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A new round of financial crisis is looming, which is a severe test not only for China, but for the global economy.
At this critical juncture, we need to take a holistic look at the potential risks and challenges in the current economic structure.
Past financial crises have taught us that the stability of the financial system is the cornerstone of healthy economic development.
Now, we are facing a huge question: where are the trillions of assets going?
We must first understand that one of the main problems in the current financial markets is the excessive concentration and idling of funds.
Even in the banking system, the liquidity of funds has not been effectively translated into the growth engine of the real economy.
In fact, according to recent data, China's money supply (M2) has reached a staggering 300 trillion, which is more than six times that of the 2008 financial crisis.
However, this huge money supply has not been able to substantially drive economic growth, but has instead been idling within the financial system and has not been effectively flowing into the hands of industry and consumers.
The current economic landscape has changed significantly from 2008.
That year, after the outbreak of the global economic crisis, China launched a four-trillion economic stimulus package.
A large amount of money has been used for infrastructure construction and the real estate market, which has effectively led to a short-term economic recovery.
Now, more than a decade later, the same strategy no longer works.
The real estate market has turned from overheating to overcooling, and a large amount of money has been trapped in a thinly traded market, failing to bring the expected momentum to the economy.
Moreover, while monetary policy has been accommodative over the past decade, the demand for loans in the real economy has not grown commensurately.
This is mainly due to the fact that companies are cautious about the future economic situation and are reluctant to expand investment and production.
This behavior of enterprises, in turn, has exacerbated the phenomenon of bank funds idling.
Layoffs and production reductions have led to a decline in consumer demand, creating a vicious circle that further inhibits economic dynamism.
Globally, not only China, but many countries are facing similar challenges.
The economic sanctions imposed by the United States, the political instability in Europe, and the debt crisis in emerging market countries have all affected the stability of the global economy to varying degrees.
These external factors, combined with the problem of internal economic circulation, form a complex and delicate global economic network, in which any slight fluctuation can trigger a chain reaction.
In the face of such a situation, how to deal with the impending financial crisis has become an urgent problem to be solved.
We need to deeply analyze the current economic structure, identify potential risk points, and take effective measures to deal with them.
This requires not only the government's macroeconomic regulation and control, but also the active participation of enterprises and consumers to jointly promote the stable and healthy development of the economy.
One possible solution would be to adjust the financial regulatory framework to encourage banks to increase lending to small and medium-sized businesses.
By providing government guarantees for these loans, banks can reduce their potential risks, and at the same time, they can also consider setting up specialized financial products to help these businesses better cope with economic fluctuations.
In addition, increasing support for financial innovation, such as the promotion of new financial services such as supply chain finance and green finance, may inject new vitality into the real economy.
For consumers, increasing consumer confidence is a top priority.
The government can increase residents' disposable income through tax cuts and increased public spending, thereby stimulating consumption.
For example, simplifying the purchase process of bulk consumer goods and reducing taxes and fees related to home purchases, cars and other goods may directly contribute to consumption growth.
In addition, improving social welfare, strengthening education and medical security can also fundamentally enhance residents' confidence in the future and willingness to spend.
Investment is another driver of economic growth.
The current situation shows that many potential investment projects have been put on hold due to a lack of confidence and uncertainty about expectations.
Therefore, creating a more stable and predictable investment environment is key.
The government should boost the confidence of businesses and investors through policy continuity and stability.
In addition, promoting the development of high-tech and future industries, such as artificial intelligence, renewable energy, etc., can not only attract more investment, but also improve the technological level and competitiveness of the entire economy.
What do you have to say about this? Feel free to leave your thoughts in the comment section!