Confidence In The European Debt Crisis Hits China's Economy High And Down.

The Chinese have been working hard. Before the reform and opening up, the Chinese people's enthusiasm for labour was high, but they had not been brought into full play.

Why did there not be such a good economic growth in the past? There is a big hole in this "high growth", which is a huge and global potential energy release.

So this is not entirely due to the efforts of the Chinese themselves, but by the Chinese effort to put it on the global stage.

We did not make such an appraisal in the past long time, and closed down, closed up, cold war, closed down and poor foundation led to long-term poverty.

Only now do we understand that openness is important to us.

How important.

A farmer is low income, a worker's income is low, in fact, is low cost.

Closing the door, but the cost is low. Once again, closing the door is just a competition between Chinese companies themselves.

After opening up, it has become a global evaluation. Chinese, Chinese products, Chinese workers, Chinese engineers, Chinese managers and Chinese enterprises are all evaluated on the global stage. This evaluation has released a huge potential energy.

We all say that we are facing a trend of high economic downtrend. How to understand this "high and low" and "high"? How big is China? A big country like China, with an economic growth of over 10%, has never seen such a miracle after World War II.

This is primarily due to Chinese efforts.

But it's not just that.

Why is this? After the cold war, there is another sea level in the world.

After the war, represented by the 7 most industrialized countries, they did not close their doors, invest and trade with each other.

Therefore, before China's entry into globalization, international trade is mainly between developed countries, and international investment is mainly developed among developed countries.

Then, after the post-war technological revolution and peaceful environment, these countries rose to a very high level.

It is all right for us to be independent and self reliant by closing the door. The wrong thing is to engage in class struggle.

When people did not do this, they went up, and their referential nature changed.

What are workers and blue collar? How much do they earn a year? We don't know.

We only know that our workers have RMB 50 yuan a month for many years.

Although workers and blue collar workers all over the world are the same in name, the world is like this. When we open the door, we find that the same blue collar workers are equally working, and some people earn so much.

We have seen many companies in developed countries. They are born in developed countries. After they finish reading, they go to work and buy cars. They produce a product that is the price, which contains workers' income and capital returns.

This is totally two sea level. What is the difference between the two sea levels caused by the cold war? With Chinese parameters, their per capita income is 100 times that of ours.

In 1980, we said that we should turn over two in 2000, reaching US $800 per capita. Before we turned it, it was US $200, 400 US dollars and two US $800.

How much is the United States at US $200 per capita? The US is US $13500 per capita, which is less than one hundred times, but don't forget the income distribution.

We are poor countries, and we need to accumulate knowledge. Therefore, the money we put into workers, farmers and intellectuals pocket is much less than that of American income distribution in personal pockets.

We need to squeeze money to tighten our belts and engage in national accumulation and two bombs.

Therefore, in terms of personal income, we should not say that farmers are 80 to 100 times worse for farmers than for manufacturing workers.

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The construction of White Swan Hotel in Guangzhou in 1979 was due to reform and opening up.

You can't invite the other side to stay in the hostel. You must have a standard hotel.

All the hardware and even the faucet in the hotel are imported. The chef is also invited from Hongkong.

A Hongkong chef comes to work with a salary equivalent to the sum of more than 100 Chinese employees.

Pay one hundred times the difference must pay, people do not come, we can only continue to be poor.

The world is such an order.

What role did Deng Xiaoping play in opening up? He made a channel between two sea levels. When the sea level was different, the potential energy could not be released, and the capital technology went to China in a rushing way to realize convection.

Why is capital coming in? This is the change in marginal productivity.

The same capital, combined with tens of thousands of dollars of annual salary in the United States, or to China, which is a high reward? This is a basic economic principle that foreign capital has gradually entered China.

Of course, in this process, the environment should be improved, the concept must be changed, the law should be amended, and the "capitalistic capitalism" should be removed.

At that time, we only wanted to have a little foreign capital, combined with our labor force, and a little technology to change our backwardness and make China develop faster.

No one had thought that China would have such a large output to export.

