In the past 30 years, Deng Xiaoping's reform and opening up policy of China toward success. However, the current economic situation in China, Xie said China's economy is facing unprecedented challenges. Including weak export demand, businesses and local government debt crisis and the cost of production there rose three major challenges. Also, due to the presence of these three challenges, China will face the largest adjustment since 1998,
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Fortunately, the Chinese government has sufficient strength to develop a number of financial incentives to protect the economic soft landing. As long as the Government to adopt reasonable policies, the economy within two years will be re-Hwan vitality. challenges of a weak export demand
China's total exports accounted for about 40% of GDP, since 2003, the export sector to GDP growth each year directly contributed 4 percentage points. Therefore, if export growth slowdown or even decline, overall economic growth will significantly slow down. Andy Xie believes that the current challenge of China's largest export demand is weak.
However, since 2004, commodity prices began to rise, Chinese exports will encounter difficulty rising costs, RMB appreciation and rising wages make the problem even more severe. Labor-intensive exports of goods already thin profits, cost pressures will push the loss of a large part of them the edge. But in the past three years, China's exports remain strong, because the early decline in profits, companies will adhere to the original production plan. However, when companies see the cost rise is a long-term problems, they will cut production.
most Chinese export companies are original equipment manufacturer (OEM), dependent on price competition to obtain orders. They can not reach the end user, not a technology. They are a subsidiary of multinational factories, very difficult to independent living. The Chinese export enterprises and multinational bargaining power is very poor, as rising costs, multinational force them to digest this part of the cost. This continues, it will destroy the Chinese export enterprises. Over the past two years, the Hong Kong-listed shares have lost export business by 50% -80%.
In addition, Europe, Japan and the U.S. economy contracted at the same time in 30 years, which caused great pressure on Chinese exports.
■ Strategies
from multinational companies in China export control
global trade is cyclical downturn in China could wait for the end of re-exports strong, but the wait time may be very long. However, China can implement reforms to speed up trade recovery.
Xie said China's export enterprises must be divorced from the control of multinational companies to open up an independent way of existence. On the demand side, as the market of resources from rich countries to OECD countries, transfer, export enterprises need to open up their own sales channels. Some companies, such as Huawei and China Communications Construction Group, has started to do. These efforts require a huge investment, but if can not sell the low cost and then also to no avail.
the supply side, China's export enterprises must upgrade their technology,
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belstaff jacket, the Chinese export enterprises rarely have the strength, and increase the strength of these areas take a long time. One shortcut is to buy technology from abroad, and brands. Strategy for the financial crisis provides a good opportunity. Europe, Japan and North America, most of the SMEs possess this quality, and are now very cheap. Foreign exchange reserves can be lent to the Chinese government export enterprises, so that they buy high-quality small and medium enterprises abroad.
Challenge \Many companies and local governments in the expansion of the bubble over, as asset prices fall, they are facing a solvency crisis.
Andy Xie said the Chinese enterprises, \Source of the problem may be lack of funding local government. Local government revenue is very dependent on land sales and real estate tax revenue, which encourages them to try every means to push up prices, which is a major cause of this bubble.
deeper reason is that over the past decade the proportion of local government revenue declined, to stimulate them to find new revenue sources,
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■ Measures to increase local government revenue share
fastest way to solve the problem is to increase the share of local government revenue. China's tax revenue has reached historically high levels, budget revenues may reach 6 trillion yuan, the government's treasury collection of one-third of the wealth of GDP, while the local government is relatively small revenue share.
reduce the government's importance in the economy, may solve the economic problems currently facing China. Prior to this, inter-sectoral reallocation of fiscal revenue may increase the solvency of local governments. The central government can transfer the surplus to local governments to solve the \In addition, the central government can issue bonds, and through intergovernmental transfers to solve the problem of local government debt. Fiscal redistribution and increase investment in infrastructure should be carried out simultaneously.
Conclusion China has entered a downward cycle of economic
above based on the Chinese economy status, said Andy Xie, China's economy will face the largest adjustment since 1998. Despite the weak financial incentives to ease demand,
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For Not long ago, the central bank cut the first time in 4 years \can not change the established downward trend. \
the same time, Andy Xie, the Chinese government is still full of hope, he believes that the strength of the Chinese government has sufficient financial incentives to develop a number of measures to protect the economic soft landing. China still has a lot of cards can be a, strong fiscal and trade surplus, a \As long as the Government to adopt reasonable policies, the economy within two years will be re-Hwan vitality.
response to weak export demand, debt crisis and the rising cost of production of the three major challenges, if incorrectly used to control the price of administrative measures aimed to address the rising asset prices and the CPI issue may soon be resolved, however, will then lead to a full-scale economic crisis.
Xie recommended that the demand for short-term stability of policies and in-depth reforms to improve efficiency together. China should be three-pronged approach: increasing share of local government revenue to meet their solvency crisis; speed up infrastructure construction, to cushion the economic slowdown; reform of the financial sector, improve economic efficiency. (Chang Yi)