Full transcript
0:00If an expert explains a concept or
0:01something unfamiliar to you , and the
0:03more they talk , the more complicated it
0:05gets — to the point where you can't
0:06grasp it in three days , or even three
0:08years — there are two possibilities .
0:10First , the expert is an idiot who
0:11doesn't understand it themselves ;
0:12they're just reciting textbook jargon ,
0:14knowing the ' what ' but not the ' why , '
0:16which is why they make it so complex .
0:18It’s all just theoretical knowledge .
0:20The second possibility is that the
0:22expert is a crook . They want to scam
0:24you out of your money , keep you paying
0:25tuition , and fool you for a lifetime .
0:27Think of those self-proclaimed Tai Chi
0:29masters ; even if you go to Chenjiagou ,
0:31you'll never learn , and why ? Why is
0:33that ? Either they are stupid , or they
0:36are malicious . There are only these two
0:38possibilities , no third . All major
0:40principles and theories can be
0:42explained simply . As long as someone is
0:44a true master in their field , they can
0:47explain it in a few sentences and make
0:49it clear with just one example .
0:51Everything works this way . To get to
0:54the bottom of the RMB , we must first
0:56look at the current management
0:58mechanism of the RMB exchange rate .
1:01Where does its origin lie ? The origin
1:03actually dates back to the era of Zhou
1:06Xiaochuan and Dai Xianglong ,
1:07specifically the decade between 1995
1:09and 2005 , when the People's Bank of
1:12China and the State Administration of
1:14Foreign Exchange gradually formed a
1:16mature foreign exchange system . The
1:18modern management system currently in
1:21operation did not exist before 1995 .
1:24Before 1995 , the Chinese RMB had a
1:27completely non-convertible settlement
1:30system , known as mandatory settlement .
1:34Mandatory settlement meant that for any
1:37individual , business , or entity —
1:39public or private — if you engaged in
1:42international trade and sold goods ,
1:44whatever currency you received , be it
1:46US Dollars or Japanese Yen , the
1:48People's Bank of China would take it
1:51all and forcibly convert it into RMB at
1:53the official exchange rate . That was
1:56called mandatory settlement . What if
1:58you needed to go abroad to purchase
2:00goods ? If you needed raw materials ,
2:02technical equipment , lathes , machine
2:04tools , or aircraft , you had to get
2:06foreign currency , and people wouldn't
2:07sell to you otherwise . You had to apply
2:10for foreign exchange and get approval
2:11before you could exchange it . For
2:13individuals going abroad , if you wanted
2:15to exchange currency — for example , as
2:17a government-sponsored student — you
2:19needed an application for the state to
2:21release foreign currency to you . For an
2:23ordinary person , it was basically
2:25impossible . So , in that era before 1995
2:27, what did individuals do when going
2:29abroad ? In Beijing , there was a place
2:32called Chenmen . Somewhere on that
2:34street near Fuchengmen — I forget if it
2:36was inside or outside the gate — within
2:38a range of a few kilometers , there was
2:40a Bank of China branch . That branch was
2:42the biggest hub for black-market
2:44currency exchange . Before 1995 , and
2:46even up to 2000 , these people who
2:48swapped currency were all authentic
2:50locals from Beijing . They were like
2:53street punks ; today , we would call them
2:55marginalized members of society . But
2:57they earned a lot of money . Because
2:59they had access to channels for foreign
3:01currency . If the People's Bank of
3:03China's official rate was , say , 1 to
3:068.5 , you could get 1 to 9 or even 1 to
3:0810 from them . They would exchange money
3:11with you at a spread much higher than
3:13the official rate . You’d give them
3:16RMB , and they would hand you cash US
3:18dollars on the spot . That’s what we
3:20called " cutting " or swapping currency .
3:22If you walked down the street near that
3:24branch , within about 100 to 200 meters ,
3:26there were many of them — just like
3:27ticket scalpers — asking , " Need foreign
3:29exchange ? " " Need US dollars ? " Now , you
3:32could say this business was illegal .
