Once-a-century alternatives will emerge from a ‘battle for supremacy’ between the U.S. and China, economist says

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Chinese authorities have promoted the usage of the yuan worldwide, whereas the U.S. greenback dominates world transactions.

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BEIJING — When it involves the funding outlook, one Chinese economist predicts once-a-century alternatives will emerge from a “struggle for supremacy” between the U.S. and China.

This game-changing window comes from upheaval on either side, stated Liu Yuhui, director of a finance analysis division at a authorities assume tank, the Chinese Academy of Social Sciences.

China is ready on turning into an ideal nation, he stated, whereas the U.S. has launched into a dollar-printing coverage because the coronavirus pandemic that has modified the monetary stability.

That’s in accordance with a CNBC translation of his Mandarin-language speech, titled “The bipolar world under the U.S.-dollar super-expansion cycle — The Chinese capital market’s ‘cognitive revolution.'”

Liu, additionally chief economist at Tianfeng Securities, was talking Friday at asset supervisor ChinaAMC’s funding technique convention. Founded in 1998, ChinaAMC is among the nation’s largest mutual fund managers and has 1.54 trillion yuan ($240.63 billion) in belongings underneath administration.

In Liu’s view, the U.S. is implementing the idea of “modern monetary theory“ (MMT), which holds governments with their own strong currency can print money to support the domestic economy without worrying too much about budget deficits.

One of the most well-known proponents of modern monetary theory is Stephanie Kelton, formerly chief economist for Democrats on the U.S. Senate Budget Committee and a senior economic advisor to Bernie Sanders′ 2016 presidential campaign.

The U.S., under the Trump administration and subsequently the Biden administration, has kept interest rates low and released trillions of dollars into the economy to support growth in the wake of the pandemic.

The stimulus program has drawn criticism for its scale. At conglomerate Berkshire Hathaway’s annual meeting in May, U.S. billionaire Warren Buffett’s longtime business partner Charlie Munger said modern monetary theory might be “extra possible than everyone thought. But I do know that when you simply preserve doing it with none restrict it would finish in catastrophe.”

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Meanwhile in China, the ruling Chinese Communist Party just celebrated its 100th anniversary on July 1, when President Xi Jinping called again for the “great rejuvenation” of China.

To Liu, the government’s stance means policy will focus on ensuring national security and cutting carbon emissions. He emphasized political correctness will be even more critical for investment in light of developments like Alibaba founder Jack Ma’s controversial speech last fall and the subsequent suspension of Ant Group’s IPO.

Mainland Chinese stocks with the highest probability of large gains will be those in the new energy, seed, optics and semiconductor industries, among others, Liu said.

As for digital currencies, on which Chinese authorities have intensified their crackdown this year, Liu cast them in geopolitical terms as well.

“In my view,” he said, “it is simply the U.S.’ technique to tempt Chinese capital.”

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