Currency War: U.S. Hedge Funds Mount New Attacks on China's Yuan

Currency War: U.S. Hedge Funds Mount New Attacks on China's Yuan
wsj.com

People and foolish investors think, "Well, China has more than a billion people so it will eventually have a robust and rich economy!" Only, it doesn't work like that (cue the "That's not how this works. That's not how any of this works" lady). Population size is only a tiny facet of a much larger picture. And it's not even a particularly important one, relatively speaking. There are some economists who are now starting to think that having a massive population size may have the opposite effect; it helps you reach a certain point but then your massive size begins to act as an anchor which keeps you from growing further.

Edit - didn't see that the original WSJ article includes quotes by Soros mentioning his short, and also mentioned China's general warnings against shorts. Though the FT article I linked focuses specifically on Soros, and talks a bit about his history too.

China is in the middle of a shift from an export-driven economy to a consumption-driven economy, part of the normal development arc of major economies. But increasing export profits at the expense of households pushes that balance in the wrong direction.

For more (much more!) detail on this, I highly suggest the blog 'China Financial Times' by Peking University professor Michael Pettis: mpettis.com.

But generally, yes: the world has a savings glut, and devaluing your currency helps export your domestic weakness (some economists call devaluation 'exporting your unemployment'). China is in a rather unique situation though.