3:34But everyone knows that " illegality " is
3:36just like the saying : the commoners
3:38can’t light a lamp , but the officials
3:39can set the whole place on fire . These
3:41currency scalpers were all in cahoots
3:43with the local police station and
3:45organized crime , so essentially , no one
3:47ever bothered them . During " strike hard
3:49" campaigns , they would hide , but once
3:51it passed , they’d be back at it every
3:54day . The police would definitely
3:56collect protection money , and because
3:58these scalpers and currency swappers
4:00were illegal and operated underground ,
4:03they often pulled some nasty tricks .
4:05For instance , they would use sleight of
4:07hand like a magic trick . You’d
4:09exchange 1,000 dollars , they’d count
4:10it out right in front of you , but when
4:11you got home and counted it yourself ,
4:12it might be 200 or 800 . Some would be
4:14missing . Or they would hand you
4:16something that looked like US dollars ,
4:18but turned out to be Nigerian or
4:20Ethiopian currency that resembled them .
4:22Since not many Chinese spoke English or
4:25knew what dollars looked like back then
4:27, people were often cheated . You would
4:30often see this in the newspapers . This
4:33was the reality of China’s foreign
4:35exchange system at the time , because
4:37the people were bound to the land by
4:40strict exit and passport controls ,
4:42restricted to their local areas , unable
4:44to move freely , let alone travel abroad
4:47. Therefore , the people had no real
4:50need to exchange foreign currency . So ,
4:52for the whole of Beijing — Beijing is
4:54still the center — and the southern
4:56centers are undoubtedly Guangzhou and
4:58Shanghai . Looking at the data , I
5:00believe the daily personal demand for
5:01foreign currency exchange in Beijing ,
5:03Shanghai , and Guangzhou combined does
5:05not exceed $ 100,000 . Beijing alone
5:07won't exceed $ 100,000 , nor will
5:09Shanghai or Guangzhou . This means that
5:11for all of China , based on the data ,
5:13the daily volume of personal foreign
5:15exchange won't exceed $ 300,000 . You
5:18might ask where this data comes from .
5:20I’m estimating it , but it’s
5:22definitely reliable . If any of my
5:23viewers or their fathers were currency
5:25brokers , they would know it’s
5:27accurate . Why ? Because the most an
5:29average person exchanges in a day or at
5:31one time is a few thousand dollars at
5:33most . If a big player said they wanted
5:35to exchange $ 50,000 in Beijing in one
5:37day , I’m not joking — the currency
5:39brokers across the entire city might
5:41not even have $ 100,000 on hand . If you
5:43try to exchange $ 50,000 , it would
5:45actually affect the black market
5:47exchange rate . So , the total daily
5:49personal exchange volume across these
5:51three major cities and all of China
5:53definitely won’t exceed $ 300,000 ;
5:55it’s likely far lower . It could even
5:58be as low as $ 30,000 . The total volume
6:00for all of China is just that small .
6:01Why ? Either people are using official
6:04channels . Or , it's just individual
6:06students studying abroad . Back in the "
6:09Beijingers in New York " era , students
6:11like Wang Qiming would leave with only
6:14$ 400 or $ 500 in their pockets . They
6:16couldn't even scrape together $ 1,000
6:19or $ 2,000 . It’s not like today ,
6:21where people think you can’t go
6:23abroad without a million dollars .
6:24That’s not the concept at all , which
6:26is why my younger viewers might not
6:28understand . It’s like how you can
6:30travel to Thailand or the Maldives now
6:32and just swipe your UnionPay card — how
6:35elegant and normal that seems . The fact
6:37that UnionPay is accepted worldwide is
6:39actually a very recent phenomenon , with
6:41a history of less than 20 years . How
6:43did people go abroad before that ?
6:45Before , you used traveler’s checks ,
6:48cash , or you would go abroad and then
6:50apply for a local bank card . If you
6:53tried to apply for a credit card , they
6:55simply wouldn’t give you one .
6:57Applying for a credit card at a major
6:59domestic commercial bank — like Bank of
7:02China or CITIC Bank , which were among
7:04the first to handle foreign exchange —
7:06they were the ones that had the
7:08earliest co-branded Visa and Mastercard
7:10with UnionPay . But back then , the
7:14requirements for being issued a Visa or
7:17Mastercard were extremely high . It
7:20wasn't like just anyone could get one .
