What are the risks to China s economy under the new normal?

From a soft landing to a hard landing.

With the Federal Reserve's interest rate hike, China's economy has to face a more complex situation, and the exchange rate, production capacity, prices, aging and other issues are all intertwined, forming a very complex Chinese knot. How to untie it requires a high level of wisdom.

The first big risk is that there is serious overcapacity, we used to love to produce things, but now there are more things and no one uses them at all, and a large number of things are backlogged and then stored in the warehouse. Our attitude has always been, whatever? Then production, and increase production.

It's like there was an overcapacity of steel back then, what should I do? We built another steel plant, built countless buildings, and then the steel production capacity was used, but the problem was that the new steel plant was also to be produced, and when the new steel plant was built, we found that the overcapacity did not ease, but became more and more serious. The money for the construction of the steel plant was borrowed by the bank.

This brings us to the second serious risk.

The second major risk, the debt crisis, a large number of local debts to mature, although there are ** credit in the endorsement, but ** can not all have access to the money printing machine, so most of the places ** is also very worried, no borrowing money can not be engaged in construction, no construction will not be performed, no performance will not be promoted, so who cares whether the people need it or not, anyway, you have to repair something, there is really nothing to repair, but also to lift up the underground green bricks, buy new ones and re-pave them. ** The money is also borrowed, and things like paving green bricks do not produce economic benefits, so usually the higher the GDP, the higher the debt. The more money you owe.

If you want to repay the money, it seems impossible, but the bank said, although I can not urge you for the principal, you have to give some interest, or my brother will really not be able to do it. This brings us to the third risk, the financial system risk of banks.

There is no major risk, the opening of the Internet is the opening of the system, and the problem of serious polarization will not be the first policy and regulation problem, but the initial stage of Internet innovation and insufficiency, what the country needs is to sweep away the evil and prevent the destruction of laws and regulations, such as the black umbrella, the declaration of non-public property, the labor law provisions, the protection of human rights and freedom, the protection of human rights and treatment, and the equal right of everyone to speak.

Under the new normal, China's economy faces at least four risks:

The first is the risk in the investment field. In recent years, China's economic growth rate has declined, mainly caused by the decline in investment growth rate, and now the investment income and rate of return are declining, how to improve the efficiency, effectiveness and return of investment, especially how to let social capital flow into the infrastructure sector, and have a stable cash flow, which involves a series of open reforms in the investment field, and this is a big challenge.

The second is the risk of urbanization. Urbanization is pinned on great hopes, the future of China's economic growth in 20 years depends on urbanization, but now urbanization is at a crossroads, although the current urbanization pays more attention to the urbanization of people, but many farmers are unwilling to be citizenized, on the contrary, many urban people want to become farmers, where to go next urbanization will be a problem.

The third is the risk of the real estate market. The real estate industry has been the best for more than ten years, but now there are problems in the real estate market, and the fundamental reason is that the relationship between supply and demand has reversed. After a lot of the fog over real estate has lifted, the situation in the real estate market has changed, and the real estate market has to adjust to the challenges.

Fourth, macroeconomic policy adjustment. Under the new normal, the policy required by China should be expansionary, and the future fiscal policy and monetary policy should be greatly adjusted.

The moderate range of economic growth is grasped, indicating that China's economy has shifted from a high-speed to a medium-high growth stage. The implications are: First, from a global perspective, the economic growth rate is still relatively high among the world's major economies.

Second, from a domestic point of view, compared with the 8%-12% range of the real economic growth trend curve in the past 30 years, the lower limit has dropped from 8% to a decrease of 1 percentage point, and the upper limit has dropped from 12% to 9%, a decrease of 3 percentage points. The interval can be called the medium-to-high-speed growth range. This shows that we have taken the initiative to reduce the rate of economic growth somewhat, so that economic development will pay more attention to changing the mode and adjusting the structure, pay more attention to improving quality and efficiency, pay more attention to resource conservation and environmental protection, and pay more attention to ensuring and improving the people's livelihood.

