2024-01-21 20:31:52
Finance is virtual and manufacturing is real?
The mainland has recently emphasized the need to pursue a financial development path with Chinese characteristics, demonstrating the country’s emphasis on the development of high-quality finance. This attitude is different from the previous far-left theory on the Internet – finance is fictitious, and manufacturing is real. This theory holds that it is not correct for the United States to abandon manufacturing and only focus on financial development. Because, once a war breaks out, without manufacturing, how can we have national strength? Is it possible to win the war with financial power?
This theory once had a market in the mainland, because it might highlight that China is stronger than the United States and satisfy the national vanity of some people. Now, national leaders personally come out to preside over financial work conferences to strengthen the party’s unified leadership over financial work. It can be seen that finance is by no means “a piece of cake”, but a task that requires concentrated efforts and serious promotion.
However, it is not easy to do a good job in finance. If you do not have a deep understanding of the role of finance in economic development and think that finance is not as important as manufacturing, it will be difficult to handle the relationship between the two well, and if not done properly, it will cause damage to the economy.
It is not without reason that capitalist society regards the financial industry as the industry with the highest value-added ability. As soon as modern industry started, it required capital. Only with money can we build factories, equip machines, buy raw materials, hire workers, and expand markets… If individuals rely on primitive accumulation methods to collect capital, the process will be very slow. The best thing is to use other people’s spare capital, that is, social funds and international funds.
Before the reform and opening up, the mainland denied the existence value of the market, and as a result, all industries were stagnant. After reform and opening up, China abandoned the rationing system and switched to using market mechanisms. Overall, the effect is very good. It’s just that we are still a little inexperienced in the financial market and have not mastered it very well.
Our stock market has insufficient trading volume and low construction costs. Investors cannot obtain reasonable returns and are naturally unwilling to support it. However, some people believe that the rise and fall of stock prices is just a numbers game and does not affect national strength because production will not stop due to stock prices. . As long as Chinese products have high cost performance, they will still be popular in the international market.
This statement oversimplifies the problem. The stock price is low, and the PE is naturally low, so it will be very difficult to raise funds in the market. Tesla’s PE is 80 times, but BYD’s is less than 20 times. As a result, if BYD uses equity for financing, the cost will be four times more expensive than Tesla, which is equivalent to being forced to sell assets at a low price. It can be seen that it is not unreasonable for the United States to attach importance to the financial industry.
Precisely because the United States can control global financial markets through interest rates and exchange rates, the United States can use global resources at a relatively low cost and take advantage of the world. If other countries issue a lot of debt, their monetary systems will be unstable. However, the United States has issued so much debt, but the U.S. dollar remains as strong as ever. China has an import and export surplus every year, but the RMB exchange rate cannot strengthen. Does this reflect that we still have room for improvement in financial regulation?
Whether financial issues are handled well or not affects the efficiency of capital use and risk response capabilities of the entire society. Countries with low financial regulation capabilities will certainly not be as good as countries with high financial regulation capabilities in terms of overall national strength. Financial powers have the ability to defeat others without a fight. In countries with weak financial capabilities, their manufacturing industries are also easily restricted.
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