Chinese state media takes aim at Soros after hard landing comments
Jan 27 2016
China's pretty miffed at billionaire investor George Soros's dire warnings on the world's second-largest economy, and isn't afraid to say so.
A flurry of chest-beating articles have appeared in state media in recent days, talking up the virtues of Chinese markets while warning investors about the dangers of speculation. The cause: a series of bearish comments on China made by the legendary investor at theWorld Economic Forum in Davos.
In a commentary published Wednesday, Xinhua said that China had "ample reasons to stay confident in the face of speculators", citing firm 6.9 percent GDP growth in 2015, robust spending and overseas investment.
And on Tuesday, the overseas edition of the People's Daily, a mouthpiece for the China Communist Party, singled out the 85-year-old billionaire for "declaring war" on the RMB.
Titled "Declaring war on the Chinese currency? Haha," the front-pageeditorial was written by Mei Xinyu, a researcher at the Ministry of Commerce. The editorial called Soros a "financial crocodile" (a long-time sobriquet for Soros in China) that had "publicly declared war on China."
"Because of his influence, fluctuations in the international financial markets has intensified ... Asian currencies are clearly under greater pressure from speculative attacks," the editorial said.
But Soros' challenge to the yuan and Hong Kong dollar would be in vain, it went on, because China's macro-economic situation was healthy and the country was able to withstand temporary exchange rate volatility.
It followed an article in Xinhua on Saturday that warned that "reckless speculations and vicious shorting will face higher trading costs and possibly severe legal consequences."
Soros made waves last Thursday when he said that a hard landing in China was "practically unavoidable."
"I'm not expecting it, I'm observing it," he told Bloomberg TV.
Although Soros did not refer directly to the Chinese currency or the Hong Kong dollar, his words carry plenty of clout.
One of the world's most closely-watched investors, Soros is known as "the man who broke the Bank of England," in reference to fame (and infamy) he garnered in 1992 for selling short the British pound, helping force the country out of the European exchange rate mechanism.
His Soros Fund management firm was also blamed for contributing to the Asian financial crisis in 1997, when former Malaysian prime minister Mahathir Mohamad was one of his most vocal critic.
Although not official pronouncements, commentaries in China's state media are closely watched as indications of the thinking of the Chinese Communist Party, which now appears to on the offensive against any opportunistic attempt to profit from its growing pains as the manufacturing giant transitions to a consumption-led economy.
Despite the Chinese government's best efforts, Soros' comments likely hit market sentiment hard, said BNP Paribas Investment Partners' head of Asia Pacific equities, Arthur Kwong.
The Shanghai Composite had its worst day on Tuesday since the suspension of the circuit breaker rule in early January, closing down 6.4 percent, hitting its lowest level since December 2014.
This is despite the fact that Soros also told Bloomberg at Davos that he believed China could "manage" its hard landing, saying, "It has resources and greater latitude in policies, with $3 trillion in reserves."
In a strange twist to the China-Soros tale, the chief of China's National Bureau of Statistics, Wang Baoan, was among the officials talking up the yuan in the wake of Soros' comments.
On Tuesday, Wang gave a speech saying that there was "no basis for long-term yuan depreciation." Just hours later, it was announced that he had been detained in a corruption investigation.
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