In the middle and long term, once it is determined that the growth of China's economy is actually unsustainable, or people realize that a high -pressure political system has brought many disadvantages to the country, then it has always attracted the third world countriesThe "China Development Model" will lose a halo.

Wuyun began to cover the Chinese economy.

Since 2020, the sluggish real estate has lasted for more than two years due to the tightening of real estate financing policies, and the situation has become more and more serious today.Compared with the previous two years, residential sales decreased by 45.8%in July this year, and the new construction area decreased by 57.6%, and its performance was bleak.The Chinese government believes that "the average housing price nationwide has not declined", but is it the phenomenon of "valuable market"?

The Chinese people are uneasy about the future, causing them to be cautious in expenditure. After China ended the clearance policy, domestic consumption did not return to the expected level.Families who feel "decline in housing assets" hope to reduce the burden on repayment loans.This is reminiscent of the "balance sheet decline" in Japan 30 years ago.

The financial difficulties of local governments have also increased due to the sharp decline in land transfer income.According to the estimated data released by the International Monetary Fund (IMF) in February, as of the end of 2022, the regular local government bonds, coupled with the bank borrowing of the government's direct financing platform, and the hidden local debt of corporate bonds, Tong Tong, about 1.983 trillion yuan).If the average interest rate is 5%, 5 trillion yuan of interest will be generated each year, which is equivalent to 4%of the GDP (GDP).This is 670 % of the maximum tax VAT tax tax, which should be trapped in the fiscal crisis.

Worsening of the balance sheet

This seems to be a chain reaction caused by real estate downturn, but the structural problems in China's current economic existence are not limited to the real estate field.Due to over -many years of excess investment and excess debt, China's overall balance sheet is deteriorating.

According to the statistics of the International Clearance Bank (BIS), China's total liabilities accounted for GDP ratio, from 178%in early 2010 to 297%at the end of last year.This is a unique phenomenon of the bubble economy.The reason is that the investment effect is poor, which has weakened the power of investment in investment.This can be seen from the marginal capital coefficient.In 2007, the economic growth of a unit was generated, only 2.8 units of investment, and 7.2 units in 2019; the average weighted average from 2020 to 2021 required 15.1 units.

In general countries, even if the ratio of debt accounts for GDP has increased sharply, it will decline soon, because after the bubble breaks (asset prices have plummeted), assets with high valuations and bad debts that cannot be repaid are all accountable for impairment loss loss loss.EssenceThis can also be understood that the market mechanism will clean up garbage on both sides of the balance sheet.

However, in China, the government's intervention in stopping the price of real estate has fallen sharply. Companies that cannot pay off debt also because some government supports the support, allowing them to pay interest or pay the principal of the exhibition period (the "implicit guarantee of the government"),So it is difficult to go bankrupt.

At first glance, this can avoid the collapse of the bubble, which seems to be a good thing.However, if the health of employment is used to metaphorize, it is like eating rotten foods (no efficient assets), but it does not vomit nor diarrhea. The toxins are not discharged, and they are piled up in the body to harm health in different forms.

The "toxins" brought by real estate bubbles are easy to understand -unreasonable high housing loans, and installment payment, including interest, make family life squeeze, and then lower consumption.

The "toxin" brought by the excess investment of the enterprise is to invest through loans. Not only does it not get the income, but also pays the increase in interest.For example, it is like sending "useless high salary" to employees who can't work.The hidden guarantee of the Chinese government allows zombie companies that cannot be self -reliant to pay interest, just like the "useless high salary" mentioned here.

China has continued to invest over over the past ten years, and "useless high salary" has reached an amazing scale.I assume: 1. House prices are twice that of normal levels; 2. Loans given by financial institutions, 15%are high -risk potential debt (based on the calculation of IMF in 2016); 3. Infrastructure investment promoted by local governments is only to invest in only investment in infrastructure.Half of the book asset value.Based on these three assumptions, the useless interest payment is about 3.8 trillion yuan per year.This is equivalent to transferring 3%of the wealth of GDP to financial institutions and their customers (the wealthy class with a large amount of assets).

In order to prevent the bubble economic collapse, China must bear the "useless high salary", which greatly reduces economic efficiency and further expands the gap between the rich and the poor.If this state is allowed, it will inevitably fall into the "medium -income state trap".

China must promote the removal of garbage that it has been avoided, that is, the impairment of bad assets and bad debts.Just as the management bubble economic collapse, this process needs to endure the pain of low growth for many years.But it is also an inevitable process to truly restore health.

In addition, the short -term forced problems in China are urgent to deal with the economic implementation of the economy and implement the reform of the local financial situation in crisis.If measures do not take measures to prevent economic deterioration, it may lead to large -scale protests in the people, as well as harmful social stability incidents such as crowds in small and medium -sized financial institutions.

The countermeasures will only be taken after the danger appears, and the cost will be higher.

China's local finances are also in crisis due to long -term liabilities.The central government requires financial institutions to extend the term of local government debt or reduce interest rates, but this is like transferring garbage accumulated in the balance sheet of local finances to the asset -liability statement of financial institutions. The problem is not cured.If you avoid fundamental countermeasures, you may cause unexpected systemic risks.

It is puzzling that to solve any topic, the central government must come up with responsibilities, but so far has not seen any signs.

Future of the Belt and Road

In summary, China's economic prospects are severe.Although the possibility of bubble economic collapse is still very low, the economy is likely to fall into medium- and long -term stagnation.

In this way, where will China vigorously promote economic cooperation in developing countries?

Overseas investment and financing affects the balance of revenue and expenditure, not growth.Recently, China's exports and attracted foreign investment have decreased, but in the first half of 2023, the trade revenue and expenditure surplus was still US $ 409 billion (about S $ 558.9 billion), and foreign investment reached 100 billion US dollars.On the other hand, considering the lack of domestic investment opportunities in China. In order to strengthen the supply chain, China ’s investment in overseas resources development will show strong interest. Perhaps China will actively continue to invest in overseas in the future.

However, the problem is also accompanied by it.I am afraid of criticism and dissatisfaction in China, saying that "investing in financing overseas, funds should be invested in the domestic economy and the gap between the rich and the poor."In addition, countries that accept investment and financing will also worry that if China's funds are concentrated in resource development, it is just to "pursue the interests of the country."

In the middle and long term, once it is determined that the growth of China's rapid economic advancement is actually unsustainable, or people realize that a high -pressure political system has brought many disadvantages to the country, so it has always attracted the "China's development in China Development"Mode" will lose a halo.This may have a more profound impact.

The author is a guest researcher at the Institute of International Issues of Japan, and modern Chinese research experts