In 2008, the American financial crisis swept the world, posing severe challenges to China's economic development, such as destroying China's financial environment, shrinking foreign exchange reserves, declining investment and exports, and reducing consumption. However, the crisis has also brought unprecedented opportunities to China's economy, such as helping to reserve resources, carrying out cross-border mergers and acquisitions, alleviating inflationary pressure, attracting foreign investment, compressing the bubble economy and adjusting the economic structure. Therefore, this financial crisis is an opportunity for our country. We must seize the opportunity, calmly deal with it, and maintain the sustained and rapid economic development of China.
Keywords: financial crisis; China economy; Opportunity; challenge
The American financial crisis is a hot topic now. With the subprime mortgage crisis, the resignation of the chairman of Citigroup and the bankruptcy of Lehman Brothers, the financial crisis in the United States has intensified. The financial crisis, which is still developing and evolving, has caused global investment confidence to be frustrated, consumer spending to shrink, unemployment rate to rise, and economic growth to further slow down. In this context, we are most concerned about the extent to which China is affected by the financial crisis. The influence of an event often has two sides. So we also look at the impact of the economic crisis on China from two aspects.
First, the adverse impact of the US financial crisis on China.
(1) Direct and dominant influence.
First, the impact on China's finance. First of all, financial institutions holding stocks or bonds of American investment banks have substantially reduced their holdings due to the financial crisis. At present, China Bank has the most mortgage credit securitization products in the United States, so the loss should be the biggest. However, due to China's capital control and China Bank's relatively simple profit model, the financial crisis has little impact on it. Secondly, the financial crisis will slow down the capital flow in China's financial market. Mainly due to the tight monetary policy of foreign commercial banks. Third, it has affected investors' investment confidence. The plunge in the China stock market has locked up almost all investors, and their confidence has been damaged, which has affected the operating environment of the entire financial industry.
Second, the export-oriented enterprises in China, especially the small and medium-sized enterprises in the southeast coast, are facing the risk of operational difficulties and even bankruptcy. This year, many small and medium-sized enterprises in the coastal areas laid off employees and went bankrupt. Although this is closely related to the financing difficulties caused by China's tight monetary policy and the rising export cost caused by the appreciation of RMB in recent years. However, the decline in overseas demand caused by the US financial crisis has led to overproduction and the inability to sell products, which is still the direct cause of the bankruptcy of coastal enterprises.
Third, China's foreign exchange reserves are facing the threat of serious shrinkage. According to the data released by the US Treasury Department, at the end of September, China held US Treasury bonds amounting to US$ 585 billion, surpassing Japan to become the largest creditor in the United States. The national debt market in the United States is similar to an oligopoly. The national debt is held by several official institutions, and the slightest move will trigger drastic changes in the exchange rate. Therefore, China, as an important supporter of a strong dollar, once it sells dollars, it will definitely affect the foreign exchange market. The depreciation of the US dollar will make China's wealth accumulated through its trade surplus shrink rapidly. However, under the premise of the American financial crisis, it is inevitable that the dollar will weaken. Therefore, the characteristics of our foreign exchange structure lead us not to sell dollars at will even in times of crisis, and we can only watch the foreign exchange assets shrink.
(2) Indirect and hidden influence. This is mainly caused by economic conduction.
1. Influence the economy through investment. From the perspective of domestic investment, the financial crisis has mainly brought adverse effects.
First, it leads to a decline in investment enthusiasm and lack of confidence. Under the crisis, people's confidence in economic growth has generally declined. Due to the increasing uncertainty about the future and poor expectation of investment income, people will appropriately control the investment scale in the short term. Second, the ability to use foreign capital has weakened. With the continuous evolution of the financial crisis, foreign financial institutions and enterprises have been selling overseas assets and withdrawing funds to cope with the crisis. The withdrawal of foreign capital will inevitably lead to a sharp decrease in available foreign capital in China. Third, the expected increase in investment costs, with the implementation of rescue measures and the easing of the crisis in various countries, will inevitably lead to a rapid rebound in the prices of resources and primary production films, increasing investment costs. In order to solve its huge debt problem, the United States must reduce the pressure by cutting interest rates and issuing currency, which is likely to lead to the depreciation of the dollar and the re-rise of resource prices. In the case of increasing costs, it will inevitably inhibit the investment enthusiasm of enterprises, making it difficult for the actual investment growth rate to rise sharply.
From the perspective of foreign investment, affected by the financial crisis, investors have slowed down their direct investment in China to varying degrees in order to avoid risks.
2. Impact on China's exports. The financial crisis broke out in the United States, and the contradiction of "excessive consumption" was highlighted. In the short term, the output will be greatly reduced, workers will be fired, and suppliers' procurement of raw materials will also be reduced. As the crisis spreads, other countries will take similar measures. For China, an exporter with a trade surplus for many years, it is bound to face the dilemma of "overproduction". Manufacturers worry that if they have too much inventory, they will reduce production, which in turn will further reduce consumer demand.
