Zhang Jingwei: Is The Global Economic Crisis Coming Back?

Recently, the Geneva global economic report said that debt is blocking the main artery of the global economy and hidden dangers for the next crisis, which may break out from emerging markets. The report cites a data that the global debt to GDP ratio has increased from 176% in 2008 to 212% in 2013 since the financial crisis.

From the US financial crisis to the European sovereign debt crisis, borrowing can promote economic growth and lead to crises. This dialectics is vividly interpreted by the economic crisis. Today, emerging markets with debt saving will play the "destroyer" of the global economy?

Earlier this year, along with the US's quantitative easing policy, it triggered a wave of capital flight from emerging markets. This is a global anti intellectual phenomenon. The positive recovery of the United States and the western world should make emerging markets rejoice, but the abstract logic of "should be so" is shattered by reality. Globalization is not idealistic internationalism, especially the most sensitive international capital. Their trader will choose the most advantageous market for arbitrage. In the wake of the US economic recovery, international capital looks at the positive effects of the appreciation of the US dollar and chooses to flee emerging markets. In the long run, the economic prosperity of the world's leading economies led by the United States will be the positive energy for the global economy to get out of the mire. But in the blur of crisis and recovery, the recovery of economies like the US and Europe will create a siphon effect from capital to confidence and hollow new markets.

Eight emerging market countries such as Argentina, Brazil, Chile, India, Indonesia, Russia, South Africa and Turkey do exist. In particular, the high proportion of net government debt to GDP has led observers to worry about their repeat of the European sovereign debt crisis and produce a chain reaction. However, the high bar rate in these countries is precisely the result of coping with the last global crisis. Without the existence of high leverage, these emerging markets will not survive the severe test of the last crisis cycle. It is worth mentioning that from the United States to Japan and even now to the euro area, maintaining high leverage to save the economy has become a universal remedy. It is only in the choice of levers and deleveraging that countries are different.

In these countries, the formation and fermentation of crisis elements are not only the choice of macroeconomic policies, but also the disturbance of man-made geopolitical factors. The US and European economic sanctions against Russia triggered by the Ukraine crisis hit not only Russia's economy but also European countries. Brought by the new India modi government reform The vision makes global capital full of confidence. Under the multidimensional and positive stimulation, the net government debt accumulated by GDP70% in the country is no longer a problem. In September 26th, S & P revised India's outlook from negative to stable.

China has become global economy One of the main engines is even the most difficult period when the structure is downregulated. Anxiety about China's economy is also an important argument for crisis theory. On the one hand, China's economic growth rate has broken 8 into 7; on the other hand, China's debt growth rate has been 14% in the past 6 years. The key is that China's structural adjustment is still on the road, and whether the Chinese model can achieve sustained and steady growth will seem to lack confidence in the international community.

But we must point out that Post Crisis Era The United States normalize its monetary policy, and China ushered in a new normal economic reform. The key is that in the international community's fear of the US European debt crisis today, China is making clear the transparency and standardization of local bond issuance through the budget law and the opinions on strengthening the management of local government debt. China's ability to leverage and leverage is stronger than that in Western and emerging markets.

Whether optimistic or pessimistic, the international community should understand this: the economic crisis in the US and Europe, the whole world is falling down; emerging markets are "sick", and the US and Europe will "take medicine". Global thinking is very important to any market. As long as China, the United States, Europe, Japan and other major markets resist pressure, the global economy will not sink again.