1977: The beginning of the blind date with the daughter of the king

Chapter 715 Going Home
"Are you going to intervene?"

"This is bad for your plans in the UK, isn't it? Weren't you thinking of setting up your automotive industry there?"

Bao Yugang was somewhat surprised to hear that Li Changhe was about to speak, as this was not the direction they had been discussing.

Li Changhe smiled and said, "Plans can't keep up with changes. Now that I'm needed, I naturally have to speak up at this crucial moment."

"Compared to the automotive industry on Hong Kong Island, the automotive industry on Hong Kong Island is of course more important."

"Furthermore, even if I asked, I might still be able to buy their cars. They know the burden of the British treasury. There are so many car brands. While many companies are vying for some of the big brands, there might not be anyone willing to buy the smaller brands."

There are so many car brands in the UK, like Bentley, Rolls-Royce, Mini, Rover, and Land Rover, which many car companies may be vying for. But there are also brands like Lotus, MG, and Austin, which have a certain reputation locally, but may not be popular globally.

Furthermore, he had considered this on the way back: even if he were to invest in the automotive industry, the future direction would still be electric vehicles.

Unfortunately, the patent barriers set up by Europe and the United States in the automotive industry were too deep. Even in the years before he traveled through time, the automotive industry did not make much of a breakthrough. On the contrary, the electric vehicle industry achieved a global breakthrough.

Even if Li Changhe doesn't participate, in the end the country's automobile industry will simply follow the old path. Of course, he will continue to try afterward.

“In that case, that’s fine. I estimate I’ll have to make a trip north in a few days to go there in person.”

“Let me tell you, Thatcher was furious in Beijing this time. When she returned to Hong Kong, she went on a rampage, clamoring to go back and start a war. Fortunately, no one went crazy with her.”

"The few thousand British troops on Hong Kong Island are not even enough to fill the gaps over there. By the time the British transfer troops from the mainland, it will be too late."

“Youde and Shenbi saw this very clearly.”

"but."

Bao Yugang hesitated for a moment, then turned to Li Changhe and said, "I estimate that HSBC may take some economic action next!"

They manipulate the economy to cause stock and real estate markets to decline, thereby exerting pressure on us. This is one of the tactics they have prepared long ago.

Bao Yugang is now considered one of HSBC's senior executives. Even if you don't participate in some things, you can still see them from some of HSBC's actions.

"I guessed it. The fastest will be the stock market, followed by real estate most likely."

To say that the stock market and real estate crash in Hong Kong Island in the past two years were entirely due to panic among Hong Kong people is utter nonsense. Panic is an accelerator, but there's always a spark that ignites it.

If someone hadn't deliberately set things on fire, the Hong Kong stock market and property market, while affected, would never have collapsed like that.

"Since you already considered this beforehand, you can make the decision yourself!"

Bao Yugang shook his head and didn't say anything more.

This is indeed a turbulent time for Hong Kong Island.

And the subsequent development of Hong Kong Island did indeed follow this pattern.

The newspapers are buzzing with discussions from all sides. Regardless of which side you're on, it's a battleground of opinions, with all sorts of insider revelations.

As a result, the entire Hong Kong Island was filled with anxiety, and the already declining stock market was further exacerbated.
It was at this time that HSBC made its move.

As soon as October passed, the National Day holiday had just ended on the mainland, and people were still basking in the joy of the holiday when HSBC made its move.

Without consulting the banking association or making any prior preparations, HSBC announced a rate hike, and Standard Chartered followed suit, announcing its own rate increase.

As for Hang Seng Bank, which is controlled by HSBC, it had no choice but to announce that it would follow suit.

The move by the three major banks is clearly aimed at tightening credit. They have not only started attracting large amounts of deposits, but have also increased the difficulty and profitability of obtaining loans.

As a result, the stock market plummeted instantly, with the Hang Seng Index falling from 1200 points to 860 points in two weeks, a drop of nearly 30%, which directly shocked many stock investors in Hong Kong.

The resulting reaction was a sharp drop in the real estate market. After all, the real estate industry is heavily reliant on banks, and when banks tighten credit, the real estate market suffers as well.

The British have started playing their economic card.

As the economic market collapsed, requests to interview Li Changhe flooded into the Landmark office like snowflakes.

Unfortunately, Ella blocked them all.

