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International Herald Leader: Depreciate RMB Sharply and Keep Foreigners’ Hot Money in China

The International Herald Leader, a publication under Xinhua News Agency, published an article on December 12, 2011, blaming the Western countries for “draining” China of its real estate properties, stocks, and currency. According to the article, since last year, foreign institutions have been quietly selling their real estate properties. Since September this year, China began to notice the trend of property sales when Blackstone sold all of its properties in Shanghai. In November, Bank of America and Goldman Sachs reduced their shares in the Bank of China. Meanwhile, foreign capital has quietly retreated from the stock market. At the same time, high-end U.S. manufacturers are leaving China. The article speculates that once foreign companies start to sell RMB on a large-scale, the RMB will devalue and China’s economy will suffer from a hard landing. The article gave two suggestions to avoid a hard landing and “fight a financial war of defense”: 1) Sharply reduce the price of real estate properties before foreigners sell their properties in China on a large scale; 2) Depreciate the RMB before foreigners sell RMB on a large scale, thus letting foreigners’ hot money “become rotten in China.”

Source: International Herald Leader, December 12, 2011