Sharpening the Blade Against the Red Wall: From Hong Kong to Handong

In June 1996, Kyoto had shed its spring chill and entered early summer. The Chinese scholar trees lining both sides of Chang'an Avenue were lush and verdant, their dense green canopies spreading out like umbrellas. Dappled sunlight filtered through the leaves, casting dappled shadows on the gray pavement. The air was filled with the sweet fragrance of locust blossoms, and the occasional chirping of cicadas echoed from the alleyways. It should have been a scene of tranquility and peace, but Zhou Jin felt a heavy weight on her heart as she hurried toward her grandfather Zhou Jianguo's residence.

Zhou Jianguo's residence was located in a quiet courtyard in the west of the city. With its red walls, gray tiles, and surrounding green trees, it exuded the solemnity and tranquility characteristic of a retired cadre's home. As a veteran revolutionary who had served in the central government for many years, Zhou Jianguo, though retired, remained deeply concerned about national affairs, reading Party newspapers and internal reference materials daily without fail, and was well-versed in the domestic and international situation. When Zhou Jin appeared at the courtyard gate carrying the thick book, "Early Warning and Practical Response Plan for Financial Risks After Hong Kong's Return to China," Zhou Jianguo, who was reading the document under the grape trellis, looked up and saw his grandson's solemn expression and barely concealed anxiety. He knew his grandson must have something important to discuss.

"Grandpa, I have an urgent report to show you." Zhou Jin walked quickly to his grandfather and handed him the heavy report, his voice trembling slightly with excitement. This nearly 600-page report was the culmination of more than two months of his hard work. From data collection to logical deduction, from risk assessment to solution design, every word and every set of data had been repeatedly scrutinized. At this moment, he handed this report, which carried the weight of national financial security, to his most trusted grandfather.

Zhou Jianguo put down the newspaper and took the report, examining it carefully. The deep blue cover with its gold-embossed title was particularly striking, and the words "Respectfully Presented to the Central Decision-Making Body" on the title page instantly made him realize the report's significance. He gestured for Zhou Jin to sit at the stone table, while he opened the report and began reading page by page, starting with the first section, "Analysis of the Current Situation of Hong Kong's Financial Market." Sunlight filtered through the gaps in the grape trellis, illuminating the dense text and charts. Wearing his reading glasses, Zhou Jianguo's fingers lightly traced the paper, sometimes frowning, sometimes lost in thought, occasionally pausing to make simple marks next to key data.

Zhou Jin sat to the side, feeling both nervous and expectant. He knew his grandfather had weathered many storms in his life, participated in countless major decisions, and possessed extremely keen political insight and economic judgment. Whether this report would be approved and successfully delivered to the highest levels depended heavily on his grandfather's attitude. He didn't disturb his grandfather's reading, but simply sat quietly, replaying the core content of the report in his mind and outlining the logical structure of what he wanted to emphasize in his grandfather's report.

Before they knew it, the sun was setting, casting a warm golden glow over the courtyard, and the shadows under the grape trellis stretched longer. Zhou Jianguo finally closed the report, the thick volume feeling particularly heavy in his hands. He looked up, his gaze deep as he looked at Zhou Jin, his eyes devoid of their usual gentleness, replaced by an unprecedented solemnity: "Xiao Jin, you put a lot of thought into this report. The data is detailed, the logic rigorous, and the analysis very reasonable."

Hearing her grandfather's affirmation, Zhou Jin felt a slight sense of relief and quickly took over the conversation, detailing her analytical logic and deep concerns: "Grandpa, as you've seen, the inflow of hot money into Hong Kong in 1995 reached as high as US$500 billion. This international capital wasn't coming to invest at all; it was targeting the instability that followed Hong Kong's return to China. Based on my analysis of the logic of international capital operations, combined with the current situation in Hong Kong, they will most likely concentrate their firepower on attacking Hong Kong's financial market during the 1997 Asian financial crisis."

He stood up, walked to his grandfather's side, and pointed to the section in the report about international capital's short-selling strategies, saying, "You see, international speculative capital, represented by Soros' Quantum Fund, is most adept at using a combination of leveraged short selling and media hype. They first borrow large amounts of Hong Kong dollars, then sell them off in a concentrated manner to suppress the exchange rate, while simultaneously establishing short positions in the stock market and derivatives market, using market panic to amplify volatility. Although Hong Kong's linked exchange rate system is stable, it also has fatal flaws. Once market confidence collapses, the Hong Kong Monetary Authority, in order to maintain exchange rate stability, can only passively sell US dollars and buy Hong Kong dollars, which will lead to a tightening of market liquidity, soaring interest rates, and in turn triggering a stock market crash, forming a vicious cycle."

Zhou Jin's voice grew increasingly firm: "Once the crisis erupts, not only will Hong Kong's economy suffer a severe blow, countless businesses go bankrupt, and citizens' assets shrink, but more importantly, it will seriously affect the country's exercise of sovereignty over Hong Kong, shake the foundation of 'one country, two systems,' and make us a laughing stock in the international community. Therefore, we must plan ahead and make preparations."

He paused, his gaze fixed intently on his grandfather: "The plan I proposed in the report to establish a secret company is actually a win-win solution. On the one hand, this company can cooperate with the national macro-control during the crisis, stabilizing market confidence by buying up undervalued assets in Hong Kong, thus becoming an important force in dealing with the financial crisis; on the other hand, taking advantage of the asset price crash during the Southeast Asian financial crisis and the Hong Kong financial war, it can acquire high-quality assets at low prices, such as mines and ports in Southeast Asia, and real estate and financial institution equity in Hong Kong. These are all non-renewable strategic resources. Once the situation stabilizes and asset prices recover, it can not only generate huge economic benefits for the country, but also strengthen the country's economic strength and strategic influence."