The Red Fire Monkey is supposed to be an very lucky year in the Chinese zodiac, but slowing economic growth in China means that investors and consumers alike are taking a more cautious approach heading into the rest of 2016.

It is probably worth reminding ourselves that China's economy grew by a robust 6.9 per cent in 2015, the slowest rate in a quarter of a century but still among the fastest growth rates of any major economy in the world. This is nearly twice as fast as developed economies in Europe, Ireland excepted.

Expansion of 6 per cent or so looks eminently possible during the monkey year, as the service economy and consumer spending are buoyant, wages are rising and employment growth is strong.

Against this background, comments by billionaire investor George Soros suggesting that he was planning to short-sell China's yuan currency, which has dropped 5.7 per cent since August, were highly unwelcome in China.

Speaking of the Chinese economy, Soros, who famously broke the Bank of England, said: “A hard landing is practically unavoidable.”

Dragonomics economist Arthur Kroeber said the 11 per cent plunge on the stock markets in the early days of the year certainly gave the impression that the Chinese economy was in serious trouble and the lack of clear direction in President Xi Jinping's economic reforms was problematic.

“Today China is a country without a clear economic direction, and this shows up in a steadily slowing rate of private investment. The fault for this lies squarely with Xi. We have no idea whether Xi understands what modern markets require, or how he hopes to reconcile their demands with the Leninist-Confucianist paternalism he is busy imposing on the rest of society. China is unlikely to collapse, but it does risk losing its way,” said Kroeber.

Arrest

The arrest last week of the newly installed head of China’s National Bureau of Statistics,

Wang Baoan

, on corruption charges, has revived suspicions about the reliability of Chinese data, but even Soros said that China is well equipped to combat a hard landing.

The Chinese media has been particularly vocal in its response to Soros's move, and the Beijing Youth Daily appears to be taking it quite personally, pointing out how, during the Asian financial crisis in 1997, Soros, whom it terms a "robber baron", shorted southeast Asian currencies and stocks.

"He targeted the Hong Kong dollar. Yet, with support from the central government, Hong Kong authorities made effective interventions to the currency market in 1997. The international speculators failed. By making high-key comments over Asian currencies, Soros is highly likely to be waiting for opportunities for his 'revenge'. But it's quite difficult for him to succeed," the newspaper said.

Protection

The

Beijing News

believes that China’s foreign exchange reserves are the best protection against Soros, and reminded its readers that short-selling the yuan was unlikely to succeed because China is the world’s second-largest economy and has the largest foreign exchange reserves as well.

“To avoid being attacked by Soros, the economy must be stable enough to offer continuous foreign exchange reserves. This is tough . . . Foreign exchange reserves are playing a significant role in countering massive short-selling,” the newspaper said.

The iFeng website defended the Chinese economy, saying it was “stronger than cliches” and that, after years of growth, China was strong enough to withstand Soros’s onslaught.

“China is now witnessing some economic difficulties. However, judging from its size, structure, reform and institutional construction, the stability of the Chinese economy should not be underestimated,” it said. “China is facing a number of challenges to phase out excessive capacity, but the individual savings ratio is quite high. A large number of rich Chinese are fans of overseas shopping.

“As long as a proportion of the excessive capacity can be gradually upgraded, China’s economy will develop to a higher level. Despite the current slowdown, the Chinese economy is still much stronger than that of other countries.”

If defending against Soros turns out to be the first of a series of battles over China’s economy in the Year of the Monkey, government-backed forces are already lining up.