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THE CHINESE STOCK MARKET IS RISING BECAUSE THE NEW PBOC WILL NOT BE MORE LIBERAL OR RADICAL, BUT RATHER MORE PRAGMATIC AND PRACTICAL, AND THUS WILL DEVALUE THE YUAN.|
The spate of rumors around PBOC Chief Zhou has turned into a torrent in the past 12 hours, with the stock market rising, immediately being spun by the Western propaganda machine to mean that the markets approve of and expect to get a big stimulus of easy loans, again meant to derail China's attempts to regain its footing after the DISASTROUS REVALUATION OR OVERVALUATION OF THE YUAN that has led to the strangulation of its manufacturing sector, made unable to sell to the international market because its products were overpriced compared to foreign products in dollars, and unable to sell to the domestic market because foreign products are underpriced in Yuan, riding on the strong Yuan/Dollar exchange rate.
To these Western mainstream media economic hitmen, posing as pundits, the answer is "NO, NO, and NO! China's stock market is rising because it EXPECTS AN IMMEDIATE DEVALUATION OF THE YUAN which will immediately boost exports and allow domestic manufacturers to retake the China market from foreign manufacturers, leading to instant relief on their balance sheets.
An injection of free money into the economy by the PBOC will not stimulate factory production, if the prices of their product remain uncompetitive abroad and at home. It can only lead to inflation, not production. The Chinese stock market is not going to award inflation with a bull market, because a bull market based on easy money will soon face a rise in interest rate to rein in the inflation it causes, and a higher interest rate means the stock market will fall, not rise. So, why is the Chinese stock market rising? Because it expects an immediate loosening of the PBOC's tightfisted policy of revaluing and overvaluing the Yuan, which leads to instant opening of foreign and domestic markets. This leads to real production, real national income, and real rather than borrowed higher standards of living.
And the Western media is AFRAID that China's self-inflicted strangulation of its manufacturing industries will end with the departure of Zhou, and therefore, are proffering their snake oil solutions before he leaves in order to poison the Chinese economy with the opposite plague, which is inflation, as if it is the cure to Zhou's mistakes in the past. Injection of easy money without first devaluing the Yuan will not increase production. Instead, it will increase consumption without hope of increasing production, i.e., quantitative easing without devaluing the Yuan first will lead directly to stagflation.