Chapter 2: The Calm Before the Storm

How could the Americans remain indifferent? American manufacturing has hollowed out, finance is the foundation of the nation, the U.S. dollar is their scythe harvesting global wealth, and the U.S. government is a finely tuned instrument wholly dedicated to serving the dollar. Its departments operate efficiently and swiftly around the interests of the dollar, working seamlessly together like a millennium-old demon lord. In the face of this ancient fiend, the post-2000 generation is like a newborn baby just opening its innocent eyes.

After the Chinese financial press conference on September 25, the U.S. House of Representatives introduced the “Patriotic Investment Act” on the 26th. The bill’s main points include canceling preferential tax rates on investments in China and raising the tax rate to a maximum of 37%. This proposal aims to encourage American companies to cease investing in China and block the flow of dollars into China, thereby protecting the U.S. economy and national security.

Watching the Chinese stock market rise from September 24, and with the three Chinese financial ministries holding a press conference on the 25th extending a warm invitation to global capital, how could the U.S. remain unmoved? The tax stick was raised high—there was no alternative, it was their right. At least it was an open challenge, a fair fight. If one cannot break their move, the fault lies in one’s own lack of skill.

Then, on October 4, 2024, the U.S. Bureau of Labor Statistics released data showing non-farm payrolls soaring beyond market expectations by 80%, simultaneously revising previous months’ employment numbers significantly upward. This data suggested the American economy was unexpectedly robust, with no need for further interest rate cuts to stimulate the market. This audacious move left global markets dumbfounded. The market interpreted this as the Federal Reserve possibly halting further rate cuts. The Fed played coy, refusing to give a direct answer and skillfully managing market sentiment with practiced finesse. Thus, the Fed’s previously firm message of continued rate cuts reversed almost instantly. We’ve seen data manipulation before, but never with such shamelessness. Previously, the U.S. reversed its stance on soybean and crude oil reserves to mislead global financial markets; now it blatantly manipulates interest rates to influence worldwide capital flows. This was a clear signal that the game was about to change drastically.

Meanwhile, mainland China was entering the National Day holiday, with crowds thronging to tourist spots. Yet, overseas securities markets remained open as usual. Before October 4, overnight, foreign investment banks abruptly shifted their stance, overwhelmingly bullish on Chinese assets and overweighting Chinese stocks. The Hong Kong stock index surged continuously, with the Hong Kong market leading the A-share market’s charge like a commanding elder brother.

After the 4th, however, the Hong Kong market suddenly lost direction, shrinking in volume and consolidating for a day, waiting for the domestic market to open. They knew the decisive battle was imminent and quietly withdrew to the sidelines. It was inevitable; the Hong Kong stock market has always been a shadow market of the U.S. dollar—not just Hong Kong, but every global financial market bows to the dollar’s dominance.

Domestically, the atmosphere was even more peculiar. Throughout the National Day holiday, all securities firms were working overtime to open accounts. Domestic brokerage analysts seemed to be on holiday, silent about the stock market. But on social media, a chaotic swarm of dubious characters wildly bullish, inciting the post-2000 generation to seize what they claimed was the only once-in-a-lifetime chance for immense wealth. They urged desperate measures—mortgaging everything and leveraging heavily to storm the stock market. Some even shouted slogans like “Below 6000 points is just a rebound; only above 6000 points does the reversal begin. The index’s rise will match the range of the Dongfeng-31AG intercontinental ballistic missile—that is, 15,000 points,” and “Limit-up at the opening on the 8th means closing the market immediately.” These claims whetted everyone’s appetite for the limit-up.

Due to the absence of voices from legitimate financial institutions, the entire narrative was controlled by unlicensed influencers and online celebrities, who fanned the flames and stirred the mood, seriously misleading market sentiment. Regulators appeared bewildered and powerless. This was psychological warfare, and our regulatory system and philosophy were utterly defenseless against such tactics. Losing control of public opinion meant the outcome was predictable.

Sure enough, at the opening on October 8, all A-share indices hit the daily limit-up. Trading opened at 9:30 a.m., and it seemed it could close just as quickly. But the earth-shaking battle had begun. At 9:25 a.m., during the call auction, trades worth 500 billion yuan were executed—all at the limit-up price. Once the market officially opened at 9:30, the stock market plunged sharply. An avalanche of sell orders poured out like a dam bursting. Within just half an hour, turnover reached 1 trillion yuan. The market opened high but fell throughout the day, only to rebound strongly near the close, with total daily turnover hitting a historic 3.5 trillion yuan. The fifty flagship bull-stock brokerages all remained limit-up.

Yet, curiously, on the same day, the Hong Kong index plunged over 10%, with mainland-listed brokerage financial indices plunging as much as 30%. The same Chinese assets, on the same day, reflected such stark contrasts between the Hong Kong and A-share markets. Could this really be the sunset of the West and the rise of the East?

Gazing upon the ominous 3.5 trillion yuan shadow hanging overhead, a veteran investor with over thirty years in the stock market muttered tremblingly, “Children, Grandpa is watching near the 38th parallel. As you go into battle tomorrow, make sure you all survive...”