China Warns Soros Against Starting A Currency War: "You Cannot Possibly Succeed, Ha, Ha"

Tyler Durden's picture

George Soros may have broken the BOE and may well have been at least partially to blame for the Asian Financial Crisis, but he will not win an FX battle with the PBoC. At least that’s Beijing’s message to the billionaire, as conveyed via a characteristically hilarious “op-ed” in the People’s Daily entitled Declaring war on China’s currency? Ha ha

Yes, “ha, ha.” Although there’s nothing funny about the $1 trillion in capital that fled the country in 2015 on the heels of the PBoC’s bungled effort to “manage” a controlled devaluation of the yuan.

Although Soros didn’t specifically mention either the RMB or the HKD, he did indicate he is betting against Asian currencies in an interview with Bloomberg TV last week and that, apparently, was cause for Beijing to issue a stern warning.

Soros’s war on the renminbi and the Hong Kong dollar cannot possibly succeed — about this there can be no doubt,” the People’s Daily says, after calling Soros “the financial crocodile,” and blaming the billionaire for “increasing volatility in already unstable financial markets.”

Perhaps Beijing knows something everyone else doesn’t, or perhaps the PBoC simply assumes that when Soros mentions “hard landing” and betting against Asian currencies in the same breath it probably means he’s short the yuan, but whatever the case, Chinese authorities have ramped up the rhetoric in the past several days.

Reckless speculations and vicious shorting will face higher trading costs and possibly severe legal consequences,” Xinhua wrote over the weekend. “And just as proved in the yuan exchange rate case, the Chinese government has sufficient resources and policy tools to keep the overall economic situation under control and cope with any external challenges.”

The ironic thing about the latter passage there is that Soros actually echoed that sentiment in the interview China appears to be referencing. “China can manage it. It has resources and greater latitude in policies, with $3tn in reserves,” he said.

Of course China won't be able to arrest Soros and beat a confession out of him like Beijing is fond of doing to others suspected of launching "malicious" short attacks, but the brash commentary does indicate that Chinese authorities are becoming increasingly sensitive to suggestions that a steeper RMB devaluation is a foregone conclusion.

As we've noted on a number of occasions, capital flight is as much about perception as it is about reality. If people believe there's a problem, they'll act first and ask questions later and when a voice as influential as Soros says the "hard landing" is upon us, it has the potential to trigger more outflows at a time when more than a hundred billion per month is exiting the country for the safety of foreign assets like high-end real estate. 

Also on Tuesday, China said the head of the country's statistics bureau Wang Baoan is now under investigation for "serious violations of discipline." The news comes just hours after Wang criticized Soros' hard landing call. 

Coincidence? Perhaps.

We anxiously await the word on what exactly Wang is accused of doing wrong considering the NBS is the body responsible for habitually reporting GDP figures that never deviate materially from the Party's 7% target. 

*  *  *

Full People's Daily piece

Original title: a declaration of war to the Chinese currency? "Ha ha"

Source: People's Daily Overseas Edition

From last year to this year, the "financial predators," said Soros, the man of the hour for two consecutive years as one of the World Economic Forum in Davos the most interesting. Last year, he used the platform to announce the "permanent retirement", no financial investment involved in the political arena and instead focus on its so-called "political charity"; this year, is also on this platform, he was open to China "declaration of war", claiming that We have generous short Asian currencies. Because of his influence, fluctuations in the international financial markets has intensified already existing Asian currencies obviously feel greater pressure speculative attacks.

However, Soros challenge for the renminbi and the Hong Kong dollar is unlikely to succeed - this, no doubt.

Although China's economic growth downward since last year, stock market volatility, the yuan against the dollar, but in this period of global slowdown in economic growth, China's economic fundamentals are relatively good among the great powers: economic growth last year, equivalent to the US growth twice; China in 2015, although exports fell 1.8%, but the global trade decreased by 10% over the same period; China continues to upgrade industrial structure, advanced manufacturing and emerging new services is still growing, and has begun more and more field line leading world ......

These show that China's macro-economic stability is far better than the other BRIC countries and most developed countries, economic shocks can not simply overturn China, China is still able to maintain a global economic power in relatively good condition. Meanwhile, the ethnic composition and cultural tradition unity and other factors also gives a higher high social stability of China.