7:23If you had a W-card or a M-card back
7:25when we old-timers hung out at the
7:27Kunlun Hotel , you’d have so much face
7:29— even the waitresses would want to
7:31give you their phone numbers . That’s
7:34no exaggeration at all ; this was only
7:36twenty years ago . So , I say in the era
7:39of Dai Xianglong and Zhou Xiaochuan ,
7:41the People's Bank of China faced the
7:44issue of how to handle massive foreign
7:46exchange reserves . I mean , from the
7:49time China truly opened up — post - 1990
7:51— to joining the WTO in 2000 , during
7:54that decade from 1990 to 2000 , " Made in
7:57China " evolved from shoes and shirts to
8:00more complex goods . With massive
8:03exports came huge amounts of foreign
8:05exchange that the People’s Bank had
8:08to settle , pushing our reserves to 100
8:11billion , 200 billion , 300 billion , and
8:14even 400 billion US dollars . This was
8:16unprecedented ; we used to have only
8:19tens of billions or even less , so we
8:21had never seen figures like 100 or 200
8:23billion dollars before . They were real
8:27country bumpkins back then — the
8:28People’s Bank of China had no foreign
8:31exchange function ; it was managed by
8:33the Bank of China , which was a
8:35commercial bank , until we hit those
8:37hundreds of billions . Only then did
8:39they realize a commercial bank couldn't
8:41handle it , so the central bank took
8:43back the power and established the
8:45State Administration of Foreign
8:46Exchange . The SAFE was a department
8:48extracted from the commercial structure
8:51of the Bank of China to manage things
8:53centrally . Under this system , every
8:55commercial bank could handle foreign
8:56exchange businesses , but all were
8:58managed uniformly by the SAFE . How did
9:00they manage it ? Actually , they had no
9:02experience ; in the beginning , it was
9:04mainly just foreign exchange settlement
9:05. But as I’ve said , you all know the
9:07result of settling forex is that you
9:09end up with more and more foreign
9:10currency , because , damn it , it’s all
9:12been settled into your accounts . Since
9:14you’re holding onto all this cash ,
9:16you have to put it to use ; you have to
9:18spend it because you’re a bank —
9:20otherwise , you’d have to pay interest
9:22on those deposits . If you don't use it ,
9:24what can you do ? You buy US Treasury
9:26bonds ; it’s the simplest way , which
9:29is why China became the largest
9:31purchaser of US debt , forming a pattern
9:33that has continued ever since . Around
9:361998 , a major event occurred : the Asian
9:39Financial Crisis . That had nothing to
9:42do with China ; the crisis began when
9:43Thailand suddenly abolished the Thai
9:45baht’s peg to the US dollar , causing
9:47the baht to plummet and triggering a
9:49wave of currency devaluations across
9:51Asia . At that time , Soros had a very
9:53keen sense of smell for this , so he
9:55took down the Thai baht in one fell
9:57swoop , and then the Philippine peso .
9:59Soros then turned his sights to Hong
10:01Kong , aiming to break its linked
10:03exchange rate system between the US
10:05dollar and the Hong Kong dollar . Once
10:07broken , because Thailand only announced
10:09it was unpegging after he broke them —
10:10otherwise , he would have bought up all
10:12of Thailand's US dollar foreign
10:13exchange reserves ; after all , you were
10:15pegged , weren't you ? So that is why he
10:17went to break it . By the same logic , he
10:19could break Hong Kong , because Hong
10:21Kong didn't have too many foreign
10:22exchange reserves either . So Soros did
10:24the math : he leveraged his way into
10:25Hong Kong , selling off Hong Kong
10:27dollars to buy up US dollars . Just how
10:29many US dollars does the Hong Kong
10:30government have ? With your linked
10:32exchange rate , you are obligated to
10:33sell to me at this price . I will keep
10:35buying , buying , buying , until you can't
10:37hold on , you run out of dollars , and
10:38you announce a de-pegging . Then , the
10:40Hong Kong dollar rate crashes , and I
10:42eat you alive . This was Soros's main
10:44strategy when attacking Hong Kong at
10:46the time . When the Hong Kong dollar was
10:48under attack , the central government
10:50attached great importance to it . Those
10:52in charge at the time were Jiang Zemin
10:53and Zhu Rongji ; both were from Shanghai
