Chapter 242: Paid Service (5)
The war had ended.
But the aftershocks continued.
The 7% depreciation of the yuan wasn’t just a numerical shift.
It was a powerful shockwave that shook the balance of the global economy.
First, the foreign exchange market went into turmoil.
This was due to a spreading fear that "emerging markets are still unstable," causing global investors to quickly pull out their funds.
Exchange rates of key emerging markets like Brazil, India, and Southeast Asia fluctuated, and speculative forces took advantage of the volatility to stir even rougher waves.
In this situation, it was only natural that countries around the world voiced strong protests.
—China’s unilateral action is a disruption to the global market!
—This is an act of weaponizing the exchange rate to distort the market, a reckless act that destabilizes the international financial order…!
Normally, only emerging markets would have raised objections.
But this time, even powerful nations like Europe and Japan took a hardline stance and raised their voices.
Of course, their concern wasn’t about protecting emerging markets.
A 7% drop in the yuan meant Chinese products had become that much cheaper.
There was no way the countries already wary of China’s trade dominance would sit back and do nothing.
—The United States will never tolerate China’s artificial market manipulation.
This move inevitably leads to severe trade sanctions, including a designation as a currency manipulator!
However, China’s rebuttal was concise yet powerful.
—Was this what we wanted?
—We fought to the end and poured in a trillion dollars. And yet the market crushed us.
The countries that had been criticizing China were momentarily silenced.
Because they had all seen it for themselves.
They had witnessed how desperate China’s defense had been, and the enormous cost it bore.
But China didn’t stop there.
—Isn’t all of this the result of the “free market” you all so fervently believe in?
—Who triggered this situation? It was none other than the American-led speculators! So why should we take the blame?
Looking at the root cause, the responsibility actually seemed to lie with the United States.
China had suddenly shifted into the position of victim, and now the U.S. was the one forced to explain.
Behind this strategy, of course, was Ha Si-heon.
—The important thing is to become the victim. Shift all the blame onto the U.S.
The strategy worked flawlessly.
As the U.S. representative began desperately explaining, the Chinese representative cautiously spoke.
“To be honest, we also think the 7% drop was excessive. Even if we were to adjust it, our original target was more around 4%.”
“If it’s excessive, shouldn’t it be adjusted again?”
“Of course, we’d like to do that. But speculative forces still remain in the market. If we intervene hastily now, we could trigger another war.”
There was a genuine sense of helplessness in the Chinese representative’s voice.
“But don’t worry. We plan to adjust upward immediately once the situation stabilizes.”
And one month later.
China kept its promise.
They adjusted the exchange rate to a 5% depreciation compared to before the war.
Still, the suspicion did not fade.
“Even 5% is too much! And above all… you expect us to believe this perfect timing was just a coincidence?”
The core of the controversy was the “timing.”
“September is the most important time for exporters! And yet you kept the 7% depreciation all the way through that month?”
September is when Western buyers finalize their orders for the year-end shopping season.
China enjoyed a massive 7% discount effect precisely at that moment, resulting in an explosive surge in orders.
It was too perfect.
Too precise to believe it wasn’t planned.
But China remained unfazed.
“We admit the timing was coincidental. But we weren’t the ones leading the short-selling, were we? Nor did we choose the 7% figure or the timing of the attack.”
While it was true that China benefited, there was no proof that it had been “intentional.”
“It was a coincidence.”
Of course, such rhetoric did nothing to calm the fury.
Especially the United States, which had no intention of letting this go.
They immediately began preparing a counterattack.
And their target was an unexpected stage.
The IMF.
***
China had been actively pushing for the yuan’s inclusion in the SDR (Special Drawing Rights) for years.
SDR is a type of “global reserve currency” created by the IMF.
Simply put, it’s the VIP club of currencies.
Being part of the SDR basket means becoming a currency officially recognized by the world—a reserve currency.
This fundamentally changes the yuan’s status in the global economy.
