China's already warned Soros just a few days ago not to short the renminbi. http://www.ft.com/cms/s/0/ebabbebe-c40d-11e5-993a-d18bf68267...

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's already warned Soros just a few days ago not to short the renminbi.

Perhaps it makes more sense to Chinese eyes, but that looks very odd to me. If Soros tries and fails, he'll lose a lot of money, but that would seem to be no concern of the Chinese government. So if the Chinese authorities had no worries about the outcome it seems like they'd have no reason to try and warn him off; since they are trying to warn him off, it suggests they're worried.

The entire thing sort of comes off as an admission of weakness to me, which I doubt was the intention.

Soros famously broke the bank of England: http://www.investopedia.com/ask/answers/08/george-soros-bank...

His name alone is enough to scare Chinese bankers who are worried they can't support their currency.

That's behind some weird interstitial, so here's a cached version: http://archive.is/xoix6

They're trying to do the same time thing as Soros did, yes. But even after its recent $300 billion spending spree to defend the yuan, China still has trillions in foreign currency reserves left, orders of magnitude more than the BoE ever did. And they have a cultural imperative against "giving in" to Western capitalist pigs. I really don't think these guys have thought their plan through.

Not enough reserve

"by 2018 all of China's excess reserves — cash that it has on hand to use immediately — could be gone."

http://www.businessinsider.com/chinas-fx-reserves-less-than-...

Exactly this. China also likes shows of strength, and would be more than happy to expend large amounts of cash to bankrupt the people trying this, rather than lose face being broken by them.

If they run out of cash they will start to devalue their currency, that's the bet.

If each Chinese citizen were to sell $1000 worth of yuan back to the Chinese government in return for 1000 USD, a trillion-dollar reserve would be depleted.

I don't get this. My mental image is all the toddlers of Beijing queuing at the banks, with a wad of banknotes in one hand and a pacifier in the other, unsure which one to give to the teller.

I guess he's using an ill-chosen metaphor to show one trillion isn't that much.

That is all the worse for China, and will only serve to increase the size of the bet against the Yuan. When it comes to currencies, there is nothing that can fix the law of supply and demand. The country can spend huge fortunes avoiding the direction of the market, but it will only make things worse when the fall finally comes. I believe Soros and his friends will make a lot of money here.