In 1980, China, a big exporter with an export volume of US $9 billion 900 million, mainly exports resource products, including oil developed in Daqing oilfield. At that time, there was no demand for oil in China, such as catching a lobster export, Chinese people could not bear to eat their own food, and they used foreign exchange to buy equipment.

This is the way China interacts with the international community.

Foreign capital, technology, business models, ideas and so on, and then with China's workers, intellectuals, entrepreneurs together, there will be so many things.

Shanghai Yangshan port is now the first big port. I visited it. When the old manager went to Rotterdam to study in 90s, he could hardly understand anything.

Seeing the developed port machinery abroad, he told me that he was thinking at that time when China's port of Shanghai could have one; now you go to Yangshan port to see that the one hundred or two hundred lines are in a line, the unit speed is the first, the total number is the first in the world, surpassing the port of Singapore.

What does it carry? "Made in China".

Why did China become a factory in the world? When I was attending the National People's Congress, I listened to one billion people and eight hundred million farmers every day. This is China's national conditions.

Turning agriculture into manufacturing and turning into hundreds of millions of industrial workers is the result of openness.

An open market, a ready market, an open, a large number of capital to come in; once open, we can learn something that was hard to learn in the past.

The most important one.

Its landmark event is: in 1999, China signed WTO for 5 years, and China formally became a member of the WTO in 2002.

Then, since 80s, all the achievements of reform and opening up have broken out.

We have changed from poor trading countries to the largest trade producing countries in the world. Before the crisis hit, our trade surplus reached the highest level of GDP11.7%.

The creation of an extroverted model was Japan, and Japan's highest surplus was GDP5%.

Therefore, high growth is one of the reasons for the efforts of the Chinese people, but this effort is put on the high level of growth brought about by global evaluation and high sea level evaluation.

What is the price of the same thing? What is the price of the American workers? This is actually our own calculation. In 20 or 30 years, our growth rate is very high, but we have not counted the accumulation of our fathers. Actually, our former generation has been poor for many years.

50 yuan, 60 yuan for many years, we have not counted.

Counting these together is not a miracle.

The cold war and the closed reform and opening up took place late and did not open until 1980. The opening up of the world's potential energy released after the war was the main reason for the high growth.

Why is it down again? First of all, it is highly dependent on the global market.

Can it be unaffected by global demand? We import and export GDP66% and 67% at many times, while large countries do not.

In this way, how can we not be affected once the US economy is in trouble? In 2006 and 2007, exports affected 20% and 30%. By 2008, the impact of the US financial crisis dropped 20%, 50 percentage points inside and outside the country.

As US imports shrink, our exports will shrink, and coastal areas, migrant workers, GDP, finance and stability will all have problems.

Another drag, 4 trillion plus 9 trillion credit will climb up.

But after all, our economy is mainly external, and the international economy has not improved at all.

Although the US government saved the market from the big crisis of 1929 and 1933, we thought it was still a "play" but it was actually a problem with European debt.

What's the problem? The government has a problem.

This is a great blow to global confidence.

The market is out of order and the government is rescuing. Then the government is out of trouble. Who can save it? It can only be boiled, but this is not going to happen.

Therefore, the impact of the European debt crisis on global investment and economic development is greater than that of the US financial crisis.

As a backward country, globalization can bring benefits to China, but it will also bear the brunt of globalization.

This is the first reason to pull the economy down.

Second reason: a large number of administrative means enter the economy.

Because of the rapid economic growth in recent years, we have to regulate and control.

The last government has been busy for 10 years. Basically, it is busy regulation: housing prices, land prices and so on.

Why? There is a macro environment.

The dollar came in, the surplus came in, and foreign investment came in.

The US dollar can not be spent in China, and who should it be exchanged with?

Commercial banks turn into dollars, and how do they do business in China?

In this process, our highly dependent export country has produced a policy goal - the stability of the RMB exchange rate against the US dollar.

RMB in China is the cost: hire workers, pay taxes, buy electricity, are exported products in Renminbi, the dollar starts, the renminbi rises to the dollar, the cost pressure of export enterprises is up.

