The Stock Market Crash Has Affected A Small Number Of People.

China's stock market plummeted in the first week of opening in 2016.

By 10:15 on January 13th, the Shanghai Composite Index fell below 3000 points, the lowest point since 2015.

After the RMB's 5% decline in 2015, the first 10 trading days in 2016 dropped sharply.

Although suddenly surged 1000 points in January 12th, the 13 day stabilized at 1 US dollars to 6.56 yuan, a drop of nearly 2000 basis points compared with the beginning of this year.

I flew from London to Shanghai in January 9th, and I grabbed a copy of "Financial Times". From the front page headlines to the various comments in the middle, nearly 10% of the dozens of large newspapers were talking about China's "two cities" problem, China's economic slowdown and its impact on the world economy.

One of the most unforgettable is the feeling of "sneezing in China and catching cold all over the world".

Starting in January 4, 2016 and January 8th, the value of global listed companies shrank by 2 trillion and 400 billion US dollars due to the collapse of China's "two cities", which is equivalent to the sum of GDP in India and Russia in 2014.

China is the engine of world economic growth. If China fails, the world economy will suffer.

On the one hand, it shows the importance of China. On the other hand, it shows that the globalization of the world economy has been closely linked to the fate of China.

Therefore, once China's economic growth has declined significantly, the eyes of the whole world will be pegged to China, and the global economy will also suffer a heavy blow.

It is no wonder that when China's "two cities" plummeted at the same time, various kinds of analysis, conjectures, even gloating and libel remarks by the outside world were everywhere.

Among them, Foreign Affairs, the most famous diplomatic magazine in the United States, has just published an article entitled "Daniel Lynch", entitled "The End of Chinas Rise still powerful powerful" (the end of China's rise: strong but weak).

The main point of this article is: "in the past 3 months, bad news has continued, and the stock market has plummeted continuously.

Corporate debts are mountains, foreign exchange reserves are low, and so on are only a few problems.

The aging of population and the lack of investment threaten the national economy to be threatened by deflation.

However, China will not be as unbearable as the former Soviet Union, but more like Japan in the 90s of last century, because of lack of investment, asset bubbles, deflation and aging of population, it could not continue to develop.

Therefore, China's development has come to an end.

This article makes a strong assumption that China's failure to continue to develop will lead to political and social instability.

Such an article that looks bad on China has a large market in the western world, and there is a certain market in China.

However, I want to say that there are three problems.

First, is China really as embarrassed as those pessimists, especially Daniel Lynch? Second, China's future development potential is incapable of objective judgement by the so-called "Chinese experts" who have a smattering of knowledge about China.

Third, many of these "Chinese experts" have a gloating attitude, and have seriously underestimated the Chinese government's ability to govern and the ability of the Chinese people to solve difficulties.

I spent 3 hours this morning accepting the interview with Zhang Qin, director of the Chongqing branch of Xinhua news agency and her colleagues, Deng Ting, editor in chief of Xinhua administration.

The last point of my speech is this.

First, I am "pessimistic" about the current difficulties in China, because without these difficulties that were not envisaged 5 years ago, China will surpass the United States by 2025.

Second, I am still optimistic about the future of China, because the current resistance to development may push China back for 5 years, that is, it will only surpass the United States by 2030 to become the world's largest economy.

That is to say, China is not able to catch up with the United States, but when it can catch up.

In the last 5 years or even 10 years later, China has become the world's largest economy. It is a necessity, not just a possibility.

I have made many analyses in the previous blog.

China's GDP grew by 7.4% in 2014 and 6.9% in the first three quarters of 2015.

Although the rate of decline is larger than expected, a drop of 0.5 percentage points is not the usual definition of a soft landing, or even a crisis.

Second, in the first three quarters of 2015, the global growth rate was less than 3%.

In addition to India's slightly higher growth rate than China, China's performance is the best in the world's 10 largest economies.

For example, the United States increased by 2%, 2.4% in the UK, 1.8% in the euro area and 1% in Japan, while Russia and Brazil were more than 4% of negative growth.