Meanwhile, Li Changhe brought Gong Xue to Macau Island and began to linger in the casinos.

In fact, Li Changhe only spent a few days at SJM Holdings before quietly returning to Beijing.

This time, he was called back by Lin Yuan.

The British economic war has been swift and ruthless, causing considerable headaches for the country.

That evening, Li Changhe arrived in the capital and, without even resting, went straight to a courtyard. There, he found none other than Elder Lu, with Secretary Liang beside him.

"Comrade Changhe, you probably know why we called you back this time, mainly because of the problems on Hong Kong Island."

"Lin Yuan has told you about some of the previous situations, but we didn't expect the situation to worsen like this."

"The stock market and real estate are relatively new industries for us, but they have a significant impact on the economy."

"You have made great achievements in the stock market and finance, and you also acquired Hongkong Land, a real estate company. We called you back this time because we want you to tell me what kind of methods they use?"

Li Changhe nodded: "I know, I actually did some sorting and brought it back."

At this moment, Li Changhe took out a document he had compiled from his pocket and then pushed it in front of Liao Lao and the others.

There are currently few financial scholars in China, especially few who specifically study the financial and real estate markets of Europe and the United States.

Even if there is a gap, it has been a long period of in-depth understanding. In the past two years, we have been trying to understand it again, but there is always a process of digestion.

Like Hong Junyan, the teacher of Li Changhe and others at Peking University, who used to study world economics, but has been out of touch with the global economy for more than ten years. Now, Professor Hong has gone to the United States as an exchange scholar.

Secondly, in fields like economics and finance, individuals often have their own perspectives. With more people involved, there are more theories and opinions, making it difficult to reach a unified opinion without a strong leader.

Li Changhe estimated that the financial faction in China must be in an uproar right now, which is probably one of their reasons for bringing him back.

I reckon the debate in China definitely didn't reach a conclusion.

"Oh? It seems you were prepared all along."

"Okay, you go first, and I'll watch as you speak. Xiao Liang will take care of organizing it," Old Lu said with great delight.

Li Changhe nodded, then organized his thoughts.

"Mr. Lu, this is how I summarized the British line of thinking when I was in Hong Kong."

"First, there was the stock market. The other side triggered a stock market crash to create panic. Then, following HSBC's announcement, they collectively raised interest rates, thereby tightening the circulation of Hong Kong dollars in the Hong Kong market and causing a so-called cash crunch."

"With less money available, there will be less money to invest in the stock market to save it. Conversely, people who are short of money will see the stock market crash and banks offering high-interest loans, so they will naturally choose to cut their losses and run away to make up for their losses."

"This in turn caused a sell-off, which triggered more stock declines, creating a chain reaction that explains why the stock market fell by 30 percent in two weeks."

"The stock market decline has a ripple effect on the real estate market. Some people sell stocks to maintain their cash flow, while others sell houses to replenish their stock holdings and reduce costs. Coupled with the cash crunch in the market, if real estate developers lower prices, the real estate market will collapse along with the stock market."

"Their goal is to cause a chain reaction of stock and property market collapses, thereby impacting the entire economy of Hong Kong Island."

"They've already used their methods in the stock market, but I reckon they still have some tricks up their sleeves in real estate. The most obvious one is the relocation of British capital."

"If nothing unexpected happens, many British companies will likely announce their relocation from Hong Kong Island, which will exacerbate market panic and accelerate the collapse of the real estate market."

Li Changhe remembers clearly that Jardine Matheson and Wheelock, these British-owned companies, all announced around 82 that they would move their headquarters out of the country. Before, Li Changhe thought they were running away out of fear of a military unification, but now it seems that it is also possible that it was a strategy to cooperate with the British economic war.

"Okay, go on!"

As he listened, Old Lu looked at the document written by Li Changhe, then nodded to signal Li Changhe to continue.

Li Changhe continued, "In fact, when it comes down to it, economic warfare boils down to one word: money!"

"Economic warfare is all about who has more money. With more money, you can naturally stabilize the situation!"

"Sigh, Changhe, we know what you're saying. The reason they can't reach a conclusion is ultimately because they don't have enough money."

"To be honest, the country can only squeeze out five billion Hong Kong dollars right now!"

“Fifty billion seems like a lot, but it’s actually not enough for the overall situation in Hong Kong. So how to use this money is the core of the current dispute.”