Specific to the RMB exchange rate is concerned, since the middle of last year the RMB against the US dollar depreciated slightly indeed, but market participants will also be seen that the average annual exchange rate of RMB measure, from $ 1 in 1994 against 8.6187 yuan to one US dollar in 2014 against 6.1428 yuan, the appreciation of the RMB against the US dollar has been for nearly 20 years, only a slight repeated in 2000. The continued appreciation of one currency against the US dollar so long time, amplitude so large is rare, a slight pullback now is normal. Moreover, China has become the world's second largest economy, the yuan pegged to the dollar is not always in fact - in the capital is highly mobile world, in order to achieve the independence of monetary policy, China is willing and able to withstand the temporary exchange rate, slightly volatility, market participants will sooner or later realize that and get used to this, thereby reducing the current over-reaction so.

Background from a larger perspective, the current strength of the dollar against most other emerging market currencies may continue for a long time, but the renminbi is difficult to do this. Because China's trade balance surplus remained sustained, and surplus is still expanding; the US economy is already in deep financial "Dutch disease" (a sector booms caused by the decline of other sectors) and escape.Although the United States want to re-consolidate the economic foundation in fact, the body, the "re-industrialization" momentum almost but difficult to continue, resulting in the goods trade balance continued to deteriorate as the economy recovers. This one US dollar against the yuan temporarily strong, will certainly be the aforementioned "Triffin dilemma" (confidence and liquidity dilemma) interrupted, and it can be expected that this time may not be too long.

From another perspective, Soros to Asian currencies "declaration of war", but also for China to create a deepening of financial cooperation in East Asia as well as "all the way along the" opportunity of financial cooperation. International monetary cooperation from low to high is divided into international financing cooperation, joint intervention in currency markets, macroeconomic policy coordination, joint exchange rate mechanism, the single currency five levels - direct power of its deepening, usually pressure from speculative currency attacks.

The current monetary cooperation in East Asia, is still in currency swaps and repurchase network level marked by cooperation in the area of ??financing. Now, emerging market currencies volatility, Soros started speculative attacks on Asian currencies starting gun for the Chinese and other East Asian economies, to achieve cooperation from international financing to carry out joint intervention in currency markets and even upgrade macroeconomic coordination, is not a Opportunities do? 

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KesselRunin12Parsecs's picture
KesselRunin12Parsecs (not verified) Jan 26, 2016 8:35 AM

May the Schwartz (not) be with you!

Father Thyme's picture
Father Thyme (not verified) KesselRunin12Parsecs Jan 26, 2016 8:38 AM

Too beaucoup! Too beaucoup!

Big Corked Boots's picture

China could do humanity a favor and get rid of Soros.

Father Thyme's picture
Father Thyme (not verified) Big Corked Boots Jan 26, 2016 8:40 AM

What we have here, little yellow sister, is a magnificent specimen of pure Soros Blacksnake.

Latina Lover's picture

Too bad that the Chinese Government cannot send the Tong HK Gang members to pay Soros a visit.

mtl4's picture

Soros is a financial vampire no doubt, but countries like China will eventually learn that it's their own capital controls that are really burning them.

knukles's picture

Ah, the ICON of the Liberal/Progressive mental set.... sending people to concentration camps, all in for the NWO, Order from Chaos....
What better company to keep ... other than Satan?

Stainless Steel Rat's picture
Stainless Steel Rat (not verified) knukles Jan 26, 2016 9:13 AM

What braniacs.  China to world: "We are worried about Soros.", "We will resort to bluster because we apparently need to and it has worked wonders with the shorters among our own population.",  "If anyone wanted to piggyback on a currency attack, the yuan is your bitch."

VinceFostersGhost's picture



Too bad that the Chinese Government cannot send the Tong HK Gang members to pay Soros a visit.


Actually....I'm pretty sure they can.

HopefulCynical's picture

I would love to see Bejing hang Soros by his own evicerated financial entrails.

Yes indeedy.

MagicHandPuppet's picture

I love it when two scumbags streetfight.  Either way, a P.O.S. will lose.

Chris Dakota's picture
Chris Dakota (not verified) MagicHandPuppet Jan 26, 2016 10:29 AM
I am become death, the destroyer of worlds.

George Soros

DownWithYogaPants's picture

Or as a friend used to say "The Niggerians are at war with the Mexicans and I am rooting for both sides!"

Newsboy's picture

Is there some way to bet against EVERYBODY?

Jes' wonderin...

TruxtonSpangler's picture

All your base are belong to us

dr.charlemagne's picture

Newsboy. Yep, there sure is. Gold and Silver. No counterparty. A bet against everyone.

PTR's picture

Yes. Finance EVERYONE.

