The World Economic Recession Is Because The United States Has Become A Victim Of China.

Jim Rogers, a well-known investor in Wall Street, told Bloomberg news agency that China is a victim rather than a problem for the current world economic situation.

He said that many indicators of China's economic situation can be measured. Although some data may not be as easy to obtain as the United States or Germany, but he has been to China many times, has many exchanges with local people, and has visited many Chinese enterprises to know more about China's current situation.

He said: "China's economic development has indeed slowed down compared with the original.

But this is normal, as is the case in many other countries and regions.

When asked about China's debt, Rodgers said, "I am concerned about the situation in the whole world in 2016 and 2017.

The economy is depressed in many places.

To those who blame it on China, I want to say that China is the victim of this situation, not the reason for it. "

The real reason, he said, is that the US central bank and the US government's debts are expanding.

China, like all other countries, is a victim.

When asked whether China is facing the bursting of the debt market bubble, he said that unlike China's easing of the world economic difficulties in 2008, China does have debts, but unlike the United States, the United Kingdom or Portugal.

Rodgers said, "if you are worried about this, you might as well look at the US.

The United States is the largest debtor nation in the world, and debt is rising.

We have no foreign exchange reserves.

China has amazing foreign currency reserves. "

China's oil consumption has been reduced by the slow growth of the low carbon service industry, which largely explains the recent collapse in crude oil prices.

Prices of base metals and other industrial raw materials have also been similarly affected.

Although China has made initial progress in adjusting the real economy, it has suffered a serious setback on the way of financial reform.

China's stock market crash in 2015 intensified in early 2016, and also affected other major stock markets.

Once again, a simplistic explanation of a very complicated affair is made.

From the recent collapse of the global stock market to the next recession, the outside world blamed everything on China.

Although the size and pnational connectivity of China's economy can not be underestimated, its global influence is much smaller.

At present, two powerful forces are in the process of competition: one is the pition from the country to the new growth mode, and the other is the necessary development of the vigorous financial infrastructure.

Contrary to popular belief, China is making considerable progress on the first point, especially in terms of restructuring its economic structure from manufacturing to service sector.

These adjustments are far more important than the overemphasis on gross domestic product.

Erroneous fascination with the accuracy of overall growth also ignores this key point.

The collapse of the super cycle of agricultural and mineral products is a more serious consequence.

Momentum driven investors (as well as resource economies such as Brazil, Russia, Australia and Canada) have been slow to realize China's importance in getting rid of the intensive growth of agricultural and mineral products.

Oil is the most obvious example.

Coal does account for about 70% of China's total energy consumption, but its role in promoting world oil demand is also crucial.

In the 10 years ended 2014, China's oil consumption growth accounted for 48% of the total global oil demand growth.

The deeper problem is not the bubble burst itself, but the impact of financial reform.

China's credit flow has been overly dependent on banks, so building other financing channels through the capital market has become a priority priority.

Since the new bond market is too small to fill the gap, attention shifts to a reliable stock market.

With the stock market in turmoil, the scheme is no longer credible.

Monetary policy in Beijing is entirely another matter.

Investors have come to the wrong conclusion that the recent devaluation of the US dollar indicates the beginning of a new round of competitive devaluation, which may lead to a comprehensive currency war, reminiscent of the devaluation of the Asian financial crisis in the late 90s.

The prevailing trend made the region plunge into severe recession and almost brought the same fate to the world.

This possibility is negligible.

After 10 years of significant depreciation, the renminbi is now closer to its reasonable value.

China's previous large-scale current account surplus has been reduced, eliminating the pressure for further adjustment of the renminbi.

Specifically, although the exchange rate of RMB against the US dollar has decreased by 6% since last July, it has increased by 25% compared to the middle of 2005.

In terms of a basket of currencies for China's trading partners, the so-called real effective exchange rate is still 50% higher than it was 10 years ago.

Although this shows that China has every reason to restrain the momentum of RMB appreciation in recent years, the possibility of a more destructive reversal is still very low.

First of all, under the global economic downturn, it is necessary to take a much larger depreciation rate to boost exports so as to offset the downward pressure on other sectors in China.

Second, such a depreciation would violate the core strategy of Beijing's shift from exports to domestic consumption.

Finally, the International Monetary Fund recently introduced Renminbi into the basket of SDR currencies, which could have a serious impact on the decision.

If capital market reform remains stagnant, progress in economic adjustment will be hampered.

At the same time, the global market needs to be mentally prepared.

The good news is that the worries about China's hard landing are too exaggerated.

For short selling, this may be a timely relief.

The bad news is that central banks are beginning to stop providing market support to the market (that is, quantitative easing in recent years).

In the end, this may be more problematic than another Chinese panic.