SHANGHAI/NEW YORK -- The Chinese government is ramping up its rhetoric against billionaire investor George Soros, who recently offered a dire outlook for the world's second-largest economy.
"A hard landing is practically unavoidable," Soros said of the Chinese economy last week at the World Economic Forum in Switzerland, suggesting an intention to short Asian currencies.
The People's Daily, the mouthpiece of the Chinese Communist Party, fired back Thursday by publishing a front-page article unequivocally rejecting the "hard landing" claim, saying the Chinese government possesses several tools at hand to deal with economic downturns.
This comes on the heels of a similar opinion piece against Soros penned by Mei Xinyu, a researcher at China's Ministry of Commerce, in the People's Daily's overseas edition on Tuesday. He warned that betting against the yuan or Hong Kong dollar is "doomed to fail," maintaining that China's economy is relatively strong compared with those of other major economies.
Worried about a further weakening of the yuan and acceleration of capital outflow, China has every reason to push back against Soros. The celebrity investor made his name in 1992 by selling off the British pound. The Bank of England, the U.K.'s central bank, tried to fight back by raising interest rates twice in one day, but with no luck.
Soros was later criticized by Malaysia's then-Prime Minister Mahathir Mohamad and others who claimed that his shorting of Southeast Asian currencies triggered the 1997 Asian currency crisis.
Soros has since made a pivot toward charitable causes, and his fund is neither as sizable nor as dominant as it once was. But China is still taking an openly defensive stance against him -- mainly because policymakers are running out of options to prop up the yuan.
On Aug. 11, the People's Bank of China began taking the stock market's previous day's close into account when calculating the yuan's reference rate against the dollar. Though the move offered more transparency, it curbed the discretion the Chinese central bank had to set exchange rates. China now finds itself engaging in interventionist practices, such as repeated yuan buying, in order to stabilize the Chinese currency.
That has led to foreign currency reserves shrinking by roughly $500 billion in 2015, the largest drop in 23 years. It is also bringing about the unintended effect of turning investors such as Soros into yuan sellers.