In 2010, I had a chat with Ren Zhengfei at the Davos forum.

He said that for his company, much of its income came from the international market, and the renminbi was worth the dollar.

Because HUAWEI's equipment in the world's production base is still in China, the cost is RMB, and the product is dollar denominated.

If the yuan rises to the US dollar, then the Chinese government and the central bank will maintain the RMB exchange rate with the US dollar.

There is a price to maintain this stability. What is the price? Come in 1 dollars, you said that my exchange rate is stable, 7 yuan, right? Then 7 yuan will go out, you will become 6 yuan, go out is to rise.

But coming in is not a dollar, and tens of millions of dollars come in every day.

Therefore, a large amount of our basic currencies, which are exchanged with commercial banks, become national foreign exchange reserves.

The country's foreign exchange reserves are going up all the way, looking good.

When Zhu Rongji arrived in Beijing, China's foreign exchange reserves stood at only $18 billion. After that, the exchange rate was increased by $32 billion a year, which was 50 billion. Soon afterwards, it was 500 billion, 1 trillion, 2 trillion, 3 trillion and 4 trillion dollars in foreign exchange reserves.

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What mechanism is this mechanism? It is mainly sold to the central bank.

What does the central bank buy?

In this way, the basic currency has entered the market, and China has entered the era of not bad money.

Too little money is not enough. Too much is also a problem.

Money supply exceeds the growth of commodity capital services, and prices rise.

The heat, the heat and the rise, will be regulated.

No regulation of many Chinese people can not get through, because their wages have not risen and consumption has not increased.

Regulation and control in our pformation system is mainly based on law and economic means, but in fact it can not be achieved. We must use a lot of administrative means.

Administrative means, China is a very strong economy of the government.

You say good is good, you say problems, he is the problem.

One regulation, administrative departments together, a ministries issued documents do not work, the five ministries and commissions jointly issued.

If growth is too fast, problems will arise. We must control housing prices and control land prices.

Our administrative control is to enter the economy, which is highly lagging behind.

Why? Because

Stability must be strengthened and regulated. To the following departments and offices, these are all powers. They need all kinds of examination and approval. Do not belittle the examination and approval. This is addictive.

This is a price for the rapid growth of our country: a large number of administrative means enter the economy.

High speed growth does not matter, but can be found everywhere, brakes and magnets everywhere, killing entrepreneurs everywhere.

Because of the poverty of the past, they could not do business, but now they all live too hard, too much trouble to run enterprises, and the morale of entrepreneurs has come down, and the entrepreneurial spirit has been weakened.

This is the handle.

Second reasons for pulling down.

The third reason is that China is a creditor economy rather than an equity economy.

Especially like China's economy, now 30 years of reform and upgrading, we are mainly indirect financing and banking.

And the bank is a creditor's right, the creditor's main economy is going up and down will be magnified.

Why is that? Because debt is a lever.

When the economy is hot, everyone is optimistic about the future. The demand for loans is very high, because the prices are rising and the real interest rate is negative after the price is cut off.

Borrow money to buy a house, prices will exceed interest rates, many families understand this truth.

It is very economical to borrow money to buy assets and assets to go up quickly.

This leverage can be magnified at a good time, and when bad prices change, even if the nominal interest rate is constant, real interest rates will quickly turn right.

This is the fundamental reason for the difficulties of many enterprises and places.

Equity based economies do not have this problem, equity can not be refunded in this matter, good dividends, bad is to compensate together, this is the characteristics of equity based economy.

But we are mainly creditor's rights. When it's good, it will be better than good. But when it's bad, recently, many industries have increased their financial costs. Most of the so-called financial cost is debt repayment.

Why do many people jump off buildings, they just can't figure out how they can borrow so much money.

They forget that borrowing money at a good time is very cost-effective, but when the market turns over, they find that they have borrowed a lot of money.

Because interest rates were negative, and now interest rates have been positive, many industries and businesses have been hard pressed.

What I am talking about is these three forces that pull the Chinese economy down.