10:55and understood some economics , but they
10:57didn't understand foreign exchange . How
10:59could Jiang Zemin understand it ? And
11:02Zhu Rongji didn't either . So , Jiang and
11:04Zhu urgently notified the People's Bank
11:06to report to them on exactly what was
11:08happening in Hong Kong . We had just
11:10taken back Hong Kong for less than a
11:11year . If the Hong Kong dollar became a
11:13useless currency like the Thai baht ,
11:14then the Chinese Communist Party's " one
11:16country , two systems " would have failed
11:17. How could it be so good when it was
11:19in the hands of the British , but end up
11:21in shambles as soon as it reached the
11:22hands of the Communist Party ? So , Jiang
11:24and Zhu took this matter very seriously
11:26and notified the People's Bank to
11:28report . The entire People's Bank
11:30couldn't find anyone who understood it ,
11:32and even Zhou Xiaochuan didn't really
11:34grasp it . But Zhou Xiaochuan knew who
11:36did — a man named Yi Gang , who
11:38eventually became Zhou Xiaochuan's most
11:40valued successor . He was a cadre being
11:42groomed for important roles because Yi
11:44Gang had returned from studying in the
11:46United States . During his studies , Yi
11:48Gang had genuine contact with the
11:50Federal Reserve and top American
11:52economists . Jiang Zemin gave them half
11:54an hour to explain it clearly . Jiang
11:56Zemin and Zhu Rongji listened to them
11:59together . It terrified those two guys ,
12:01but Yi Gang and Zhou Xiaochuan were the
12:03ones who truly understood . They
12:04explained it to old Jiang in just 20
12:06minutes . I don't know how they
12:08explained it , because I only heard this
12:09story after they came back , feeling
12:11quite triumphant . Old Jiang made the
12:12decision right then and there ; Old Zhu
12:13and Old Jiang agreed together to back
12:15Hong Kong and support Hong Kong . After
12:16they finished speaking , Jiang asked a
12:18question , and they both knew he
12:20understood . Jiang asked in his Shanghai
12:22dialect , " So , all this back and forth ,
12:23does it just come down to who has more
12:25money ? " " So , in the end , do we have more
12:28money or does Soros have more money ? "
12:30Yi Gang made precise calculations .
12:33Soros was using leverage , but we could
12:35use leverage too . Moreover , our
12:37principal was far greater than his ; our
12:40leverage could exceed his many times
12:42over . Then Jiang said , " Let's give it a
12:45go . " " We must win . " A decision was made
12:48right then . Jiang Zemin and Zhu Rongji
12:50heard the reports from Yi Gang and Zhou
12:52Xiaochuan and understood everything .
12:53This was what Soros hadn't anticipated .
12:56He thought that with the Communist
12:57Party's few hundred billion in foreign
12:59reserves — about 400 billion at the
13:00time — they would be reluctant to use
13:01it . He didn't think they would actually
13:03take it out . Furthermore , he believed
13:05the mainland and Hong Kong financial
13:06systems were separate , so he didn't
13:08prepare the ammunition for that front ,
13:09and his forces were wiped out . If Soros
13:11were born in today's era and tried to
13:13attack Hong Kong , if the Soros of that
13:15decade were in today's world , perhaps
13:16he would have won . But Soros is old now
13:19, and that era has passed . So , that
13:21time in Hong Kong , Soros basically lost
13:23all the money he had earned in Thailand
13:25, along with his own assets . That
13:27single blow made Soros very difficult
13:30to deal with . After Yi Gang and Zhou
13:32Xiaochuan gained the full trust of
13:34Jiang and Zhu , it was because they were
13:36pragmatists who understood American
13:38rules and could speak in a way that
13:40Americans understood . That is why Zhou
13:43Xiaochuan was able to hold the helm of
13:45the People's Bank of China for 15 , or
13:47even 16 years , making him the
13:49longest-serving central bank governor
13:51in the history of the Republic and
13:53China . Otherwise , given his background
13:55— his father , Zhou Jiannan , was only a
13:56ministerial-level official — there was
13:58no reason he could have served for over
14:00a decade and eventually retired at the
14:01vice-national rank . In the position of
14:03central bank governor , it is very
14:05difficult to reach such a height .