China had long desired this, and the yuan’s inclusion in the SDR was virtually considered a done deal.
But the U.S. made a last-minute move to overturn it.
“The SDR is a group of currencies that play a central role in the global market. As we saw in the recent crisis, the yuan has not yet secured the trust and stability required for this status.”
The U.S. directly challenged the yuan’s qualifications.
“We can’t overlook the fundamental issues in China that were exposed during this short-selling crisis. Excessive corporate debt, crises in the real estate and construction sectors… Do you really believe such structural weaknesses are fit for a global reserve currency?”
But then—
“We admit there were issues.”
Contrary to expectations, China readily accepted the criticism.
And added in a calm tone.
“But those companies have already been fully transitioned into a stable national loan system. In other words, we’re already in the process of fundamentally strengthening our economy.”
During the yuan crisis, China restructured loans for high-risk industries through emergency liquidity support.
Insolvent companies had switched to more stable government loans.
Thus, the issues the U.S. pointed out had already been resolved—so went the logic.
But the U.S. didn’t back down.
“That’s not enough. These are like the knees holding up a national economy. China’s knees are already weak, and all it’s done is slap on a band-aid. Eventually, it’s only a matter of time before it collapses.”
“Do you have evidence to back that assumption?”
“Didn’t it almost collapse this time?”
“That was due to an unprecedented external shock.”
The U.S. representative wasn’t wrong.
Had things been left as they were, China likely would’ve collapsed under the weight of its own weak knees.
However—
That’s something we’ll never know for sure.
Because before China could fall on its own, Ha Si-heon had already tripped it.
“If we had actually collapsed, then maybe. But it’s unfair to judge us based on hypotheticals.”
“But there’s no guarantee this won’t happen again, is there?”
At the U.S. representative’s rebuttal, the corners of the Chinese representative’s lips curled slightly.
He nodded slowly and gave a meaningful smile.
“So what you’re saying is… you believe the world’s retail investors and hedge funds will unite once again to attack the yuan?”
"..."
At that moment, the U.S. representative fell completely silent.
Even by their own assessment, the chances of the same thing happening again were extremely low.
“This was an extremely rare event—a so-called Black Swan. The odds of it happening again are… probably as likely as another subprime mortgage crisis in the U.S.”
The atmosphere in the room subtly shifted.
China had skillfully touched a nerve—America’s past financial crisis.
And there was a sharp undertone in the Chinese representative’s words.
If one insisted that China’s real estate and corporate debt—issues it had already addressed—were still problems, then one could just as well say the U.S. dollar wasn’t exempt by the same standard.
China ended with a calm smile.
“Even if there were vulnerabilities in the Chinese economy, the necessary actions have already been taken. Is it really a fair assessment to dig up problems we’ve already resolved and exclude us based on something that might have happened?”
The faces of those watching the fierce back-and-forth reflected deep contemplation.
The United States and China.
Two great powers were standing toe-to-toe.
Whose side should they take?
Troubled expressions. Conflicted glances.
But in international organizations, it all came down to legitimacy.
And then—
They made their decision.
***
<IMF Officially Approves Yuan as Reserve Currency... SDR Entry Confirmed>
<Yuan Joins the Ranks of the Dollar, Euro, Yen, and Pound... Leaps into Global Reserve Currency Status>
Vice Premier Liu Weigang slowly put down the newspaper.
A dumbfounded chuckle slipped from his lips.
“They actually pulled it off.”
China had long wanted to lower its exchange rate, but fear of intense backlash and retaliation from the international community kept it from acting hastily.
Yet Ha Si-heon had resolved that problem in one move.
By casting China as the “victim.”
“The exchange rate win is important, but I think the biggest achievement is solving the shadow banking issue.”
A deputy minister nearby smiled faintly.
His face, usually heavy with worry, was uncharacteristically bright.
Just like the exchange rate, China had been hesitant to touch shadow banking.
