Chinese media slam George Soros for 'declaring war' on yuan

Mr George Soros, billionaire and founder of Soros Fund Management, seen here at the World Economic Forum last week, pointed to deflation and excessive debt as reasons for China's slowdown.
Mr George Soros, billionaire and founder of Soros Fund Management, seen here at the World Economic Forum last week, pointed to deflation and excessive debt as reasons for China's slowdown.PHOTO: BLOOMBERG

BEIJING • Chinese state media stepped up a salvo of biting commentaries yesterday against Mr George Soros and other currency traders as the yuan comes under pressure, with the billionaire investor accused of "declaring war" on the unit.

At the annual World Economic Forum in Davos last week Mr Soros told Bloomberg TV that the world's second-largest economy - where growth has already slowed to a 25-year low according to official figures - was heading for more troubles. "A hard landing is practically unavoidable," he said.

Mr Soros - whose enormous trades are still blamed in some countries for contributing to the Asian financial crisis of 1997 - pointed to deflation and excessive debt as reasons for China's slowdown.

The normally stable yuan, whose value is closely controlled by Beijing, has come under pressure in recent weeks and months in overseas markets and from capital outflows, and the authorities have spent hundreds of billions of dollars to defend it.

China's official Xinhua news agency yesterday said that Mr Soros had predicted economic troubles for China "several times in the past".

"Either the short-sellers haven't done their homework or... they are intentionally trying to create panic to snap profits," it said.

An English-language op-ed in the nationalistic Global Times newspaper blamed "Westerners" for not "accepting responsibility for the mess" in the world economy.

The comments came amid reports that the People's Bank of China (PBOC) gave guidance two weeks ago to some Chinese banks in Hong Kong to suspend offshore yuan lending to curb short selling and tighten liquidity.

People with knowledge of the matter said the PBOC told banks, including BOC Hong Kong and Industrial & Commercial Bank of China, on Jan 11 to curb lending unless necessary. The instructions were not made public.

PBOC also asked some Chinese banks and companies to collect information about short-selling orders in the offshore yuan market from Jan 1, after noticing volatility at the end of last year, sources said.

The yuan edged up against the dollar yesterday after the central bank set a firmer midpoint rate at 6.5533 per dollar prior to market open, 0.02 per cent firmer than the previous fix 6.5548.

The spot market opened at 6.5780 per dollar and was changing hands at 6.5797 at midday, 0.03 per cent stronger than the previous close.

Yesterday's media reports followed a front-page article published by the overseas edition of the People's Daily on Tuesday titled Declaring War On China's Currency? Ha Ha. It was widely shared on Chinese social media.

Mr Soros "publicly 'declared war' on China", the paper said, citing the 85-year-old as saying that he had taken positions against Asian currencies. But some readers questioned whether the official rhetoric could fuel Chinese investors' fears.

One poster on China's Twitter-like Weibo said: "They say a lot of loud slogans, but do official media even know that Chinese investors are in hell? I'm afraid that Chinese investors will die in a stampede before Soros even shows his hand."

AGENCE FRANCE-PRESSE, BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on January 28, 2016, with the headline 'Chinese media slam George Soros for 'declaring war' on yuan'. Print Edition | Subscribe