14:07Xiaochuan became famous in that one
14:09battle under the Zhu and Jiang
14:11administration , establishing his
14:13absolute technical authority . Under the
14:16governance of experts like Zhou and Yi ,
14:19who were equipped with purely
14:20American-style training , they managed
14:23the People's Bank of China's foreign
14:25exchange reserve system . This was the
14:29so-called " pool theory " that Xiaochuan
14:31later promoted externally , which is the
14:33Panama and Management Bureau theory I
14:36mentioned to you . To put it simply ,
14:38this theory is actually quite
14:40straightforward : it means taking the
14:42previous system of mandatory foreign
14:44exchange settlement by the People's
14:46Bank of China and placing it into a
14:47relatively freer " pool . " In the past ,
14:50every single transaction was settled
14:52precisely for you . All currency usage ,
14:54receipts , and purchases required
14:56individual approval for each
14:57transaction . But as China's economic
15:00scale grew , its GDP increased , and
15:02foreign trade surged , this management
15:04style became outdated , wasteful of
15:06human and financial resources , and
15:08technically difficult to implement . So ,
15:11what could be done ? They simply opted
15:13for a closed environment ; I stop caring
15:15about the details and only manage the
15:17inflow and outflow of this pool —
15:19controlling the total volume . As for
15:21this black box , I don't care what
15:23happens inside it . First , I still
15:25strictly regulate capital-account RMB ,
15:28but for trade-account RMB — that is ,
15:30import and export-related currency — I
15:32basically only manage the total inflow
15:35and total outflow of this pool . As long
15:37as the total inflow and outflow remain
15:40unchanged , I adopt a relatively free
15:42market pricing for the RMB exchange
15:44rate within this pool . I don't announce
15:47daily prices myself ; instead , several
15:49overseas market makers in Hong Kong ,
15:51along with a few authoritative
15:53institutions under the People's Bank of
15:56China , automatically form a
15:58semi-marketized daily RMB exchange rate
16:00quote . That is basically the status quo
16:03. The current RMB exchange rate market
16:05quoting system is based on market
16:07makers , and these market makers are
16:08actually " Central Mom , " the People's
16:10Bank of China . The officials at the
16:12People's Bank of China are very savvy
16:14about this . Under this sophisticated
16:16management system — this very
16:18reasonable and scientific management
16:20system — the People's Bank of China's
16:21foreign exchange system and its
16:23mechanisms are the most advanced . Apart
16:25from the U.S. Federal Reserve , it is
16:27the most advanced in the world , and it
16:29is completely different from the Fed .
16:31The Federal Reserve can regulate the
16:34global foreign exchange market , but it
16:36cannot control the RMB in China . I once
16:38nicknamed the People's Bank of China in
16:41my early blog posts as the " Federal
16:44Reserve's Beijing Office . " I gave them
16:47that name , and later , some of those old
16:50leaders even accepted it themselves .
16:52Why didn't Greenspan bother Zhou ? It's
16:55because of their mutual synergy ; the
16:57U.S. also wanted China to have such a
16:59pool . It’s beneficial and harmless
17:01for the U.S. , China , and Wall Street .
17:03Therefore , everyone has a tacit
17:05understanding , which formed this model
17:07where " the U.S. allows China to
17:08maintain its own private army . " So , the
17:10comprehensive RMB buffer pool
17:12management system established by Zhou
17:15Xiaochuan was very scientific and
17:17reasonable , operating until the 2010s ,
17:19reaching its peak in 2012 and 2013 .
17:22Before appearing out of thin air , this
17:25operation was so incredible that they
17:28even started giving the People's Bank
17:30of China top management the position of
17:33Deputy Managing Director at the IMF ,
17:35granting the RMB reserve currency
17:38status . This was something you couldn't
17:40obtain without going to war in the past
17:42; how would they give a Chinese person
17:44the number two spot at the IMF during
17:46peacetime ? How could they let a Chinese
17:48person hold that role ? How is that even
17:50possible ? Who do you think you are ? But
17:52the leaders of the People's Bank of
17:55China did indeed become top leaders ,
17:57rotating leaders , at the IMF during
18:00those years , around 2011 , 2012 , and
18:022013 . A major breakthrough for the
18:05internationalization of the currency .