After the crisis broke out, the United States continued to inject capital to save the market. According to related reports, the issuance of US Treasury bonds in 2009 may reach nearly $65,438 +0.8 trillion. The measures such as tax cuts and medical reform promised by the new President Obama will inevitably increase the financial pressure of the next US ZF. So in the long run, the risk of dollar depreciation is still great. The depreciation of the dollar will inevitably lead to the decline of the RMB exchange rate and increase the export cost.
Therefore, the double pressure of shrinking demand and rising cost will greatly weaken the growth of export volume and export profit of export-oriented enterprises in China.
3. Impact on consumption in China. First, the actual purchasing power of consumers has declined. In the first half of this year, a large number of small and medium-sized enterprises in China closed down. After the financial crisis broke out, foreign-funded enterprises and some domestic-funded enterprises in China laid off employees one after another, and millions of employees faced the risk of unemployment. Therefore, consumers must tighten their belts and reduce their consumption expenditure in an all-round way. At the same time, the China stock market crashed, and the shareholders were almost wiped out, so the consumption expenditure was bound to be greatly reduced. Second, the expected income of consumers has declined. The financial crisis and its uncertain expectations for the future economy have obviously further worsened China residents' expectations for future income growth. Income expectations are falling, and consumers must cut back on spending and consumption.
Next, let's look at the beneficial effects of the financial crisis.
(1) is conducive to reserve resources and carry out cross-border mergers and acquisitions. First of all, the spread of the financial crisis to the real economy will inevitably lead to a sharp drop in the prices of international primary products. At present, the prices of a series of resources such as crude oil are falling. However, with the rescue measures of various countries and the depreciation of the dollar, when the crisis may subside, it will bring about a sharp rebound in the prices of international resources and primary products. Therefore, China can make full use of its abundant foreign exchange reserves, actively and steadily seize the favorable opportunity to reserve resources before the depreciation of the US dollar, and accumulate cheap resources for China's industrialization.
Secondly, the subprime mortgage crisis helped China enterprises to bypass market access barriers and M&A barriers, expand their investment in the United States at a relatively reasonable cost, and speed up the internationalization process through acquisition, equity participation and capital injection.
(2) It is conducive to alleviating inflation in China. With the gradual evolution of the American financial crisis, the prices of international primary products have fallen sharply. For example, in July, crude oil reached an all-time high of 147.5 USD, and the current oil price further fell below the 46 USD mark. With the downward trend of international primary product prices. It is conducive to curbing the recent rise in the ex-factory price index of industrial products. Generally speaking, it has eased the inflationary pressure in China.
On the other hand, the US financial crisis caused China's external demand to shrink, transferring part of its export capacity to the domestic market, thus increasing the supply of the domestic market, intensifying the competition in the domestic market, and on the other hand, restraining the rise of the price level.
Therefore, on the whole, the US financial crisis is conducive to easing the inflationary pressure in China.
(3) It is conducive to attracting international capital. At present, the new rural reform proposed by the central government will provide a huge construction and consumption market for rural areas in China. After the outbreak of the financial crisis, China adopted a series of policies to expand domestic demand, which ensured that China's economy continued to maintain sustained, stable, healthy and rapid development in the context of the financial tsunami in the world economy.
On the other hand, the transmission of the financial tsunami led to exchange rate turbulence and capital flight in a series of countries, such as Western European countries and Japanese, while China's RMB remained firm and its exchange rate was stable, maintaining a slight appreciation trend against the US dollar.
All these are conducive to creating a good investment environment in China. In the long run, China is the only place for international capital.
④ It is beneficial to squeeze out the bubble of China's virtual economy. China's rapid economic growth in recent years is largely due to the superficial prosperity caused by the virtual economic bubble in real estate and other industries. The financial crisis in the United States spread to China, which led to the decline of the housing market in China and the collapse of the stock market in China, which to some extent squeezed out some virtual economic bubbles in China.
⑤ It is beneficial to the adjustment of China's economic structure. In a prosperous economic environment, many problems will be hidden and difficult to find, while in a crisis, various problems and contradictions in the economy will be highlighted. At present, China is in the stage of economic cycle adjustment, and the crisis is conducive to discovering various problems in China's economic development, thus helping to take various preventive measures and providing guidance for the adjustment of China's economic structure.
Generally speaking, due to China's huge foreign exchange reserves, capital control, prudent monetary policy and the continuous surplus of ZF finance, the impact on China is still limited. However, according to international financial theory, the improvement of a country's terms of trade due to currency depreciation is sometimes delayed, that is, the so-called J-curve effect. Therefore, when the financial crisis spreads to other countries through trade channels, there is also a J-curve effect. Therefore, the impact of the financial crisis on China through international trade will be delayed. Therefore, China can adjust its domestic policies through various favorable conditions and factors, improve its own environment and conditions to the maximum extent, take preventive and coping measures, calmly face the financial crisis, and reduce a series of transmission effects of the US financial crisis on China's economy.
Therefore, this financial storm is not only a crisis in China, but also a test and opportunity for China's financial career and economic development. We must seize this opportunity to realize the sustained and rapid economic development of China.
References:
[1] Analysis of the new opportunities brought by the global financial crisis to the China market.
[2] US$ 585 billion: China became the largest creditor in the United States.
[3] Zhang Zhibo. Financial crisis contagion and national economic security. Shanghai Academy of Social Sciences Press, 2007.