Now, the higher-ups had realized that Hua Xia is a big manufacturing country. This is not a compliment.
If you are doing high value-added manufacturing, the profits will be high. Countries like Germany, the US, Japan, etc., will become developed countries.
Hua Xia is a big manufacturing country. It relies on cheap labor to become the world's factory. This is an export-oriented economy.
Simply put, the main goal of China's foreign trade was to earn foreign exchange through exports.
This model can increase the country's technology and efficiency quickly. But at the same time, there are risks. That is, Hua Xia is overly dependent on the international market.
Once there are changes in the international market, this model of economic development will be severely affected. This kind of economic development comes at a high cost.
Developed countries have a domestic demand economy. They pursue high consumption, high wages, and high investments.
Hua Xia had earned a lot of foreign currency. But what next? A portion of the foreign currency is used as reserves, and the other portion is used to buy foreign bonds.
The bonds issued by foreign countries are to promote their own consumption. If you buy foreign bonds, it is equivalent to giving money to them and letting them live extravagant lives.
How much can you earn from bonds? It can only help you maintain your value. But they are taking your money and using it to stimulate domestic demand, they are already making more money than before.
China cannot rely on cheap labor as a means of competition, and it cannot destroy the environment as a means of development. This kind of development is very unsound.
It is just like how Hua Xia owns the most foreign reserves in the world. This might seem to increase the country's ability to resist risks, but there is a huge disadvantage. The country can easily be held hostage by foreign currencies, especially the USD.
If the country sells the USD, the financial market will be affected. This will affect Hua Xia's stock market and the RMB exchange rate. The result is that the country can only buy foreign currencies and cannot sell them. This is equivalent to helping the US stabilize the USD exchange rate.
The US and UK have strong economies and prosperous financial markets. This has a lot to do with the status of their currencies in the world. However, this kind of status was not unchangeable.
Soros had led his men to attack the British Pound's exchange rate and made a lot of money. It was also at that time that the USD replaced the British Pound Sterling as the number one currency in the foreign exchange market.
Hua Xia's higher-ups have also noticed this. Now, they are gradually reducing these low-value-added products. For example, their former clothing, leather shoes, etc. are indeed very competitive in the international market. But with the EU's anti-dumping fine, they are greatly affected.
At this time, Hua Xia was also doing import substitution. In other words, he was developing the technologies related to the products that Hua Xia had no choice but to import to avoid being restricted by foreign countries.
It was just like how Hua Xia was the world's number one manufacturer of pens. However, the ballpoint used to produce ballpoint pens had to be imported from overseas.
Among them, Japan has the best technology, followed by Germany and Switzerland. It might seem like a worthless item, but once it reached a certain amount, it would be a considerable profit.
This also directly reflected that Hua Xia was still far from the world's most advanced in terms of high-end materials and so on.
Was it because Hua Xia was lacking in researchers? Of course not. Hua Xia's talents were definitely abundant.
But many of their talents were focused on other areas, like military technologies, etc. This was true. If a country's military was not strong, it will never become a powerful country.
But the combination of military and civilian was too weak. Many technologies can be used for civilian use. This will improve the people's livelihood and generate profits. This will allow more funds to support the development of new technologies.
An export-oriented economy was good. Very good. But an export-oriented economy relied on the country's economic advantages. It would be perfect if this advantage was in the form of technologies or funds. But if it was only cheap labor, what was there to be proud of?
A country had developed, but its people did not earn more. This was not right. Only when people's living conditions are better, that is what people look forward to.
China had always said that the development model of other countries can only be used as a reference and must not be copied. This is a principle that everyone knows.
This was because every country had different national conditions, and no one can develop according to others' model. It was just like Thailand in the past. If they had developed according to others' model, the consequences would be disastrous.
Even without Feng Yu's involvement, Soros will still be able to deal a heavy blow to Thailand and other countries' economies. This will also implicate the countries that are closely related to Thailand.
Hua Xia was worried that this would happen, and that's why he increased his foreign reserves. But it cannot be too much.
Actually, the higher-ups had also noticed the disadvantages of having too much foreign reserves. The best solution now was to increase the status of the country's currency.
Hua Xia owned too many US government bonds, and it was equivalent to tying his economy to the US. The depreciation of USD will stimulate the appreciation of RMB, and Hua Xia's US debt will shrink.
For example, if the exchange rate changed from 1: 8 to 1: 7, then the US will only need to repay 700 million RMB of the 800 million RMB that it owed to Hua Xia. This will lower the US debt and deficit. This was equivalent to Hua Xia paying for the US debt, and it will cause inflation for Hua Xia.
What else can Hua Xia do? Continue to buy USD and push up the USD exchange rate. This will increase Hua Xia's USD reserves. Then the cost of Hua Xia's exports will increase, and its competitiveness will drop.
The US owed Hua Xia too much money, and Hua Xia had invested too much in the US.
This change in the exchange rate will have a severe impact on Hua Xia's assets. Look at Yen. The exchange rate was very low, and Japan's economy was not doing well.
The appreciation of RMB is already a trend. At this time, Feng Yu should try his best to avoid losses and slow down this trend to a reasonable level.
The currency must be in line with the country's purchasing power, and it must be integrated with the country's economy.
Of course, Feng Yu's considerations might be one-sided. After all, he did not know much about the political movements of the higher-ups. But Hua Xia's trade surplus was too high, and a large amount of money was flowing into Hua Xia. This was not a good thing.
Especially this trade surplus. Most of Hua Xia's profits were from export subsidies. Many companies relied on these export subsidies to make profits. Can such companies be considered to be doing well?
Hua Xia's exports were severely restricted by international technical barriers. There were more anti-dumping cases against Hua Xia, and Hua Xia will suffer significant losses.
This time, the US's economic crisis must make Hua Xia and other countries pay for it. Feng Yu must think of ways to make the US pay for this!
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