China’s experience, especially since 2008, shows that the challenges after take-off can be even more serious and the problems before take-off even more complex.
We’ve gone from 2008 — the CONTAGION of the U.S. financial crisis, of course, but you can also ask why 1987 was such a big financial crisis in the U.S. that the Dow could fall to 500 in a day — a shock that most Chinese people didn’t feel?
That’s because China is opening up and entering international markets — China’s rapid growth is tied to opening up, but on the other hand, all the external fluctuations will impact the Chinese economy.
So, the shock of 2008, we were $4 trillion in 2009 — that was the response to the shock.4 trillion itself will bring consequences and a large amount of excess capacity, which needs to be taken later.After 2008, we believed that the economic growth rate would be stable at a medium to high speed and would enter the “new normal”, which was very popular at that time.
Not normal, as it turned out, but a time of dramatic change.Since 2008, a lot of things have happened: 4 trillion had 4 trillion consequences, financial markets, stock market crashes, different sectors…
Then we see that although our economic aggregate is very large, its distribution is extremely uneven and the problem of unsustainable development is still hanging over our heads.
What is the difficulty?
The difficulty is: the economy has been flying, and high speed will bring high expectations of all participants.
At this time, if the speed changes again and the economy changes again, the impact on the psychology and behavior of the whole economic subject will be more serious than before the flight.
We did not maintain the new normal. Then we thought that a lower growth rate of 5-6% could be stabilized.Then the trade war between China and the United States, then the unprecedented COVID-19 outbreak.
These are all contingent factors, of course, but taken together they are intrinsically linked to an increasingly open and highly liquid economic fundamentals.Therefore, we should focus on the discussion: after take-off, how the economy continues to stabilize.