18:07And for the average person , because
18:09this pool was growing larger and more
18:12abundant — I remember back in 2013 and
18:142014 . It had already surpassed $ 4
18:17trillion in total foreign exchange
18:19reserves ; of course , the buffer wasn't
18:21that large , but a $ 4 trillion total
18:23foreign exchange reserve is still quite
18:26a significant buffer . The cash portion
18:28of US dollars in the pool was at least
18:30several hundred billion , making the
18:32People's Bank of China absolutely the
18:33wealthiest institution in the world . So
18:35many foreigners wanted to follow you ,
18:37fawn over you , and borrow from you
18:39through financial means . The People's
18:42Bank of China felt good about itself
18:45too , so that era , around 2013 , was
18:47China's most open period . People could
18:50freely exchange $ 50,000 annually with
18:52just their ID , and without needing a
18:55reason ; any Chinese citizen just had to
18:57say " I want to travel abroad " at a bank
18:59window to get that $ 50,000 . In that
19:02era , underground banks in places like
19:04Vancouver and Los Angeles had to keep
19:06their fees very low , because it was so
19:09easy for regular people to exchange
19:11currency that underground banks had no
19:13profit margins . They could only add one
19:16percent or 1.5 percent . What does this
19:19mean ? With so much money in RMB , the
19:22U.S. hoped that the RMB would
19:24appreciate . Because the Americans
19:26understood that once the RMB
19:27appreciates , your trade competitiveness
19:29is no longer as strong , and the speed
19:31at which dollars flow into China would
19:33not be as fast . The U.S. didn't want
19:35China to grow too large , so they
19:37exerted mild pressure for the Renminbi
19:39to appreciate . The " Beijing office of
19:41the Federal Reserve " in China was very
19:43cooperative with this mild appreciation
19:45. If you ask me to rise by 1 , I rise by
19:470.1 , " Dad , " I won't make you lose face ,
19:49I've risen , and " Dad " was very
19:51understanding , " Okay , good son , rise by
19:53another 1 , " " Okay , I'll rise by another
19:550.1 . " Just like that , the RMB to USD
19:57exchange rate climbed step by step from
19:58over 1 : 7 to 1 : 5 . Wait , was it 1 : 5 ? 1
20:01: 6 ? Over 1 : 6 ? At its peak , the RMB
20:05reached over 1 : 6 , did it ever break
20:07through to 5 point something ? I forget ,
20:09it seemed to break through 6 for a
20:12moment . I’ve forgotten , but those
20:14interested can look up the RMB's peak
20:16against the USD in 2017 or 2018 . Under
20:19the management of Zhou Xiaochuan and Yi
20:21Gang's " Pool Theory , " the Renminbi
20:23formed its own automatic adjustment
20:25mechanism . This mechanism could
20:27actually have functioned very well , to
20:29the point that Alibaba and Tencent both
20:32started opening overseas payment
20:34services for Alipay and WeChat , because
20:36they also wanted a slice of the
20:38overseas payment pie . This means that
20:40every Chinese person living in
20:42Vancouver can use their own Alipay ,
20:44even today , at places like T & T
20:46Supermarket or Chinese restaurants .
20:49When paying for a meal , you just scan
20:51the code , exactly like in China , and
20:53boom , it settles the bill directly at
20:56the current exchange rate . However , the
20:59restaurant owner or the T & T owner
21:01doesn't receive Renminbi ; they have it
21:03converted into Canadian dollars or US
21:06dollars by China's foreign exchange
21:08management department . This means that
21:10the People's Bank of China must have
21:12enough US dollars in its " pool " to be
21:15able to do this . So today , when I talk
21:16to everyone about " Financial Censorship
21:18, " it's that the moment Taobao and
21:20WeChat stop overseas payments , when
21:21overseas retail payments stop , your "
21:23Financial Censorship " is triggered . Why
21:25? Let the data speak for itself . Taking
21:28Canada as an example , the largest
21:30Chinese supermarket that accepts Alipay
21:32and WeChat Pay is the biggest merchant
21:34called T & T Supermarket . T & T has about a
21:36dozen , fewer than 20 large supermarkets
21:39across Canada , and its total annual
21:41sales are roughly in the range of 1
21:43billion to 2 billion Canadian dollars
21:46— within that 1 to 2 billion range per
21:49year . This is the largest Chinese
21:50supermarket chain in Canada , and its
21:52revenue won't exceed 2 billion Canadian
21:54dollars . Because it's a public company ,
21:56it was acquired by Loblaw , that is , the
21:58owner of Superstore . T & T is the largest
22:01Chinese customer base ; no other Chinese
22:03retail group or sales unit has a higher
22:06overseas transaction volume than T & T .
