2024-02-01 20:30:47
Viewpoint C｜China must straighten out its financial market and make good use of private accumulation
As pointed out in yesterday’s article, the Chinese people have a strong sense of crisis. As soon as they realize that there is downward pressure on the economy, they try their best to save money to prevent hunger. They only care regarding saving and are unwilling to consume, let alone invest. This will prevent funds from returning to the real economy and damage the multiplier effect of positive economic interaction.
Originally, following people deposited their money in banks, banks might lend funds to enterprises for business in accordance with the country’s financial policies, they might also lend funds to the government for public welfare, and they might also lend money to ordinary people for consumption in advance. In this way, the money in the hands of ordinary people can return to the real economy.
However, in order to be responsible to their depositors, banks have a relatively conservative lending policy and may not be willing to lend to risky businesses. On the other hand, the government will also set a certain loan-to-deposit ratio to prevent banks from over-borrowing. Therefore, banks will not lend money to some start-up businesses, and they can only rely on individuals to invest, and the individuals themselves bear the investment risks.
However, ordinary people do not know how to do business and cannot judge which businesses are worth investing in. Professional third-party financial management came into being. As a result, many various trust investment funds have appeared in society, claiming to be able to seize investment opportunities in the market for ordinary people who do not understand investment. Some specialize in investing in start-ups, some specialize in hedging and arbitrage, and some specialize in value investing, you name it.
This type of trust investment fund companies once sprung up in China, and the types are no less than those overseas. There are not only those who specialize in commodity futures contracts, but also those who specialize in investing in distressed assets, those who sell long-term apartments, and even those who specialize in virtual currencies and P2P. It’s a pity that most of these investment funds failed midway and failed to achieve positive results, resulting in investors losing all their money. After investors find that they have been deceived repeatedly, they have no choice but to avoid it.
Although similar things happen from time to time in Western countries, the frequency of occurrence and the breadth of victims are not as serious as those in China. At least the funds invested in the investment market have not been interrupted.
The situation in China is relatively bad. People not only do not believe in third-party financial management, but they also do not believe in the stock market. As a result, the valuation of A-shares is obviously low, which greatly reduces the ability to raise funds through listing. Some companies even joke that listing in China is equivalent to selling assets at a discount.
It is precisely because the financial market does not function well that ordinary people have no choice but to invest their funds in the relatively real real estate market, which has caused the real estate market to explode due to overdevelopment. Nowadays, even investment in real estate has suffered heavy losses, and ordinary people have no choice but to deposit their money in banks to collect interest.
This is not a good phenomenon, and if it continues to develop, it will damage China’s ability to sustain economic growth. Therefore, China must straighten out its financial market and provide certain protection for people’s investments, so that people will be willing to make more investments. Without the support of ordinary people, the social functions of financial markets cannot be fulfilled.
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