Old Lu didn't hide anything and directly told Li Changhe the truth.

The government can only squeeze out HK$5 billion right now. Is HK$5 billion a lot? For the stock market, it's not much, considering that the daily turnover of the Hong Kong stock market exceeded HK$100 billion at its peak.

Throwing in 5 billion might create a ripple, but that's about it.

“I know, Mr. Lu. Actually, I made preparations a long time ago. In fact, I considered it several months ago. I raised a sum of money myself, and at the same time, I joined forces with many companies such as Sun Hung Kai Properties, Henderson Land Development, Nan Fung Development, and Sun Hung Kai Securities to prepare a sum of money together.”

"This sum adds up to about HK$15 billion. Add our HK$5 billion, and it comes to over HK$20 billion. This sum is definitely enough."

Li Changhe had prepared nearly two billion US dollars beforehand. After all, he had borrowed eight hundred million US dollars from major banks such as HSBC and Standard Chartered for the foreign exchange reserves in Hong Kong, and later earned another seven hundred million from Kuwait. In addition, he had the money given to him by Texaco in the United States. He could have put it into Hong Kong to buy up assets at the bottom.

So even the figure of two billion US dollars is an understatement by Li Changhe.

Currently, the Hong Kong dollar is also declining against the US dollar, falling from 6.1 to 6.9 in just half a month. In other words, if Li Changhe's two billion US dollars were converted at the current exchange rate, it would be approximately 14 billion Hong Kong dollars.

Add to that Li Zhaoji and his group's more than 1 billion Hong Kong dollars, and 15 billion is a sure thing.

"Wow, Comrade Changhe, you've really given us a huge surprise!"

"You actually prepared so much?"

Old Lu and the others were somewhat stunned. Li Changhe's 15 billion yuan gave them a huge surprise and boosted their confidence.

Li Changhe then explained, "Mr. Liao, it's actually quite a coincidence. I originally intended to buy up assets in Hong Kong at rock-bottom prices."

“I knew that economic fluctuations like this would definitely have an impact on the Hong Kong stock market and real estate market, so I originally joined forces with them to buy at the bottom.”

"I just didn't expect the British to be so ruthless, actually dumping shares and causing such a sharp drop."

"Actually, the stock market and real estate are secondary. What I'm really worried about right now is the Hong Kong dollar!"

Hong Kong dollars?

"Tell me in detail!"

Upon hearing Li Changhe's words, Old Lu became even more serious.

"That's right. Because of Hong Kong's economic boom in recent years, coupled with its special status, the Hong Kong dollar has been trending towards internationalization, especially in Southeast Asia. It is more trusted than currencies such as the Thai baht, Singapore dollar, Malaysian ringgit, and Indonesian rupiah."

"Because the Hong Kong dollar was previously pegged to the British pound, and although it is now floating, it is still almost pegged to the US dollar, which keeps its value constant."

"But the current situation is that the Hong Kong dollar is depreciating against the US dollar. If the real estate market falls further and some pro-British groups on Hong Kong Island flee to Hong Kong, the Hong Kong dollar will probably continue to fall."

"You mean the value of the Hong Kong dollar will collapse, just like the legal tender of the Republic of China, and become completely worthless?"

Old Lu said with concern.

He then shook his head: "That won't happen. If it did, the British would suffer greater losses than we would, and the entire Hong Kong Island would be ruined."

He understands some economics, so he naturally knows how serious the harm can be when this situation arises.

These high-ranking officials are well aware of the importance of currency to a region, and even the most foolish British wouldn't do such a thing.

Li Changhe nodded: "Yes, the British won't let the Hong Kong dollar become worthless like the legal tender it was back then, but they have another way."

"That is to change the Hong Kong dollar from a free exchange rate to a fixed exchange rate, for example, by locking in the US dollar and directly locking in the exchange rate between the Hong Kong dollar and the US dollar."

“If that happens, Hong Kong Island will lose its monetary sovereignty, and the Hong Kong dollar will become a complete exchange certificate for the US dollar, losing its independence.”

"Monetary sovereignty, that's a new concept. What are the potential harms of it? Please explain it to us."

Old Lu then asked curiously.

Li Changhe said seriously, "Actually, my feeling is that if they do this, the impact on us will be both good and bad, with both advantages and disadvantages."

Then, Li Changhe began to explain it to the two of them in detail.

(End of this chapter)