01
In order to prevent the incoming Donald Trump from being disorderly, China took action, made two positive suggestions and decided to “defeat magic with magic”.
The first thing is that we will issue US dollar bonds in Saudi Arabia on November 14th.
Middle Eastern tycoons have not yet regained their senses, and a group of countries in Asia and Europe have rushed over to buy most of them.

Issuing US dollar bonds is a ‘patent’ of the United States, and no country dares to do so. Pandas dare to slap bald eagles’ butts.
The original plan was to issue 2 billion US dollars, but the subscription funds turned out to be as high as 39.73 billion, with a three-year subscription multiple of 19.9 times the issuance amount.
The five-year subscription period is even crazier, with a subscription multiple of up to 27.1 times.
2 billion yuan is simply not enough to meet the rush buying needs of various countries.
CCTV’s evaluation is as follows: the highest multiple of global sovereign bond issuance has been broken by China.
Firstly, we need to understand several key points: the US dollar, Chinese sovereign bonds, the Middle East, interest rates, and subscription multiples.
What does this mean?
The US dollar is easy to understand, as it is an internationally recognized and settlement currency. We issue US dollar bonds, not RMB bonds.
This US dollar bond is issued with Chinese national credit as collateral, and we use solvency as collateral to borrow 2 billion US dollars from the world.
But this borrowed dollar has nothing to do with the United States, it’s the money we borrowed.
The third detail is that this bond is not issued in China, but in Saudi Arabia, facing the world. Countries that want to purchase it can go to Saudi Arabia with dollars, and Americans can also buy it.
Why choose to issue in Saudi Arabia? Mainly considering the bottom line, because Saudi Arabia has too many US dollars. If no one buys, Saudi Arabia can keep the 2 billion yuan without any pressure.
Who would have thought that it would be so popular? Saudi Arabia itself didn’t even grab much market share.
At the same time, we also imply another layer of meaning – China has the determination and ability to protect its overseas assets, as well as the ability to protect its allies.
This whole thing is done to Americans in a fair way!

Since it’s a bond, who doesn’t want to make money? So the coupon rate is also what everyone is most concerned about.
The countries with higher credit ratings have the least risk of default and the safer principal. So there are too many countries to rush to buy, and the bond interest rate is relatively low, which is more popular than the treasury bond issued by the United States itself.
The sovereign bonds issued this time are divided as follows: a three-year term of 1.25 billion US dollars, with an interest rate of 4.284%; Five year term of 750 million US dollars, with an interest rate of 4.340%.
Adding up to exactly 2 billion.
On the day of issuance, the closing price of the three-year US Treasury bond yield was 4.258%, and the closing price of the five-year US Treasury bond yield was 4.339%.
Compared to the Federal Reserve’s bond interest rate prices, the bond interest rates issued by China have not increased much and have been fiercely sought after, which shows how hardcore China’s global sovereign bonds are.
You can borrow US dollars from the world, and China can also borrow US dollars. This is a reflection of national strength!
Do India and the UK dare to issue such sovereign bonds? I can brag no matter how much I do, but when it comes to real money and silver, few countries will accept it.
From the perspective of subscription multiples, China’s creditworthiness is much higher than that of the United States. Central banks around the world are not fools, otherwise they would not have taken 40 billion yuan in cash to grab 2 billion yuan in bonds.
The issuance of sovereign bonds in US dollar form by China this time is a financial exercise with two purposes:
One is to test one’s own appeal; The second is deterrence.
Over the past 8 years, everyone has seen that the confrontation between China and the United States is becoming increasingly intense, with financial wars, trade wars, technology wars The United States is using it to the extreme.
In order to cope with the uncertainty of the next four years, it is very necessary to test China’s appeal in the financial market. Those countries that rush to buy bonds with money will be recorded in our notebooks one by one, analyzing the financial strength of each country.
To prevent potential risks, if the United States launches a financial war against us, Panda can issue bonds worth billions of dollars, giving them the confidence to confront the US financial war.
Defeat magic with magic, and also test how much ability the United States still has.
And these countries that rush to purchase the sovereign bonds we issue are comrades in arms with the same aspirations.
Countries that buy Chinese sovereign bonds can also do something they previously dared not imagine – these sovereign bonds with attached income are ideal collateral assets. If they borrow US dollars from China to repay their debts, they will not easily be harvested by the United States.
By the way, the United States is a creditor of most countries’ debts, such as the World Bank, Goldman Sachs Investment Bank, International Bank for Reconstruction and Development, International Development Association, International Finance Corporation, and various prestigious international insurance companies. In fact, they are all white gloves used by the US government to exploit debt issues and harvest assets of other countries.
Poor countries like Argentina owe a lot of debt to the United States, either by borrowing new debt to repay old debts, or by using land and state-owned core assets to offset their debts.