Third, China's economic growth has just come down from the highway that has often rushed to more than 10% in the past 30 years, and all aspects of society (enterprises, individual residents, etc.) must have a process of adaptation. If the economic growth rate falls by a large margin too quickly and too rapidly, it will not be conducive to changing the mode and adjusting the structure, and it will not be conducive to stabilizing market expectations. It is advantageous for economic growth to shift from a high-speed to a medium-high speed first, and then gradually decline in stages.

Fourth, China is a vast territory, a large population of the country, industrialization, informatization, urbanization, agricultural modernization is developing in depth, the domestic market and demand for maneuver is very large, coupled with the continuous deepening and promotion of reform and opening up, fully release the reform dividend, to a greater extent and wider play the basic role of the market in the allocation of resources, better transformation of the first function, we have the conditions to achieve high-speed economic growth.

According to reports, a spokesman for the Ministry of Finance recently said that as of the end of June this year, the balance of local ** debt was 15 86 trillion yuan, and within the local ** debt limit of 18 82 trillion yuan this year, the ** debt risk is generally controllable. According to the report, as of the end of 2016, China's local ** debt balance was 15 32 trillion yuan, and the debt ratio was 80 5, which was lower than the international standard of vigilance; The balance of **and local ** debt is 27 33 trillion yuan, and the preliminary accounting debt ratio is 36 7, which is lower than the warning line of 60 in the European Union, and also lower than the level of major market economy countries and emerging market countries, and China's ** debt risk is generally controllable. The next step will be to encourage local governments to pilot the development of special bonds that balance project income and financing within the statutory limit, and establish a system for special bonds to correspond to project income and assets.

Proceeding from China's actual situation, we will create a Chinese version of municipal project bonds to ensure the reasonable financing needs of local governments. Experts said that at present, a "closed-loop" system of local debt management and supervision has been formed, and certain results have been achieved in controlling local debt risks, so there is no need to worry about debt risks.

1 All 1The risk of a slowdown in the world economy.

2.The risk of contagion of the sovereign debt crisis in Europe and the United States.

3.Risks of increasing global inflationary pressures.

4.The risk of further intensification of protectionism.

References: (1) Opportunities for China. The relaxation of the world situation has provided favorable external conditions for China to concentrate its energies on economic construction. Second, under the situation of multipolarization in the world pattern, China's international status and role have been enhanced.

2) Challenges facing China: First, under the trend of regional grouping in the world economy, the economic protectionist barriers of regions or groups make China's foreign economy face fierce competition.

Second, it is facing the challenge of a new scientific and technological revolution. After the collapse of the world's bipolar pattern, the role of the arms race has been relatively reduced, and the competition in comprehensive national strength has been put in the first place. All countries are adjusting their national strategies to make the development of science and technology the focus of their national development strategies.

All countries regard scientific and technological development as a key factor in their comprehensive national strength. How to choose an economic and scientific and technological system that suits China's national conditions, adapt it to the needs of the development of productive forces, and meet and overcome the challenges of the new scientific and technological revolution is a new topic for China in the present era.

Third, we are facing the challenge of global integration of the world economy. As history enters the 21st century, the trend of global integration of the world economy is becoming increasingly obvious. Acting in accordance with international economic practices and actively participating in international economic competition and cooperation are objective requirements for the development of the world economy.

With the further development of the global integration of the world economy, it is difficult for any country to maintain a closed economic model, so China's only choice is to adapt to this trend and strive for the initiative in economic development.

Fourth, it is facing the test that the international socialist movement is at a low ebb. After the disintegration of the bipolar pattern, the United States has become the sole superpower, and it has reduced the containment of the former Soviet Union in the pursuit of power politics, and the pressure on China and other socialist countries and some developing countries will also increase correspondingly.

3) In the face of the above challenges, only by adhering to the theory of building socialism with Chinese characteristics, by adhering to an independent foreign policy, and by relying on scientific and technological progress can we actively participate in international competition, enhance our comprehensive national strength, meet various challenges, and realize China's socialist modernization as soon as possible.