's emerging market economy, told reporters that he was worried about the inflation in emerging markets. One of the main reasons was that the central bank's credit problems existed. Monetary policy often had two objectives, both to curb inflation and to consider the exchange rate, that is, to try to fight inflation while avoiding excessive currency strength.

"Such a dual goal has led us to doubt the anti inflationary capacity of emerging market central banks."

David says.

Soros sing empty

Under the dual goal of ensuring growth and preventing inflation, China's monetary authorities have adopted a prudent policy. Monetary tightening is mainly achieved by raising the deposit reserve ratio. Since October 2010, the reserve ratio has been raised for nearly 10 times.

However, with the expansion of the shadow banking system, the effectiveness of the central bank's policies is being challenged.

In May 16th, Bank of America Merrill Lynch reported that the rapid growth of off balance sheet business of banks under the tightening of monetary policy undermines the strong capital and provision of Chinese commercial banks.

On the other hand, the rising lending rate also raised the interest rate of private lending.

Since March, the annual interest rate of private lending in the PRD has reached 100%.

A private equity fund manager told reporters that the monthly interest rate of private lending in Henan area has reached 10% (that is, the annual interest rate is 120%).

On the one hand, faced with high inflation, interest rate measures are slow to come out; on the other hand, the constantly rising reserve ratio leads to tight liquidity between enterprises and banks.

Against this background, concerns about over tightening and hard landing are growing.

However, Qu Hongbin, chief economist of HSBC China, believes that even in the absence of credit regulation, SMEs are also facing financing difficulties.

He believes that it is too early to start a relaxation policy.

Singing empty behind

Another reason why Dylan, an analyst at faxing bank, insisted on singing empty China, was in the early June that the media concerned about China or would create new institutions to dispose of the local government's debt of up to 2 trillion -3 trillion.

Dylan believes that this may be one of the reasons why China's economy has not received widespread attention so far: the government has spent a lot of money to solve an economic problem, and then the problem has been solved and everything is going on.

However, in the view of Li Yang, vice president of the Academy of Social Sciences, there is no big problem in China's local government debt. "First, if the rate of economic growth does not decline, the problem of local government debt will not deteriorate. Second, even if the situation is not good, we can draw" real gold and silver "from the national level without having to be too pessimistic.

And local debt is also worrying, as well as the risks faced by real estate regulation.

In June 15th, standard & Poor's downgraded the outlook for China's real estate industry from a stable to a negative one, as credit tightened and severe.

Some people worry that housing prices will be sharply adjusted downward.

According to Ma Jun, chief economist of Greater China in Deutsche Bank, the assumption is that the government will adopt a laissez faire attitude in the face of the downward trend in the real estate sector.

"In the past more than 10 months, the government has taken a lot of measures to control housing prices. Once there is a big risk, the government can only solve a few problems by loosening a large number of tightening policies."

He analyzed.

And for the "real estate investment will lead to a sharp decline in economic recession," he also worried that it is not tenable, "after all, this year, investment in affordable housing construction will increase by 100%.

This can offset a considerable drop in real estate investment. "

As a matter of fact, every time international investors sing empty China, they have "ulterior motives".

Soros often sang empty China at the same time, "turning hands into clouds, covering hands for rain".

As early as November 2010, Soros set up a hedge fund in Hongkong. The main reason for its entry was the prospect of RMB appreciation. He once expressed "dissatisfaction" on several occasions for the appreciation of the renminbi slowly.

And the appreciation of the renminbi is expected to be increasing. After the increase in foreign exchange accounted for nearly 300 billion yuan in April, it is expected to further increase in May.

Under the background of high inflation and the underestimation of domestic currency, international capital has poured into the country to exchange for the double benefits of asset appreciation and arbitrage.