Now there is a third way, borrowing US dollars from China to repay our debts, agreeing to use Chinese yuan to repay our money, without their sovereignty or core assets.
So, what if poor countries don’t have the money to repay the money they owe us? It’s easy to do – just use mineral resources, agricultural products, or resources that China needs to repay.
Poor countries have not only broken the curse of US dollar debt, saved their core assets from bankruptcy, but also made money by expanding bilateral trade.
For us, we never suffer losses. We digest the US dollar, buy resources at low prices, strengthen the Chinese yuan, and help the US dollar flow back to the United States. As a result, the proliferation of US dollars in the market will gradually decrease.
The most crucial thing is to win over people’s hearts, which cannot be bought with money.
Even if the United States were to kill someone, they wouldn’t be able to crack this cunning plan of killing three birds with one stone!

02
The influence of the second scheme is even more profound.
Before Donald Trump came to power, he began to talk about tariffs and threatened to increase tariffs by 60%.
So, he won’t calm down in the next four years, and there’s a possibility of a trade war going viral.
It is very necessary to be prepared in advance!
Two days after Saudi Arabia issued sovereign bonds, the Ministry of Finance and the State Administration of Taxation issued Announcement No. 15.
The first one is the cancellation of export tax rebates for aluminum and copper materials.

Why aluminum and copper?
Because aluminum and copper are the “golden oils” with extremely wide uses, last year I wrote “Flying Aluminum, Surprisingly the Protagonist of War” and “Enchanting Copper, Comparable to Gold”, which received considerable response and were even included in the Science Popularization China website.
After the cancellation of export tax rebates, the offshore prices of aluminum and copper materials will inevitably rise, which is the actual export price. This will also block the mouth of the US government and avoid using excuses such as product dumping and price subsidies to cause trouble.
Cancelling now is to prepare for the trade war and turn passivity into initiative!
Forcing companies to raise prices and targeting the hated internal competition.
If Donald Trump raises tariffs after he takes office, the FOB price of aluminum will rise again, unless the United States builds its own smelter to smelt its own metal.
Relatively speaking, the cost of producing aluminum in China is the lowest in the world, but smelting aluminum is an extremely complex process. For every ton of aluminum produced, 13500 kWh of electricity is consumed. The lowest electricity cost for large industries is 0.4 yuan, and the photovoltaic cost is 5400 yuan. This does not include costs such as auxiliary materials, labor, casting, transportation, environmental management, and equipment and plant depreciation.
In 2023, China will export 5.287 million tons of aluminum materials, accounting for 8.4% of the total production. The imported and exported aluminum materials will consume 71.4 billion kilowatt hours of electricity.
What is this concept? It is equivalent to China consuming 7% of its total electricity generation annually in order to produce and export this portion of aluminum materials.
The photoelectric fee is too much for the United States and even more so for Europe!

Since we cannot afford production, there is no need for companies to export at cost price for the sake of a small tax refund. Such low-priced internal competition is not beneficial to us!
They used our low-priced products to quell inflation and even accused us of dumping, which fell into the mouths of American politicians. In turn, they used tariffs to suppress our manufacturing industry. Why bother?
So, canceling export tax rebates, reducing export volume, raising prices, increasing profits, and reducing electricity consumption can contribute more to carbon emissions.
Even if China reduces its exports of aluminum and copper materials, producing countries such as India cannot replace them because the scale effect of China’s industrial production is too large. Even if we raise prices, India still cannot compete.
India itself has to import a large amount of steel and aluminum from China and Vietnam. How can they compete with China?

03
On one hand, there is the issuance of global sovereign bonds, and on the other hand, the cancellation of export tax rebates for aluminum and copper products and the reduction of tax rebate rates for photovoltaics and batteries.
All of this stems from the experience and lessons learned over the past six years, which have been greatly affected by the United States. It’s time to take the initiative!
Prepare with both hands, plan ahead, and respond as early as possible.
Once the US government launches another trade war, we will no longer be so passive.
I believe more actions will be taken in the future, and the situation of internal competition is changing.
Perhaps by enduring for another two to three years, our lives will return to pre pandemic levels.