Interpretation Of China'S Risk Distance From Systemic Crisis

Over the past few years, the most widely used statement in Chinese government officials is that the risks of China's financial crisis are controllable, or that the financial risks in China are within the controllable limits. Therefore, there is no need for China to worry about the occurrence of systemic risk at all, nor do we need to worry about the risk of regional crises.

In particular, many government officials are proud that because China's financial risks are controllable, China has not experienced such financial crises as developed countries such as the United States over the past few years.

However, the most common sense is that in the pitional period of planned economy or from planned economy to market economy, there is neither monetary policy nor excessive credit expansion, and the overall tightening of credit and the financial crisis.

For example, the Chinese economy before 2003.

But since 2003, especially after 2009, China's economy has undergone tremendous changes. The whole economy is the result of excessive credit expansion.

For example, the credit expansion in the 5 years of 2009-2013 years is still more than the sum of the previous 60 years. How can China's financial crisis happen at any time? Is it possible for the outbreak of systemic risk in China's financial market to be controllable?

It can be said that in 2015, China's stock market's skyrocketing and plummeting, the reversal of the RMB exchange rate rise, China's Internet running repeatedly, some cities real estate bubble burst, China's

Already four.

Especially since this year, the RMB exchange rate has dropped sharply and fell to its lowest level in 5 years, especially the offshore RMB exchange rate has been falling sharply, thus triggering a hype tide of shorting the RMB exchange rate.

China's stock market's four degree fuse has long caused the market to be extremely panic, and the stock index can only be lower and lower.

China now faces financial risks not only in the stock market, but also in the extreme panic of the stock market. Other assets or financial markets are also facing considerable risks and extreme panic.

Such as the RMB exchange rate, the real estate bubble, the Internet financial P2P market, we can say that we see the current chaos in China's financial market, China's systemic crisis risk has been hidden, and any financial policy mistakes in the financial market may become the trigger for the risk of this financial crisis.

But I don't know when to pass.

Since, after October 2007, despite the collapse of the Chinese stock market in 2008, especially in the 6-7 months of 2015, the Chinese stock market has experienced an avalanche slump, but in the past, every time it happened, it would be considered that the adjustment of the Chinese stock market at that time did not need to worry that the Chinese stock market would lead to a bigger financial crisis.

However, after the "new exchange reform" in August 11, 2015, the three markets of foreign exchange, stock market and property market also fell at the same time, and at the same time, the risk of China's financial market could not be ignored or worrisome.

Especially since this year.

Trading days are few, but its downward trend is very fierce, especially in the offshore RMB market. It is also a surge of hype about shorting the RMB exchange rate. The Central Bank of China has warned and counterattacked the hype of shorting the RMB exchange rate.

But the Chinese central bank can control the RMB in the offshore market, and the offshore market may be unable to catch up. Investors who are short of the RMB exchange rate in the international market are likely to make a comeback at any time.

If a large number of Renminbi fled, the most easily traded assets are stocks, and the selling wind in China's stock market may emerge.

At the same time, some people may also sell housing to avoid the risk of RMB devaluation.

If this happens, not only will the stock market plunge again, triggering the panic of the stock market, it will also quickly pmit the panic to the property market, triggering a panic selling trend in the Chinese property market, and it may also cause the property bubble to explode in such a situation for more than a decade.

If the risks of the RMB exchange rate, China's stock market, China's property market and Internet finance are to explode at the same time, the systemic risk and crisis of China's financial market will not be controllable, otherwise it will burst in a certain way.

Is the Chinese government and investors aware of this?

Before the Bank of China countered the shores of the offshore market, the offshore price of the RMB exchange rate was 1900 points from the bank price, almost equal to 3 percentage points.

The difference between FOB and FCB is so large that it means that the offshore market is not optimistic about the future trend of RMB.

It will drop sharply.

For example, some international financial institutions predict that the RMB exchange rate of offshore market this year will fall to 7.3 or even lower.

Although the Chinese government has been stressing that the renminbi has no basis for sustained depreciation, if the renminbi in offshore market drops sharply, domestic capital flight will become a trend.

It is estimated that there will be about one trillion dollars or more than 6 trillion yuan of funds waiting to be converted into other currencies.

When a lot of capital flows out of China, it is not only difficult for the monetary authorities to control them, but even control costs a lot.

Under such circumstances, the sharp decline in the RMB exchange rate is inevitable.