The outbreak of the global financial crisis in 2008 hit the economies of countries around the world. The US subprime mortgage crisis is the root cause of this financial turmoil. The subprime mortgage crisis stemmed from a credit bubble in the U.S. housing market that eventually led to the collapse of the financial system as a whole. Now, as China's real estate market cools, people are beginning to worry about whether something like the subprime mortgage crisis in the United States will happen again.
So, let's explore: is it possible that the "subprime mortgage crisis" will set a precedent and cause the Chinese real estate market to "plummet"?
First of all, we need to be clear about the fact that China and the United States are living in huge differences in terms of the background, economic model, and political system. Therefore, from the perspective of historical theory alone, "history will not completely repeat itself".
However, in the current situation, I think there are still several potential risks:
1. China currently has a problem of high housing prices
In recent years, under the influence of a variety of factors, especially the slowdown in the growth rate of urban residents' income, the current property market prices in China are generally high. If this problem is not solved in time, it can easily cause investors to lose confidence, sell assets, and cause further declines in property prices.
2. Inertia thinking and risk accumulation in the banking industry
Since the banking industry has a strong dependence on housing mortgages and developer loans, and relevant data show that the bad debt rate of the banking industry in some provinces or cities has increased significantly, if there are project default events in a wide range in some areas, it will drive more enterprises to fail or even cause a chain reaction.
3. The progress of market-oriented reforms is slow
Although supply-side structural reform has been promoted since 2014, efforts need to be strengthened to improve the business environment and break administrative monopolies, otherwise it will be difficult to truly promote the construction of new urbanization and the optimal allocation of social resources.
All three of these are foreseeable and ongoing problems, and if they are not effectively addressed, they will most likely lead to a situation similar to the 2008 US subprime mortgage crisis.
Of course, the following points should also be paid attention to in terms of risk prevention:
1. Promote more standardized and transparent operation processes;
2. Strengthen supervision and establish a long-term regulatory system;
3. Reduce excessive leverage;
4. Improve the level of public services to support the development of the residential rental market;
5. Promote scientific and technological innovation and accurately support innovation in small and micro enterprises to promote the healthy, stable and sustainable growth of the real economy.
In short, "although history cannot completely repeat itself", we still need to remember the "lessons of history". While ensuring reasonable profits, we must pay attention to truly meeting consumer needs and ensuring normal operation, safety and stability. Only through legal and compliant investment activities can we achieve long-term sustainable growth goals and make society a more balanced and tranquil society.
After all, no one wants to see their social environment be hyped and then collapse!