That was because of the fear of panic.
What if the government officially intervened in WMPs and other shadow finance products?
That fact alone would make the public believe the products were deeply problematic.
Investors would rush to pull out funds, and that panic could quickly escalate into a bank run.
But letting such a massive off-the-books money flow come to a sudden halt was dangerous.
The construction firms relying on that money would collapse in succession, threatening to paralyze the entire economy.
Any attempt to fix the problem risked triggering an even bigger disaster.
So all they could do was stand by helplessly.
But Ha Si-heon had offered a solution.
—Shadow banking is like a cancer cell. And if a doctor says they need to perform surgery to remove it, the patient and their family will naturally be terrified.
—That’s why you need an external “gunshot wound.” Say the surgery was urgent to treat the gunshot, but during the operation, they found cancer and removed it too. That way, the fear of cancer is naturally diluted.
Ha Si-heon applied that principle directly.
During the exchange rate war, he inflicted a “gunshot wound,” and in that chaos, the government cut out the cancer of shadow loans.
And now that the surgery was over—
The public had forgotten the cancer and was focused solely on the gunshot.
An ingenious redirection of attention.
It felt like watching a magician’s sleight of hand.
“To think such a trick existed…”
Even China’s top minds hadn’t been able to come up with this solution, yet Ha Si-heon had found it instantly.
“On top of that, the bailout didn’t create any dangerous precedents. That’s the most surprising part.”
The deputy minister chuckled in disbelief.
“No local government will expect this kind of rescue to happen again.”
There was another reason China hadn’t addressed shadow banking earlier.
They didn’t want to set a precedent of central government intervention.
Most of shadow finance issues stemmed from poor management at the local government level.
If the central government swooped in to fix it—
Local governments would grow complacent, thinking “they’ll bail us out again next time.”
That would trigger widespread moral hazard and even bigger problems nationwide.
But this time was different.
The central government stepped in only because of a “foreign attack”—a national crisis.
“Everyone believes the crisis unexpectedly helped solve the problem. And they’re well aware that something like this won’t happen again.”
A rescue without moral hazard—a clean operation.
Ha Si-heon had accomplished what once seemed impossible.
And he had done it so effortlessly.
Even knowing the trick behind it, it was still hard to believe.
However—
All of these achievements came at a price.
The biggest burden was financial loss.
“The loss to the national treasury isn’t small. Even if the money poured into shadow banking was bound to be spent eventually, losing a trillion dollars from our foreign reserves is…”
It was a painful loss.
But—
“Do you think the rest will go according to his plan too?”
The deputy minister’s voice held a strange sense of anticipation.
Because, in truth, Ha Si-heon’s “solution” included a clever way to recover those lost reserves.
—Crisis always brings opportunity. And if a crisis is inevitable, it’s better when it comes from external forces. External enemies are the best way to unite people internally.
Just as he said, this incident was a perfect chance to strengthen internal solidarity.
Chinese media fiercely criticized foreign speculators, and the public echoed the outrage.
Social media was flooded with angry sentiment.
—Those Western predators want to repeat another century of humiliation!
—They just can’t stand to see us succeed. So the whole world joined forces to bring China down again?
—Let’s not forget how they spearheaded speculation during the IMF crisis too. This time, they were just waiting to strike.
The public’s anger was laser-focused on foreign speculators.
And in that process, the core issues were completely buried.
—No one was talking about the root causes of this crisis—such as the neglect of shadow banking or the government’s irresponsible market-boosting policies.
In his mind, Ha Si-heon’s voice echoed again.
—In moments like this… sometimes new breakthroughs open up.
—South Korea also went through an unprecedented crisis during the IMF era.
A moment when the entire national economy was shaken by attacks from foreign forces.
—And at that moment, something fascinating happened.
Ha Si-heon paused briefly and gave a meaningful smile.
—Have you ever heard of the “Gold Collection Campaign”?