A reflection on once believing the Cultural Revolution to be admirable under the influence of Japanese mainstream media, and an examination of how China’s realities were concealed, contrasted with decisive actions by China’s central bank against speculation.

February 16, 2016

The following is from page 5 of yesterday’s Nikkei.

As I wrote yesterday, China is not a simple great power. It is one corner of the United Nations Security Council and holds veto power.

Precisely for that reason, almost all media outlets led by Asahi Shimbun—with the sole exception of a Sankei Shimbun correspondent who was expelled from China—failed to report the reality of the Cultural Revolution and instead portrayed it in a beautified manner.

I recall that, while subscribing to Asahi Shimbun, I felt that the Cultural Revolution was indeed a great revolution.

From the radio, I heard stirring phrases from Mao Zedong’s quotations, such as “The feathers of a crow cannot hide the brilliantly shining sun,” words that today would immediately remind one of North Korean broadcasts. Until I learned the reality, I thought, “So this is Mao Zedong.”

Media led by Asahi Shimbun should learn from the following remarks by the Governor of the People’s Bank of China what it truly means to protect one’s country, and should immediately investigate who continued massive short selling and make it clear to the Japanese people and to the world.

Even media critical of China should learn from this resolve to protect the nation from speculative forces, and should investigate and report accordingly.

“Do not allow speculators to dominate.”

PBOC Governor Warns Against Yuan Short Selling

(Beijing — Ōkoshi Masahiro)

Zhou Xiaochuan, Governor of the People’s Bank of China (the central bank), stated that “we will not allow speculators to dictate the mood of the foreign exchange market,” warning international hedge funds said to be short-selling the yuan.

The Chinese magazine Caixin Weekly (electronic edition) reported this in interview form by the 13th.

China was in the midst of the Lunar New Year holidays, but amid deepening “China-originated” market turmoil, conveying remarks by the head of the monetary authority appears aimed at stabilizing the situation.

Regarding the yuan, Zhou said he emphasizes stability against a “currency basket” of major currencies such as the dollar, yen, and euro, adding that “as a result, fluctuations against the dollar may increase going forward.”

Markets have been strengthening expectations of yuan depreciation against the backdrop of economic slowdown. Recently, prominent U.S. investor George Soros expressed the view that a “hard landing” of the Chinese economy is unavoidable, prompting Chinese authorities to be wary of speculators betting on yuan depreciation. In response, Zhou pointed out that “China holds the world’s largest foreign exchange reserves,” suggesting room to support the currency through dollar-selling, yuan-buying interventions using those reserves.

He also stated that “cross-border capital movements are within normal bounds, and there is no basis for a prolonged decline of the yuan.”

While emphasizing that reforms to increase exchange-rate flexibility will continue, he explained that they will be pursued cautiously, “choosing appropriate timing so as not to affect international markets.”