Dr. Bonzo's picture

What braniacs.  China to world: "We are worried about Soros."

See, that's funny. You think ZH readers are discerning types. But not really. I just made the same point and get 8 morons downvoting. And more to come. Reading comprehension issues. Funny as fuck.

Blankenstein's picture

Probably because you ended it with "Go for it Georgio"

(didn't down vote you)

bania's picture

isn't soros' wife asian? the chinese have planted their black widow...

qomolangma's picture

Tamiko Bolton, who was raised in California, is the daughter of a Japanese-American nurse and a retired naval officer. She graduated from the University of Utah and holds an MBA from the University of Miami.

George Soros got married for the third time on Saturday to his fiancée Tamiko Bolton

Tamiko Bolton, 42, is a licensed pharmacist and has been a consultant and entrepreneur working in the fields of health and education.

She’s frequent travel companion with George Soros and attended a UN summit on climate change with him.

Tamiko Bolton started an Internet vitamin/dietary supplement sales company and now runs a web-based yoga education business, DealBookreported.

Her Upper East Side apartment was the center of a bunch of drama last year between George Soros and his ex-lover, Brazilian soap opera star Adriana Ferreyr, who sued the billionaire claiming he reneged on his promise to give her the apartment.

This will be Tamiko Bolton’s second marriage.

greenskeeper carl's picture

"Of course China won't be able to arrest Soros and beat a confession out of him like Beijing is fond of doing to others suspected of launching "malicious" short attacks"


Damnit!!! Thats actually exactly what I was hoping for. Come on China, I believe in you. Yes you can!

Latina Lover's picture

Maybe so, but if the Chinese sent Soros back to Hell, you would hear the cheers all around the world.

LasVegasDave's picture

A billion chinks vs. a judenrat kike.


who ya got?

KesselRunin12Parsecs's picture
KesselRunin12Parsecs (not verified) LasVegasDave Jan 26, 2016 9:06 AM

ya got 'inspirational' comments from Sheldon Adelson's pool boy

Father Thyme's picture
Father Thyme (not verified) bamawatson Jan 26, 2016 9:45 AM

Dum, da, dum, dum, D.U.M.B.

Deep Underground Military Bases

China's Underground Great Wall
Chinese reports that the country has a vast network of tunnels for its nuclear missiles have been oddly overlooked.

techpriest's picture

In addition, even residential buildings have underground bunkers. During peacetime they're used as parking decks, but my MIL showed me the supply rooms and the huge blast doors that are designed to protect in the event of a war.

No surprise there's way more of that.

The Saint's picture
The Saint (not verified) Father Thyme Jan 26, 2016 10:29 AM

LOL. So, rolling their nukes around underground will keep them out of sight?  No doubt the U.S. has space based metal/demsity detectors. Each missile can be pinpointed.

Lurk Skywatcher's picture

And with all of this omnipresent ability, the almighty god-state excersises complete control over the entire world! Nothing goes unnoticed, nothing can be hidden from the all seeing eye of unmatched American technological exceptionalism! See how no one dares to challenge us, see how our decisions are never wrong, see how easily we defeat our foes!

Turn off Hollywood dude, and you might survive the shock when reality hits.

Crawdaddy's picture

Turn off Hollywood/Bollywood...then turn the gaze toward Rome. Does Rome care if your country's rulers submit to them? How would we know? Maybe if our said capital buildings had a dome like the one on St Peters Basilica...maybe that would be a tell.

When China or Trump buys Georgetown U or Notre Dame I'll question the idea that the Pope's boys are not running the shit show. Until then, the Pope's boys are the only one's with the motive and means.

Mr. Ed's picture

Pinpoint underground missiles from space? Ahmmm...probably not.

ronthefisherman's picture

five year old story, dude...


Iwanttoknow's picture

LVD,The vomit that comes out of you, smelling of putrid matzo balls and gefilte fish.

The Wizard's picture

Trying to emulate with the Keynesian model isn't the best means to central planning. Maybe they will wake up and understand central planning doesn't facilitate free markets.

FreedomGuy's picture

Exactly, Wizard. China is practicing pretty much the same plays the West does with less sophistication. They still have that leftover Commie bluster and autocratic preference. However, it does not work well in relatively free markets. First, the theory does not work well and second, the smell of autocracy tends to drive money away. This includes internal money. It is why Chinese buy foreign property when they can. Just in case China goes full retard and starts confiscating property, again they hopefully have something out of reach of government. It may or may not be a great investment but it is a hedge against both currency manipulations and government authoritarianism.