Faced with such cruelty outside

In the face of domestic structural imbalance and asset bubbles, it is not easy for China to maintain a growth rate of 6.9%.

So, since I am optimistic about China's future, how can we explain the "two cities' double down" problem?

First of all, China's stock market has problems from the beginning, but not today.

In 2007, it could rise to more than 6100 points, which was the result of speculation. Many listed companies lacked some moral blood and supervision results, which led to the subsequent bubble.

In June 2015, it could rise to more than 5200 points. It is also a problem that the listed companies have not yet solved. The abuse of foreign stock market operation by regulators, even the unbridled implementation of leverage and futures trading, and the rapid creation of the "new three edition" are also the root causes of the sharp rise and fall of the stock market.

The stock market has made people suffer losses, disrupting the normal operation of China's economy and damaging China's international image.

But the stock market is not the lifeblood of China's economy, at least not at present.

China's economic development can not be carried out without stock market.

HUAWEI is not listed, but HUAWEI's performance is better than most listed companies, which is a good example.

Of course, we still want to have a healthy stock market when we take the market economy.

However, as far as the current situation is concerned, the development of China's economy will not entirely depend on the stock market, and the bull and bear boom of the stock market will not lead to an overall recession in China's economy.

As for the RMB exchange rate, has the central bank already been entrapment of "external forces"? In 2005, the RMB exchange rate reform, let the RMB appreciate all the way, foreign exchange inflow, push up asset bubbles, and reduce China's exports.

。

After 2014, we adopted a regulated floating exchange rate for foreign exchange management, even raised the floating rate from one percentage point to two percentage points, and promoted the internationalization of RMB and SDR.

We must know that once the stock market and foreign exchange market are fully liberalized and the mechanism of blocking speculation and capital flight is not yet sound, China will directly give its own lifeblood to speculators both at home and abroad.

If there are foreign hostile forces in order to be short of China and then fast, then too free "two cities" may make China repeat the mistakes of Southeast Asian economic crisis in 1997.

China's strength lies in its political stability, strong national pride, unwilling to lag behind, and no fear of difficulties.

Is it hard enough before 1978? Is it difficult at the beginning of the reform? Now that we have the foundation of sustainable development, why are we still afraid of difficulties?

Exports and foreign investment are unreliable.

Don't be afraid.

The domestic market is huge, and the difference between regions and urban and rural areas is huge.

Pushing the economic development level of backward areas to the national average level will enable China to have a "high speed" development for a long time.

Of course, China's sustainable economic development still needs the correct decision-making of the government, the need for scientific development planning and layout, and the need for wise market control measures.

For the stock market, we must strengthen the company's long-term supervision, reduce the speculation of shareholders, and block any speculative financial leverage or tools.

Those remarks that said the rise of China has ended is ill founded and does not represent China's reality, nor can it hinder China's determination to cross the middle-income trap.

If China seeks development in adversity, it will surely take a firm foothold in difficulties and steadily develop steadily.

Because China's two hundred year development goals will not change because of short-term difficulties.

Before 1997, the economic development of Southeast Asian countries was very good, but they showed many flaws under the impetus of market liberalization.

Especially in Malaysia and Thailand, they do not have the foundation and tenacity of the "four little dragons", nor do they have enough foreign exchange reserves and block the effective mechanism of outflow of foreign capital. Therefore, under the double blow of their currency devaluation and the collapse of the stock market, the national economy has suffered fatal injuries, which has led to a lack of vitality in the subsequent recovery and development.

China's 2016 "two city" slump is a bit like the Asian crisis of 1997. However, the decline of China's "two cities" is far less than that of Thailand and Malaysia.

In addition, China has more than 3 billion dollars of foreign exchange reserves at the bottom, enough to withstand any malicious attack.

The stock market is mainly domestic pactions, the stock market plummeted, the impact is a small number of people, will not cause fatal harm to the Chinese economy.

My reason for optimism in China is the three words "Chinese".

What is "Chinese"? She is unwilling to lag behind on behalf of diligence, simplicity and studious learning.

These excellent cultural habits are fundamental to China's long-term development.