Japan's stock market plunged over 12%, setting a record for the largest decline in history.

　　South Korea's stock market plunged over 8%, once triggering a circuit breaker mechanism.

　　U.S. economic data fell far short of expectations, like a shock bomb dropped on global capital markets, triggering investors' panic over a U.S. economic recession. After U.S. stocks fell across the board on August 2, Asia-Pacific stock markets immediately ushered in a "Black Monday" on August 5.

　　Stock markets plunged, yet non-U.S. currencies such as the renminbi and the Japanese yen are strengthening, and the renminbi has seen an explosive rally.

　　Sanlihe noted that on August 5, the onshore renminbi exchange rate against the U.S. dollar once rose to 7.1150, a new high since January this year. The offshore renminbi exchange rate, which better reflects international investors' expectations, also strengthened all the way, breaking through the 7.1 mark and surging more than 800 points during the day.

　　Why has the renminbi exchange rate risen?

　　Guan Tao, Global Chief Economist of BOC International, said in an interview with Sanlihe that the recent poor U.S. economic data, especially the unexpected jump in the unemployment rate data last Friday, triggered the recession indicator known as the "Sahm Rule." Expectations of a U.S. economic recession have risen sharply in the market, and the U.S. dollar index has weakened significantly, greatly easing the pressure on non-U.S. currencies worldwide.

　　In addition, the recent strength of the Japanese yen has also driven an overall rebound in Asian currencies. Changes in external factors have led to reverse unwinding of renminbi carry trades, which has also pushed the renminbi to rebound rapidly.

　　At the same time, the U.S. dollar index has fallen back, and on August 5, the U.S. dollar index fell below the 103 mark.

　　Currently, the U.S. economy faces the risk of recession. According to the "Sahm Rule," a recession is signaled when the three-month moving average of the unemployment rate is 0.5 percentage points higher than the lowest value over the past 12 months. Since 1950, this rule has been triggered 11 times, with a 100% accuracy rate.

　　**Data from the U.S. Department of Labor show that the U.S. unemployment rate rose by 0.2 percentage points month-on-month to 4.3% in July, the highest since October 2021. The number of new nonfarm payrolls in July was 114,000, far below market expectations and a sharp drop from 206,000 in June.

　　This data has greatly increased investors' concerns that the U.S. economy will fall into recession. The World Economic Outlook report **released by the International Monetary Fund (IMF) also reveals the current risk of a slowdown in the U.S. economy.

　　The above report lowered its forecast for U.S. economic growth in 2024 by 0.1 percentage point to 2.6%, and expects U.S. economic growth to slow to 1.9% in 2025 as the labor market cools and consumption slows.

　　Guan Tao pointed out that current economic data reveal the risks of the Federal Reserve's policy operations, and its strategy of "acting after the fact and being data-driven" may cause monetary policy to once again lag behind market changes. If the U.S. economy falls into recession, the Federal Reserve may cut interest rates sharply, and the U.S. dollar will weaken in a phased trend; if the economy achieves a soft landing, the rate cuts will be limited, and the U.S. dollar will remain relatively strong.

　　In addition, the debt problem is still a "Sword of Damocles" hanging over the United States.

　　**Data from the U.S. Department of the Treasury show that the scale of federal government debt has exceeded the 35 trillion U.S. dollar mark. From breaking through 34 trillion U.S. dollars in January this year to now exceeding 35 trillion U.S. dollars, it took only about half a year.

　　What does 35 trillion U.S. dollars mean?

　　According to calculations by the Peter G. Peterson Foundation, spreading this huge debt across the American public is equivalent to nearly 104,000 U.S. dollars in debt per person.

　　In Guan Tao's view, long-accumulated debt will eventually bring risks. "Unless debt converges rather than diverges, if this game continues, problems will eventually arise."

　　When the United States sneezes, the whole world catches a cold. In contrast, China's macro policies are continuing to intensify and become more effective, injecting more certainty into the world through its own new development. The IMF raised its forecast for China's economic growth by 0.4 percentage point to 5%, a sharp contrast with the downward revision for the United States.