Abstract: Two questions related to Chinese economic issues, were asked by @ben zi's Indian friends. As a Chinese, I explained to them for a better clarification. However, there are still some controveries on these topics, hencewith, I could not garantee their correctness.
Warning: it was written on SEP/21/2015
Question:
①How do you see the current financial meltdown of china.what arethe reasons behind this crisis.some expert are questioning the Chinese dreamafter the crisis. I think china will recover from this crisis soon.
②I have seen the victory parade of people's republic of china onYoutube.I thought china has demonstrated that china is not only a economic superpower but also military superpower country.but neighboring countries has own security concerns specially Japan and Vietnam.what do you think in this regard.
Due to your focus on comparative study between India and China,hence,I suppose that you read the latest news reportage about China.As you know,almost all international reputed media's report China's economy in apessimistic outlook.
When it comes to me,I think that data released by Chinese government or other agencies have shown us that China is exactly undergoing pain of economy slow down.However,it is not much felt in China's labor market,it does not cause severe earthquake in labor market even if there are 7 million graduate students annually.
China's economy situation is vividly reflected in stock exchange market performance,Shanghai and Shenzhen stock exchanges.These days, due to sensitivity of stock market,central government has a great concern about it.
Therefore,supervisory governing body and central bank,national development and reform commission,etc,spare no effort to restore confidence of investors. Many journalists,public servants,even CEO of security firms are investigated with the allegation of spreading humor,inside trading and so on.
Still,many economic indicators could give us some insights about economy situation in China.Considering Chinese government always plays a big role in managing economy. From this point, actually, we just observe credit market,then we could exactly draw conclusion about China's economy development.
If you check the interest rate series of China,then you would find out that interest rate has been cut frequently recently to respond to the newest economic situation.At the same time,widely used money supply indicator--M2 also shows us that money supply actually has been in increase instead of beginning decrease like India.
These two indicators tell us that economy in China is in decline, in addition,Purchase Manager Index(PMI) has in below 50,this directly discloses that market activity is not strong enough,producer confidence has been negatively affected.
Above all, we should understand some other dimensions. Incumbent Chinese government emphasizes economy transformation from export-led and investment-driven growth model to innovation-based and consumption-guided model.
Naturally,once the government reduced investment scale compared with previous periods of time, and inactive property market,then our GDP would be lowered to a new level,we call them "New normal".
During these days,every day,we can get some news related to " internet plus","health care reform","one belt one road","made in China 2025",therefore,in my views,China's economy is not too serious as those foreign experts expected.
The main reason is that China's government actually has been investing in infrastructure,his role is too powerful to neglect its intervention strength.I attach a survey from IMF about China's economy outlook in 2015:
http://www.imf.org/external/pubs/ft/scr/2015/cr15234.pdf
As to stock market crisis during last several weeks in China even around the world,the reason should be ascribed to our government's wrongdoings.
Before the climax point,our stock market composite index had been climbing up without any obvious good reasons,it was heard about that Chinese government deliberately took action to show a good sign to the world and his people before 70 year anniversary ceremony of anti fascist aggression.
Frankly speaking,China's stock market is policy-oriented,it is seriously affected by government's guidance.Politics often tightly connects economy under context of China.
We have to admit that economy performance is not as good as before,hence,when I check DB's credit default probability series,we know that is going up in these days.
However,the good side is that the CDS in China is the lowest in BRICS group,it means that international society still holds confidence to China.
When we come to government 10 year bond yield rate,the evidence is supporting us that global investors do not have many concerns about China's economy situation,as you see in the graph,the yield rate is actually declining.
2.The second question is seemingly beyond my horizon,it is an international relation topic.
Of course,alleviating regional tense situation is also a part of the reasons,after all,he announced 3 lakh soldiers reduction.At the same time,hewarned other neighboring countries like Phil,Viet,Japan,even USA,that China has capability to protect his territory and his people.Many missiles are launchedto target USA's military bases in Japan and Guam island.
When territory issues come to me,I do not care about much. In history,China is quite a large country,but weak China could not protect the territory,so,Russia got the largest territory at the amount of 1.6 Million KM square,Mongolia got independence under the pressure of SUUR from republic of China.
Up to today,there are still many informed people blaming President *** to give up much territory to Russia and Central Asia countries. Now days,I think territory dispute is just an excuse to drive off USA's influence away from near pacific region.
International Relation and Politics are too complex,so,I am not able to analyze it in a rational way.
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