However, on 1997, a currency crisis suddenly broke out in Thailand and developed into a financial and economic crisis. But also spread rapidly to other countries and regions in East Asia, even the four little dragons in Asia, which have always been called the miracle of development, can't escape this bad luck. During the crisis, the value of currencies and assets in most East Asian economies fell by 30%-40%, and the worst-hit economies fell even more. Banks and enterprises in East Asia have fallen into unprecedented financial difficulties. Thailand, Indonesia and South Korea had to seek assistance from the International Monetary Fund (IMF). By 1998, all the affected economies, including Singapore and Hong Kong, which have relatively good financial and enterprise quality, have fallen into a serious economic recession.
The East Asian financial crisis came suddenly and went quickly. By 1999, the crisis economy, exports and GDP all resumed positive growth. In addition to politically turbulent Indonesia, the stock market index, which is usually used as an indicator of investor confidence, has also recovered or even exceeded the pre-crisis level. East Asia's economy seems to have recovered its former vitality. However, is the recovery of economic growth in East Asia sustainable? Will a similar crisis break out again? What lessons should we learn from this crisis? At present, there is no conclusion in academic circles at home and abroad. To answer the above questions, we must first understand the causes of this crisis.
A crisis can erupt from one economy and quickly spread to other economies, and there must be the same external factors. Global economic integration and the inherent instability of international financial markets are the main reasons. In the past few decades, due to the progress of information and transportation technology, the cost of transportation and communication has been greatly reduced and the global economy has become more integrated. From 1985 to 1994, the average annual growth rate of the world's real GDP is only 3.2%, but the growth rate of international trade is twice as high as that of 6.7%. East Asian economy is famous for its extroversion and is the main beneficiary of the rapid growth of international trade. During this period, the integration of international finance is faster than that of the real economy, and international capital flows are more active. The average annual growth rate of loans from multinational banks is 12%, and that of foreign direct investment is 14.3%. During this period, the net inflow of private capital in East Asia was only $65,438+$965,438 million in 1990, and increased to $65,438+$65,438 million+$004 million in 1996, an increase of six times.
It is also one of the biggest beneficiaries of international financial integration.
However, the international financial market is inherently unstable.
(1) The capital flow is easily reversed by changes in market expectations and confidence. Thailand, South Korea, Malaysia, Indonesia and the Philippines, which were most affected by the financial crisis, had a net inflow of private capital of $72.9 billion in196 and a net outflow of $83.9 billion in197. Such a huge reversal of capital inflow and outflow is unbearable for small and medium-sized economies in East Asia.
(2) The progress of information technology and the globalization of financial markets enable the participants of international capital to move large sums of money across borders at a "real-time" speed, which provides conditions for international speculative capital to make waves and aggravate the instability of financial markets. However, under the international trend of financial liberalization, East Asian countries lack vigilance and supervision experience on the instability of financial markets and the danger of international speculative capital operation.
(3) Large international venture capital funds and investment banks operate with high leverage of 20 times and 30 times, and the funds they can mobilize are far greater than the scale that small and medium-sized financial markets can bear, so that small defects in small and medium-sized financial markets can be attacked by a few international venture capital funds or investment banks and lead to catastrophe. There is no law in the world to stop and punish the joint speculation of international financial speculators.
The influence and instability of international financial integration are the same for any East Asian economy. However, the severity of the impact of this crisis on East Asian economies is obviously different. Thailand, Indonesia and South Korea are the countries most affected. Not only did the exchange rate depreciate sharply, but GDP also fell sharply. In addition, there has been a payment crisis, and they have to accept severe assistance from international institutions such as the International Monetary Fund. Malaysia also experienced severe currency devaluation, banking crisis and economic depression during the crisis, but it was not forced to seek international assistance to meet the needs of short-term payment. Singapore's currency depreciated, but the GDP growth rate 1998 was10.5%, while the Philippine GDP growth rate 1998 only decreased slightly to -0.5%. The real GDP growth rate of Hong Kong is -5. 1% in 1998, but the currency has maintained its linked exchange rate despite several joint attacks by speculative capital. Taiwan Province province in China experienced a moderate currency depreciation of 15% in 1997, but its real GDP maintained a positive growth during the crisis, reaching 4.8% in 1998. During the crisis, the mainland not only did not devalue its currency, but also maintained a growth rate of 7.8%, making a world-renowned contribution to the economic recovery in East Asia.
According to the research at home and abroad, the severity of the East Asian economy affected by this crisis is closely related to the following phenomena:
(1) Deterioration of terms of trade and current account deficit. From the second quarter of 1995, the export growth rate of the five most affected East Asian countries dropped rapidly. By 1996, Indonesia's current account deficit accounts for about 3% of GDP, South Korea's about 5%, Malaysia's about 6%, and Thailand's about 9%. However, economies less affected by the crisis, such as Singapore, Taiwan Province Province and Chinese mainland, have relatively adequate current account balances.
(2) The dependence of economic growth on the global capital market. The hard-hit economies rely more on foreign debt to support their growth, while those economies that have been hit relatively lightly have less foreign debt.