OverTheHedge's picture

Too bad that the Chinese Government cannot send the Tong HK Gang members to pay Soros a visit.

Why not? China has military capabilities, and could certainly organise something off the books, and it might give short-sellers pause for thought. Would there be many complaints? Really? Not from me, that's for sure. ;-)


OverTheHedge's picture

Actually, the more I think about it the more I like it. Put the risk factor back into investment decisions; make the wrong call and get double-tapped. Sort the bulls from the bears for real. Can we start with The Squid?

Chris Dakota's picture
Chris Dakota (not verified) OverTheHedge Jan 26, 2016 7:39 PM

the Chinese in Chinatown San Fran have AK 47s

Somethimes they do hits in broad daylight.

Shrimp Boy went down, now the Mayor Ed Lee has taken his place.

Kiwi Pete's picture

If you piss the wrong people off badly enough they will kill you.  It's one thing to screw over John Major and the Conservative party of the United Kingdom. Another thing to screw over the people who ordered their own army to squash student protestors with tanks.

jerry_theking_lawler's picture

I'm starting to see this as their plan, possibly.  Here goes: Soros et al have created a problem in China.  China is falling into FX hell and Soro et al thinks they can finish them off and make billions upon billions....but China has been stacking this shiny yellow metal for years. I think at the end, China will announce a gold standard (along with partnership with Russia) and will close the doors on the FX shorts....and they will all ride the muppet train together at the hand of China.


Why? China knows this is what they are doing. China knows it is in trouble with a fiat currency. China knows it only hope is to stop this madness inflicted upon the world by Soros et al....this group has to go. Let's see if it plays out this way.

iggenFlot's picture

The problem with a gold standard is that when an economy goes tits up, debasement is no longer a policy tool, which means no easy solutions. As a result, a country needs to be on firm footing (or have plenty of resolve) when instituting a gold standard, because it will be tested.

HungryPorkChop's picture

Sure you can debase with gold and the U.S. did this back in 1933.  Overnight the rate of gold went from about $20 to $34.  Wallah, there's your instant overnight debasement. 

The Romans debased their gold and silver coins back 2000 years ago.  The coins got smaller and contained less gold.

Most likely no one will actually carry a gold coin in their pocket to buy grocieries.  It will be kept by the gobbermint and they would issue paper against this gold.  Once again, very easy to debase. 

iggenFlot's picture
iggenFlot (not verified) HungryPorkChop Jan 26, 2016 1:04 PM

Debasement undermines the very basis of a gold standard (as it did in the 30s), which eventually leads to its complete undoing (which was occurred in 1971).

janus's picture

exactly right, IggenFlot.  furthermore, consumerist economies and gold standards do not mix...particularly when the culture has for millenium been conditioned to save.

put gold in their hands against a fixed yuan rate and gresham's principal sets in; put yuan in their hands against a fixed gold horde and the temptation to depreciate is irresistible (in fact, the intention to in the future institute depreciation is the only reason you'd issue fiat against gold stores...and in such a scenario, the state would have to confiscate ALL bullion gold...just like in 33'...otherwise, individuals would horde gold and fuck up the depreciation).

unless an economy is hermetically sealed, a gold standard is doomed to fail.  but, a gold standard would work if it were the globe's standard.  the dollar is presently the world's currency.  it will probably stay that way for a while.  i don't think china wants the obligations that go along with reserve status.

a strong dollar-euro/weak yuan-rmb is ideal for china.  it's the ultimate merchantilist carry trade.  for a while, when the yen was strong, china was wallowing in it from every direction.  india wants to play that game, too...too bad the hindus love to horde gold.


Global Observer's picture

China is not stupid to reinstate a gold standard for the Renmimbi despite what half-wits keep hoping for.

China will however be party to a 100% gold-backed currency exclusively for international payment settlements. Of course, it won't last long if China intends to run up trade surpluses and accumulate the surpluses as gold; there isn't enough gold around for that at current prices of gold. What they have to do for the currency to be successful is to recycle their surpluses as investments in/grants to/loans to deficit countries. If their surpluses are recycled as loans they will be denominated in gold rather than any national/regional currency, investments will be converted to the recipient's currency at the prevailing rate ofgold in that currency and grants will be onverted to the currency of the country they are used to import from at the prevailing rate of gold in that currency. Thus gold will become the reference, without any actual exchange of gold for countries that are part of this monetary system for external payment settlements.