Miles Guo stated earlier today (December 8th, 2019) that a large financial transaction totaling a value of over 100 million USD (estimated) was conducted, where the exchange rate was set at 11 RMB to 1 USD. This is a far cry from the official 7 RMB to 1 USD (and lower) that the CCP has enforced by manipulating its currency for many years. It can do this primarily because it oppresses its population by filling them with nationalism and disdain for the West. It then utilizes their labor (at state-sponsored impoverished wages) to suppress prices for its exports.
The artificially lower currency price has enabled the CCP to export its ‘finished products’ much more cheaply than its competitors in a predatory manner. What this has done is decimate the ability for companies outside of China to compete in some of these industries most hard-hit by these “dumped” exports, which in some cases are explicitly designed to hurt worldwide competition in favor of “cornering” the production of certain goods.
The Trump administration and Treasury Secretary Mnuchin labeled the CCP as “currency manipulators” on August 5th, 2019. One of the main reasons for this change is the inability of companies to get their money out of China once invested. More clearly, these investments are not liquid in any way outside of China. As we have stated previously, this designation has helped to further starve cash flow from the CCP’s kleptocratic leadership.
An additional data point is the continued behavior of HNA Group in selling its subsidiaries. Just a few days ago, they sold another smaller low-cost airline called “West Air” after recently divesting of “Beijing Capital Airlines, Urumqi Air and Beibu Gulf Airlines.” This is because HNA Group has recently been forced to consolidate its debt — the core CCP owned businesses appear to be scrambling to deal with their debt service. HNA Group already began selling off its stake in Deutsche Bank in 2018. We are certain investors are consistently monitoring the levels of assets held by the CCP.
Meanwhile, on Hulu island, Miles has told us that the CCP continues to print fake US dollars. We believe our authorities have started to crack down on this problem. As recently as this week (December 8th), $11,000,000 (USD) worth of fake $100 (USD) bills were seized in Taiwan. These bills were sold for as little as $14 (USD) each.
This type of law enforcement behavior and policy should be encouraging deeper integrations, including trade, between Taiwan and the United States. Miles also stated that because port calls have recently been blocked in Hong Kong by the CCP, a United States aircraft carrier will make a port call into Taiwan soon.
See this article for more information on how command economies fail.