(3) the ratio of short-term debt to foreign exchange reserves. The three countries that need international assistance not only have a lot of foreign debts, but also have a high proportion of short-term foreign debts in foreign exchange reserves. 199, Thailand, South Korea and Indonesia were as high as 100%, 203% and 176% respectively, and other economies were less than 50%.
(4) The financial sector is not properly supervised by the affected economies, and crony capitalism prevails.
(5) In the seriously affected economies, enterprises have little self-owned funds and their development depends on high-level leveraged financing. 1996 In Thailand, South Korea and Indonesia, the ratio of creditor's rights to equity was 185%, 325% and 183% respectively, and other economies were generally below 100%.
(6) In the economies that are greatly affected, the bubbles in real estate and stock market are also large.
But after careful study, the above phenomenon, like the economic crisis itself, is the "result" rather than the "cause" of the crisis. The above-mentioned different performances of East Asian economies before the crisis are actually the result of their different development strategies. Countries hit hard by the crisis, such as South Korea and Indonesia, generally pursue the strategy of giving priority to catching up and taking capital-intensive industries as the basis of economic growth. This industry
This is not in line with their own economic comparative advantages, and they have no viability in the highly competitive market environment. In order to develop these industries, the government not only provides preferential treatment such as tax reduction and exemption, but also often uses administrative power to depress bank interest rates and interfere with the allocation of bank funds. Those who can get these cheap funds are generally enterprises with good relations with the government, so the emergence of crony capitalism is inevitable. Because this kind of industry does not conform to the economic comparative advantage, although it can be established with the support of the government, its competitiveness is poor compared with similar enterprises in developed countries, and foreign trade is prone to deficit. Moreover, the profitability of enterprises in the highly competitive domestic and foreign markets is low, and the expansion and upgrading of enterprise production can only rely more on borrowing, so the level of leveraged financing of enterprises is bound to be high. At the beginning, these enterprises mainly borrowed from domestic banks, which had limited funds. With the expansion of enterprises, they are increasingly dependent on foreign loans for support. Generally speaking, foreign direct investment tends to take advantage of local market and comparative advantage. Therefore, the industries that are not in line with comparative advantages can only use loans, especially international short-term capital with greater freedom, which leads to a high ratio of short-term foreign debt to foreign exchange reserves. In order to attract the inflow of foreign capital, we have to open the financial market and relax financial supervision, so a large number of foreign short-term capital flows into the real estate and securities markets, forming a financial bubble.
On the contrary, in Taiwan Province Province and Hongkong, which are less affected, the proportion of foreign debt to GDP is low, the scale of foreign exchange reserves is large, and the proportion of short-term debt to foreign exchange reserves is relatively low. The key is that their industrial development has better followed their comparative advantages. Therefore, foreign trade has strong competitiveness, large trade surplus and large foreign exchange reserves. Their enterprises are also more profitable in the domestic and international markets. When their enterprises expand in scale and upgrade in technology, their project financing can rely more on their own profit accumulation and less on external sources of funds. Therefore, the level of leveraged financing of their enterprises is very low, and the foreign debt burden of the whole economy is very small. They do not need to rely heavily on foreign debt, so they can calmly carry out financial supervision. The development of Singapore relies more on foreign direct investment, and foreign investors also choose industries according to Singapore's comparative advantages. Therefore, there are many foreign trade surpluses, abundant foreign exchange reserves and few short-term foreign debts, so it is difficult for international speculative capital to find a breakthrough. The most dynamic private and joint ventures developed in Chinese mainland after the reform and opening up? Most of them are labor-intensive enterprises with comparative advantages and strong foreign trade competitiveness. Therefore, the mainland has more foreign exchange reserves and less short-term foreign debts. Moreover, the mainland's capital account has not yet been opened, and the currency is not freely convertible, so international financial speculators cannot attack the RMB.
As can be seen from the above discussion, international economic and financial integration is an inevitable trend, and a key to pursuing advantages and avoiding disadvantages is to choose industries according to comparative advantages and develop the economy. In this East Asian crisis, it is obvious that the economic indicators of countries and regions that develop their economies according to their comparative advantages are good, it is difficult for international speculative capital to find opportunities to attack, and the adverse effects of being attacked in time are small; On the other hand, if the economy is not developed according to comparative advantages, all economic indicators are poor and the economy is weak, making it vulnerable to international speculative capital attacks. Whether the current economic recovery momentum in East Asia can be sustained and whether similar crises will happen again in the future depends largely on whether those economies that deviate from their comparative advantages can change their development strategies and make corresponding government functions and macro-policy reforms. In addition, with the integration of international financial markets, a large amount of funds can flow quickly across borders, and venture capital funds and investment banks can operate with high leverage. These conditions provide opportunities for international financial speculative capital speculation. When financial predators attack, it is hard for any small and medium-sized economy to bear such an impact. Therefore, it is necessary to establish regional monetary cooperation to reduce the possible adverse effects of endogenous instability in the international financial market on small and medium-sized economies.