China and the US are making big moves, gold prices are soaring, the yuan has reached a new high, and is an economic inflection point upon us? It can be said that the new situation of the economic game between China and the US has officially begun. So, what exactly do we need to compete with the US in the second half of the economic game between China and the US? Today's program is packed with valuable information, so save it and watch it slowly.

Now it can be said, you cut interest rates, and so do I, it's just a matter of who cuts more aggressively?

Indeed, on one side, the US dollar has significantly reduced interest rates by 50 basis points, leading to a global wave of interest rate cuts. On the other side? China has implemented multiple policies, not only reducing the average interest rate on existing mortgages by 50 basis points, but also lowering the reserve requirement ratio by 50 basis points, and reducing the 7-day reverse repurchase operation rate by 20 basis points. After this series of operations, market sentiment has been completely activated.

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Firstly, China's three major stock indices have collectively risen sharply. As of the 24th, the Shanghai Composite Index increased by 4.15%, the Shenzhen Component Index increased by 4.36%, and the ChiNext Index increased by 5.54%, setting the largest single-day gain in a year and a half. Even the once sluggish liquor stocks have also "exploded", with Kweichow Moutai surging nearly 9%. It can be said that China's stock market is full of cheers!

Secondly, the price of spot gold has also risen by nearly $30, reaching a record high of $2664 per ounce. Some institutions predict that there is still room for gold prices to rise.

Furthermore, the exchange rate of the offshore yuan against the US dollar has now broken through the 7.0 mark and returned to the 6 range for the first time since last May.

Of course, in addition to China and the US releasing big moves, igniting everyone's optimistic sentiment towards the market, there is another reason for this phenomenon, that is, US consumer confidence unexpectedly fell by 6.9 points to 98.7 in September, setting the largest drop in three years, leading to market expectations for the Fed to cut interest rates by 50 basis points again!

Now, on one side, China's economy is rapidly recovering, while on the other side, the US economy is still in a continuous downturn, and the economy is at an inflection point. It can be said that the US dollar interest rate cut has officially started a new situation in the economic game between China and the US.

So we can't help but ask, what exactly do we need to compete with the US in the next step? This is the key point!

The first point is that we need to compete with the US on exchange rates.After 40 years of rapid development, it can be said that the Chinese yuan has firmly established its position on the international stage. Let's first look at a set of data: the current international payment share of the yuan has reached 4.74%, ranking as the fourth most active currency globally for nine consecutive months. The exchange rate of the yuan against the US dollar has also risen from 8.27 in the year 2000 to the current 7.0 threshold. It can be said that over the past 20 years, the exchange rate of the yuan against the US dollar has been continuously rising.

So why do I say that in the next 10 to 20 years, we will compete with the United States on exchange rates?

This is because the stability of a country's exchange rate and the preservation of the value of its currency can determine the country's influence in the global economy. Why can the US economy dominate the world? This is related to the strong US dollar exchange rate. It can be said that the US economic hegemony and the strong US dollar exchange rate are complementary. Therefore, even if the Federal Reserve prints money on a large scale, the US dollar will eventually return to its appropriate exchange rate.

Just like now, even if the US dollar cuts interest rates again, it will maintain the exchange rate difference with other countries' currencies through continuous interest rate hikes in the future. The United States will also use the strong US dollar exchange rate to create economic crises in other countries, which is a common trick of the United States.

Speaking of 2035, our country aims to become the world's largest economy, and our per capita GDP is expected to exceed 30,000 US dollars. How can this be achieved? Of course, it depends on Chinese products going out and foreign funds coming in. Therefore, the yuan must continue to appreciate in the future.

Firstly, with the appreciation of the yuan, international funds are more willing to invest in China! Isn't the CEO of a British hedge fund saying that a 10% appreciation of the yuan will lead to 1 trillion US dollars flowing back to the Chinese market? What if the yuan appreciates even more?

Secondly, the appreciation of the yuan is more conducive to central banks around the world holding yuan reserves, thereby causing more countries to use the yuan for international trade settlement, further promoting the internationalization of the yuan. Currently, at least 28 countries worldwide can settle international trade with the yuan, about 34 countries are accelerating the process of de-dollarization, and more than 150 countries have joined China's Belt and Road Initiative.

Therefore, with the appreciation of the yuan, everyone uses the yuan for transactions, which will further drive the export of our country's foreign trade goods, right?

Let's look at another set of data: in 2000, the total amount of our country's foreign trade exports was 249.2 billion US dollars, and in 2023, the total amount of our country's foreign trade exports was 23.77 trillion yuan, equivalent to 3.38 trillion US dollars. In this way, we can more clearly see that the exchange rate of the yuan is actually growing synchronously with our country's foreign trade exports.

Thirdly, with a strong yuan exchange rate, it is difficult for the United States to short the yuan exchange rate again. It can be said that as long as we maintain a strong yuan exchange rate, the United States' financial war will be completely defeated.Here, I will provide two examples. The first is the euro. Why can the euro cut interest rates before the US dollar? That's because the euro is the world's second-largest trading currency with a strong exchange rate foundation. Even if the euro cuts interest rates first, the phenomenon of US dollar inflow will be limited. More importantly, it is based on the consideration of domestic economic development.

The second example is the Japanese yen. Due to the strong fluctuations in the exchange rate between the yen and the US dollar, Japan is still considering whether to raise interest rates for the yen. This is also the ultimate reason why the Japanese economy cannot rise.

Therefore, in both domestic and international aspects, the second half of the economic game between China and the US cannot be without the exchange rate war.

At this time, some people may say, isn't the appreciation of the renminbi not good for the export of our country's products? Besides, in the 1970s, the exchange rate of the renminbi to the US dollar was only 1 or 2. How to explain this? This leads to our second question.

The second point is that we need to strive for the rise of the technology industry.

First, let's explain the above two questions. What we need is the sustainable growth of the renminbi, not a sudden large increase. These are two concepts. In addition, the strong renminbi exchange rate is based on the highly developed manufacturing industry. Otherwise, it will only be a false high, not only vulnerable but also affecting the export of domestic products.

This is why our country has taken the initiative to devalue the renminbi since 1994. At that time, our country's manufacturing industry had just started, and it could only rely on the low price advantage of products to drive our country's foreign trade exports.

But now, 40 years have passed, and our country is transforming its manufacturing industry. The country is also vigorously developing the technology industry. Why? First, because technology is the primary productive force, and only technology can drive the sustainable development of our country's economy. Second, only when our country's technology industry rises can the strong renminbi exchange rate have a foundation. That's because high-end products have more pricing power. We no longer need to earn US dollars by relying on cheap labor.

Just like the European Union's high tariffs on our country's new energy vehicles not long ago, even so, industry insiders still said that Chinese cars still have a competitive advantage abroad.

In this way, even if the renminbi exchange rate is strong, it will not have much impact on our country's high-end industries, but it will also play a certain role in driving. On the contrary, the rise of our country's high-end industries will make the renminbi exchange rate more stable, which is a complementary relationship.