22:08That is to say , T & T has a maximum
22:10annual revenue of 1 to 2 billion CAD ,
22:13and it's impossible for all of that to
22:15be paid via WeChat Pay or Alipay . Most
22:18customers are still local Canadians .
22:20For example , we use local Canadian
22:22credit cards or debit cards to pay ; we
22:25wouldn't use RMB for these payments .
22:28Let me put it this way : according to
22:30scientific statistics , about a third or
22:32a quarter of customers use WeChat Pay
22:35or Alipay , while the rest pay with
22:37local Canadian currency . If a quarter
22:39of the annual sales is 2 billion — and
22:42that’s an upper limit — at 2 billion
22:44a year , what is a quarter of that ? A
22:46quarter is 500 million CAD , meaning the
22:49total annual demand for RMB foreign
22:52exchange for all T & T stores in Canada
22:55is only about 500 million CAD . Los
22:57Angeles is about the same , though the
22:59retail food and beverage sector is
23:01actually smaller than the grocery
23:03sector . Even if we estimate the dining
23:05sector as equal to T & T , it still
23:07wouldn't reach 500 million CAD , because
23:09Chinese restaurants in Canada aren't on
23:11that scale . Let's be generous and say 1
23:14billion CAD , which covers the entire
23:16Canadian demand . The US is ten times
23:18the size of Canada , but the number of
23:20Chinese in the US and Canada is about
23:22the same , so let's be generous and
23:24double the US estimate . That would be 2
23:26billion USD for the US . With 2 billion
23:29USD for commercial retail and dining
23:32demand for RMB payments , 3 billion USD
23:34for the US and Canada combined is more
23:37than enough . You couldn't even spend 3
23:39billion USD ; Europe , Japan , and Oceania
23:41combined would total less than 5
23:43billion USD for the entire year . So ,
23:45for China's foreign exchange reserve
23:48pool and the administration , don't you
23:50think 5 billion USD is just a drop in
23:53the bucket ? Exactly , it’s like a
23:55little finger ; it has no real impact on
23:58the whole , but it gives you a very good
24:01feeling . That’s why all Chinese
24:03people feel that the motherland is so
24:05powerful . The motherland is amazing ; I
24:07can now use WeChat Pay and Alipay to
24:09buy things in Canada whenever I want .
24:11I’m so awesome . It gives you this
24:14illusion , making you feel particularly
24:16secure inside . So this $ 5 billion is
24:18money well spent , and it accounts for
24:21less than 5 % of their total capital
24:24regulation pool , so they absolutely
24:26should pay it because it yields returns
24:29ten times over , not just a tenth . It
24:31can have a hundredfold effect in
24:33boosting confidence , establishing faith
24:35in the RMB overseas , and strengthening
24:38the cohesion of overseas Chinese . It
24:40buys the support and confidence of
24:42overseas Chinese in their motherland ,
24:45so when they can no longer pay this $ 5
24:47billion , it’s the first thing they
24:50cut — but why ? This $ 5 billion is
24:52purely for show and is dispensable , so
24:54they will certainly cut it first ; once
24:57this $ 5 billion is cut , it shows they
24:59are in big trouble . They can’t even
25:01coordinate $ 5 billion in cash — and
25:04this is over a year , not just a day —
25:06so we can accurately conclude that the
25:09RMB can't hold up , and this pool must
25:11absorb more US dollars and foreign
25:14exchange . Therefore , the RMB must be
25:17devalued . Devalued to the next order of
25:19magnitude , the next level down ; it’s
25:20like losing one defensive line and
25:22retreating to the next . Because once
25:24the RMB devalues , the export
25:25competitiveness of all goods
25:26strengthens again , a large amount of
25:27foreign exchange flows in , and once
25:29it's in , there’s water in their pool
25:30again , so that’s how they manage it
25:32in stages . Did everyone understand ?
25:34This is the RMB exchange rate , broken
25:36down and explained in detail . Leave
25:37plenty of comments , goodbye .