Chapter 004: China in Crisis

At nine o'clock in the evening, hundreds of reporters were still gathered in front of the Great Hall of the People, hoping to capture some valuable news.

At the beginning of 2013, in addition to the political change, China also had new challenges and crises in the political and economic fields. The huge real estate bubble and the continuous depreciation of the US dollar against the renminbi have made the Chinese economy at this time face a new inflection point, and the past may be a smooth road, but if the tǐng does not pass, the huge harm it has caused will even make the achievements of decades of reform and opening up fade.

This year's two sessions are the year of the big change, and the people's attention to politics is very high, but because the national economic situation is becoming more and more severe, so that when the two sessions are really held, it is still the "economic leader".

There is no such thing as a free lunch, and likewise, there is no excessive economic policy in the world that does not require a cost. The same is true for China, which rescued the world's most violent market after the international financial crisis in 2008.

In order to stab the economic growth, after 2009, the government issued a large amount of money and issued credit on a large scale. Including the off-balance sheet portion, the total amount of credit issued in the past three to four years may exceed 50 trillion yuan. A considerable part of them have entered the real estate industry, the construction of local financing platforms, railways and other large-scale projects. Non-performing loans (NPLs) that may arise from the massive new credit under the economic spur plan have already begun to hit China's banking system.

Huaxia's excessive economic stabbing behavior that began after the international financial crisis in 2008 seems to be about to pay the price for the "impulsiveness" at that time, but it is not yet possible to judge whether it will be enough to "punish".

Over the years, the real estate bubble has been severe due to the continuous rapid overdraft of housing prices. At the end of 11 years, under the continuous strict regulation and control of the government, the real estate market entered a downward cycle, and housing prices began to decline slowly. But as house prices began to fall and the housing bubble began to show signs of bursting, banking risks began to emerge.

Fearing that the decline in housing prices would lead to risks to the banking system, the CBRC has continuously conducted mortgage stress risk tests since May 10. At the beginning of April 11, the China Banking Regulatory Commission successively launched a new round of real estate stress tests in various banks, adding assumptions such as the decline in housing transaction area and the average decline in housing prices by 30%, 40% and 50%, and by the middle of 12 years, the CBRC even launched a stress test such as a decline in housing transaction area and an average decline of more than 60% in housing prices.

In the second half of 11 years, the chairman of the Huaxia Banking Regulatory Commission said for the first time in an interview with CCTV that according to the results of the stress test, even if the house price fell by 50%, the bank's non-performing loans could be afforded, and there was no such thing as the banking industry being held hostage by real estate developers. In 12 years, the signs of the bursting of the real estate bubble became more and more obvious, and even the China Banking Regulatory Commission had to start to soften its tone, saying that if housing prices fell by 60%, it would likely "cause some harm", but "it is still under control".

However, the suspicion of public opinion is even more serious: if housing prices really fall by 50% or more, will there really be no systemic risk of bank credit asset quality? What's more, financial risks come not only from real estate loans, but also from loans from local financing platforms and huge loans for major construction projects such as railways, as well as the current hot private financing.

If these loans continue to have problems, the impact on the banking industry will continue to accumulate and interrelated, and the risks can be imagined.

In recent years, the rapid expansion of highways, high-speed railways, and urban construction projects with land development as one of the main purposes involves huge amounts of money. However, it is difficult to guarantee the income of some projects, or the return on investment period is too long, and it is difficult to repay the principal and interest in a timely manner with the credit funds involved. Some loans are increasingly likely to be converted into bad debts of banks, forming a major risk in the banking system.

Two years ago, the news broke that the financing platform for the construction of the South Sichuan Expressway had defaulted on nearly 100 billion loans. At that time, due to the urgency of the capital chain, the registered capital was only 5 billion yuan, but the balance of loans from more than a dozen banks such as China Construction Bank, China Development Bank, and Industrial and Commercial Bank of China was nearly 100 billion yuan, and there were several billion yuan of financial leases, sent a letter to the creditor bank stating that "from now on, only interest will be paid and no principal will be repaid", which means that it cannot repay the principal and interest on time.

Last year, it was also reported that an urban investment company engaged in real estate and highway construction under the jurisdiction of Oriental Municipal Fǔ was unable to repay the bank's current loan, and asked the bank to extend the repayment period and convert the payment into a fixed loan secured by assets, which is a disguised debt default.

To this day, the debt risk of urban investment is still spreading. At that time, market public opinion believed that in the next two or three years, it was about to enter the peak period of loan repayment and default of local financing platforms. Now, this prediction has begun to come true, and the large amount of local debt arrears has put huge pressure on the banks, which has been shifted to the government due to the nature of the state. Since the reform and opening up, the Chinese economy has been triumphant, and the economic crisis has not been so huge, which has caused panic among the people to a certain extent, but because the reputation of the government in the economic field has been quite good for many years, the current crisis is still under control.

On the other hand, the rapid development of railways, especially high-speed rail construction, which has occupied huge bank loan resources in recent years, has also led to the risk that huge credit debts may be difficult to repay. The Ministry of Railways has trillions of dollars in debt and is facing an unprecedented crisis of double confidence.

