On September 24, the Chinese Communist Party announced a massive stimulus plan for the stock market, attempting to save the economy by flooding the market with money. However, as time went on, the policy effect did not show up as expected. The stock market performance remained sluggish, the real estate market continued to shrink, and more significantly, the RMB exchange rate began to fluctuate, which had a particularly profound impact on ordinary people.

Recently, there have been constant news reports about the authorities' crackdown on illegal cash withdrawals. According to industry sources, some large cash withdrawals have been arrested, which shows that the Chinese Communist Party is highly nervous about the instability of the financial market. At the same time, the intertwined influence of the housing market, the stock market and the RMB exchange rate reveals the deep-seated problems facing the Chinese economy.

Five departments' new policies cannot reverse the decline of the real estate market

On October 17, five departments including the Ministry of Housing and Urban-Rural Development, the Ministry of Finance, and the People's Bank of China jointly launched new policies aimed at stabilizing the real estate market. The policies include investing huge sums of money to renovate urban villages and dilapidated houses, while expanding the credit scale of white-listed real estate companies. However, independent TV producer Li Jun pointed out in the New Tang Dynasty's "Elite Forum" program that although these policies may bring short-term sales growth to specific real estate companies, they cannot fundamentally reverse the current decline in the real estate market. Because the process of demolition and reconstruction is long, it is difficult to stimulate market demand in the short term. This new policy has limited support for private real estate companies, and state-owned enterprises will benefit more.

This seemingly powerful new policy did not change the market's confidence in real estate. On the same day, real estate stocks fell, and stocks of many leading real estate companies plunged. It can be seen that the introduction of the policy did not bring the expected recovery to the market, but instead aggravated investors' concerns about the prospects of the real estate industry.

Cashing out and stock market turmoil

As the CCP continues to introduce various economic stimulus policies, a group of speculators have taken advantage of the situation. Former Chinese billionaire Zhao Haitao revealed that some major shareholders and institutions that quickly made profits through cashing out have been cracked down by the authorities, reflecting that the CCP hopes to reshape the market order through severe crackdown measures. However, this kind of short-term stock market pull-up means cannot maintain long-term market prosperity.

During this large-scale stock market release, some retail investors were eager to enter the market through borrowing and other means, hoping to profit from the stock market rebound, but the ultimate victims are often these groups with weaker financial strength. At the same time, some large institutions and major shareholders who had foreseen the market risks took the opportunity to flee, bringing further downward pressure to the market.

Zhao Haitao further pointed out that although the authorities have cracked down on large-scale cashing out, the stock market may still usher in a wave of rebound in the short term. This is because the fleeing funds have been "warned" and the loosening policy continues to be maintained, which may stimulate the stock market to rise in the short term. However, in the long run, this short-term operation cannot fundamentally solve the deep-seated problems of the market.

The continued depreciation of the RMB exchange rate and its future trend

Not only the stock market and the housing market, but also the fluctuation of the RMB exchange rate has become the focus of attention. Zhao Haitao pointed out that the offshore exchange rate of the RMB against the US dollar has recently fallen to 7.14 and may continue to decline in the short term. This depreciation trend not only reflects the fluctuations in the foreign exchange market, but also reveals the fragility of China's economic foundation. Even if there is policy intervention in the short term, in the long run, the RMB still has room to fall.

According to Zhao Haitao's analysis, the real value of the RMB is overestimated, and the false high CPI index further highlights the bubble of China's asset prices. He predicted that the renminbi may continue to depreciate, even returning to the level of 8.64, which was the exchange rate midpoint in the early 2000s. Such a trend indicates that the Chinese economy may face greater inflation and asset depreciation pressure in the next few years.

The monetary policy dilemma faced by the CCP

In addition to the fluctuations of the market itself, Guo Jun analyzed the dilemma of the CCP in monetary policy in the "Elite Forum". As the interest rate gap between China and the United States continues to widen, the risk of capital outflow from China has intensified. In recent years, China has tried to stabilize the exchange rate by restricting capital flows through administrative means, but this approach cannot maintain economic health for a long time.

Guo Jun believes that the CCP's current monetary policy is a kind of unanchored water release, that is, a currency issuance method that is no longer based on assets or debts, which is actually a disguised wealth plunder. Every time the water is released, the beneficiaries are the institutions closest to the power center, and ordinary people are the victims of the last wave of currency. The long-term consequences of this unanchored monetary policy are bound to be hyperinflation and a sharp depreciation of the currency.

Economic crisis and the survival challenge of the regime

Zhao Haitao believes that the CCP's current economic policy is actually the last bet on the stability of the regime. The CCP dare not risk a market collapse because it will directly threaten the legitimacy of the regime. However, as Japan experienced, the self-healing ability of the market may bring about a long-term economic recovery, but the CCP seems to prefer to maintain stability in the short term rather than face the pain of economic adjustment.

In conclusion, the CCP's monetary easing policy, the depreciation trend of the RMB, and the difficulties in the real estate market are the manifestations of the deep-seated problems of the Chinese economy. If the CCP continues to rely on large-scale monetary easing without structural reforms, the final result may be hyperinflation, market failure, and even greater social and political unrest.