"History has proved that the transformation of the strength of the US dollar will lead to the redistribution of global wealth, and thus bring about a major adjustment in the global economic structure." At the Hexun Spring Stock Market Investment Strategy Conference held recently, the Financial Research Institute of the Institute of Financial Sciences of the Chinese Academy of Sciences Yin Zhongli, deputy director of the research office, said that after a decade of bear market, the dollar will usher in a big bull market, and the weakening of the dollar may bring a huge impact on the Chinese economy. Looking at the role of the US dollar from the historical cycle Yin Zhongli divides the global economies into three categories according to their comparative advantages: the first is a country with technological and R&D advantages, the United States, Northern Europe and Western Europe; the second is natural advantage. The country is represented by oil-producing countries in Russia, Canada, Australia and the Middle East; the third category is a country with cheap labor, represented by emerging economies such as China and India. History has proved that in the process of the transformation of the strength of the US dollar, countries with different advantages have a rotation of economic strength. In the late 1970s and early 1980s, the first category of countries was in trouble, the dollar entered a bear market, and the Middle East oil-producing countries began to rise. From the 1980s to the beginning of this century, the Fed adopted a tightening monetary policy, the US dollar regained strength, and commodity prices began to weaken. “One of the biggest international events of the time was the disintegration of the former Soviet Union in the early 1990s. The disintegration of the former Soviet Union had its political reasons, but the main economic reason was the government’s financial bankruptcy, and the financial bankruptcy was due to the fall in oil prices. Yin said. After entering the 1990s, the dollar remained strong. At this time, the global funds have returned to the United States, and the United States has witnessed a new technological revolution represented by the Internet. For the first time, the United States achieved financial self-balance, but this corresponds to the outbreak of the Asian financial crisis. After entering this century, the dollar began to enter a bear market. The weaker dollar helped the third-class countries with cheap labor advantages to enhance their competitive advantage, promote the rise of emerging economies such as China and India, and let the economic strength of the first-class countries decline relatively. The debt crisis in Europe and the United States is long with the US dollar. It is related to a bear market of ten years. The dollar is undergoing a transition from weak to strong Yin Zhongli believes that from the current point of view, the future re-strength of the US dollar remains a high probability event. From a political point of view, the weak dollar is in line with the interests of the US Republican Party, and the strong dollar is in line with the interests of the Democratic Party. If Obama, who represents the Democratic Party, can be re-elected in the general election held in November this year, it will surely push the dollar out of the bottom. From an economic perspective, the current economic state of the United States also supports the strengthening of the dollar. The cash flow of US listed companies is at an all-time high. From the perspective of real estate starts and sales, the signs of US real estate going out of the bottom are also very obvious. Look at the euro again, although many people now predict that the worst period of the euro has passed, but the euro has institutional flaws, there is a lot of uncertainty in the future, and the decline of the euro means the relative rise of the dollar. The return of the dollar to a strong position will trigger a major adjustment in the global economic structure. For example, the first category of countries will “rejuvenate youthâ€. Although Europe and the United States are caught in a fiscal quagmire, as long as the US dollar strengthens, the comparative advantage of the technology-leading countries will be improved; the second category will be relatively declining, especially in Russia, and it will be more difficult to predict if the international oil price falls below the barrel. For $100, Russia’s finances will certainly encounter difficulties. What does the dollar strengthen for China? "The past ten years, 'too much money' is the trouble of China's happiness. It has led to a series of problems in China's property market and stock market and the rapid growth of foreign exchange. But these troubles are at best a happy worry. Because it did not bring shock to the Chinese economy. "However, Yin Zhongli said that the future strength of the US dollar will bring pain to the Chinese economy - first, overcapacity will reappear. In the past ten years, thanks to economic globalization, China's products can basically be sold; China's various investments have expanded at a high speed, especially in real estate expansion, which has absorbed hundreds of millions of steel and cement in China. However, as the US dollar strengthens, overcapacity, the “difficult problem†of the Chinese economy will reappear. Second, the bank's annual profit growth of 30% is unsustainable. On the contrary, bad debts will emerge in large numbers. "Now the bank's low P/E ratio makes sense. Investors have prepared for the emergence of bad debts." Third, inflation is no longer a problem. If the dollar strengthens, inflation will disappear for China, and inflation will be deflation. Fourth, foreign exchange holdings will drop sharply. After the investment expansion, there will be overcapacity. If the export is blocked, and domestic demand shrinks due to some reason, the expansion of production capacity will lead to overcapacity, and international capital will flee. Yin Zhongli said that since the 1970s, international capital has flowed to almost every decade. In the past few months, China has shown signs of a sharp decline in foreign exchange holdings.
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