Even Xiao Chen, who has not been involved in the banking industry and the railway industry, can feel the crisis: even if the Ministry of Railways can repay about 6 billion yuan of interest every year, how many years and months will it take to repay more than 1 trillion yuan? ! In particular, at the beginning of 2013, the principal and interest of the Ministry of Railways loans have reached 2 trillion yuan, and by the end of the "Twelfth Five-Year Plan", the loan principal and interest are likely to reach 4 trillion yuan. Therefore, even Xiao Chen is very worried about the risk of the Ministry of Railways' loan being difficult to repay, and at the last Politburo meeting, Xiao Chen raised this issue, saying that the bank should sound the alarm and ask them banking financial institutions to seriously handle the problem of railway system loans and highway construction loans.

Although Xiao Chen is the head of the Organization Department of the CPC Central Committee, because he is also a member of the Politburo and a member of the Secretariat of the CPC Central Committee, he has the right to speak on the party's major policy decisions, and he himself is an economic background, so it is because of this issue that the Central Committee of the Communist Party of China attaches great importance to it.

The U.S. debt crisis has also made China's economy worse. At the end of 2011, as the United States lost its AAA sovereign credit rating for the first time in history, triggering a chain reaction around the world, financial markets were violently shaken, the stock market fell, and the price of gold soared.

In response to this round of financial turmoil, there are many problems facing China, including the shrinkage of China's foreign exchange assets, the impact on export trade, and the rise of imported inflationary pressure. As a member of Huaxia's decision-making team, Xiao Chen believes that all of the above needs to be carefully considered and dealt with.

And tonight's Politburo meeting is to discuss the US debt crisis.

Zhongnanhai Tongren Hall, the luxurious light gold decoration makes the place where the Politburo meeting was held look particularly magnificent, but the members of the two Politburo members present are solemn.

Since the two sessions have not yet been completed, and although the party has been re-elected, the administrative positions have not yet been adjusted in place, so all the two bureau committees are present at today's meeting.

Of course, the meeting has been presided over by General Secretary Xue Yuanlan. President Gu Banglan, Chairman of the Standing Committee of the National People's Congress Xiao Zheng, and Premier Wen Chengxi of the Government Council sat around General Secretary Xue Yuanlan. The Central Committee of the Communist Party of China has always attached importance to seniority, and the general secretary has nothing to say when he sits on it, but these "junior" Standing Committee members and bureau members can only lean back.

"So far, our economy has continued the development model of the past, relying on investment-led growth, and with it a large amount of output, in the case of domestic consumption is difficult to absorb such a large output, objectively forming a high dependence on exports." Xue Yuanlan sighed and went directly to the topic, "The consensus we have reached at our last meeting is that under the current system, it is very difficult for us to change the mode of economic development, but no matter how difficult it is, we must change, and we should tolerate an appropriate slowdown in domestic economic growth to make room for some deep-seated problems in development." Today, we continue to discuss this and related issues. ”

Premier Wen Chengxi first said: "I have been the prime minister for ten years, and when I was about to retire, I felt guilty and deeply blamed myself for such problems in China's economy. He sighed and said: "But as the prime minister, if I don't step down for a day, I won't shirk my responsibilities for a day. In fact, it is not that we are unaware of U.S. bonds, but the situation at that time is different from the current situation...... Let me stress that I am not shirking my responsibilities by saying this. At that time, all comrades must have been well aware that such a huge amount of foreign exchange could not buy what we wanted, such as high and new technology. So what can it be used for? It can only be a debt investment. But looking at the whole world, except for U.S. bonds, other countries are willing to sell to us, we look at it, it is not reliable at all, then we can't buy it, but it looks good, people don't sell it, and in the last measure, we have to buy U.S. bonds. Comrades all know that at that time, the United States and us were already linked economically, and when he caught a cold, we had to sneeze with him, and at this time we wanted to completely separate ourselves from the American economy, as we all know, it was impossible, and we could only find a way to keep him from catching a cold, but this was a bit of a drink to quench his thirst, as if his health was good, and we were more anxious than themselves. ”

When the prime minister said this, he turned his head and looked at Xiao Chen: "Comrade Xiao Chen, I remember that when I went to Jiangdong to investigate the export-oriented economy, you told me this, saying that our economy is too dependent on exports, and there will be trouble in the future, right?" You told me at that time about your thoughts, and I have often pondered them in the past two years, and I think they are very reasonable. ”——

Alas, I'll just say that it's not easy to write now, this chapter...... It's a bit risky.

Brothers, this book is almost over, thank you for your support for "Huan Hai Longteng" and Wufeng for more than a year, although there are not many brothers who speak in the book review area, but from the average order of this book, there are still some brothers who silently support, thank you for tolerating some of Wufeng's willfulness in the writing process of the first officialdom. As I said last time, I will open another book of officialdom, change some bad máo diseases, reduce the policy, and strive to write the characters, especially the heroine and supporting characters, more fully, and write the plot more round. The good aspects will also be adhered to, such as continuous updates, such as high-speed updates, etc. If you have any other requirements, you can ask them in the book review area, but ...... cough, the book is almost finished, for the sake of Wufeng's sincere attitude, everyone give face, don't talk too impulsively. Thank you very much.