What is the US national debt? As you may have heard, it's as high as $33 trillion, a figure that's too big for us to imagine. The United States has the advantage that its currency is the dollar, which is used all over the world, so it is not afraid to borrow money. However, if we compare the US national debt with its gross economic product (GDP), we can see that the US national debt has exceeded 100% of its GDP and continues to grow.
So, how much is China's national debt? The Bank for International Settlements, which counts the public debt of countries, that is, borrowings from official and public institutions. According to its data, China's public debt has reached 984 trillion yuan (13$5 trillion), while China's GDP is about $18 trillion, which means that China's debt-to-GDP ratio is 75%. That's lower than the 129 percent in the United States and 264 percent in Japan, but it's not a small number.
Why do I mention Japan, you may ask?
Because a major event has happened recently, that is, the yuan has surpassed the yen to become the third largest settlement currency in the world, after the dollar and the euro. This shows that the renminbi's international influence is getting stronger, and it also means that China's debt problem is not only related to itself, but also to many other countries and regions.
Japan was once synonymous with an economic miracle, and from the post-World War II period to the early 90s, its economic growth rate amazed the world, and even threatened the hegemony of the United States for a time. What is the secret of Japan's rise?
It is to use its own industrial advantages to produce a variety of popular consumer goods, such as TVs, cars, cameras, etc., and occupy the global market;
By speculating on real estate, a bubble was created in which the value of land exceeded that of the world;
Through massive borrowing, the vitality and demand of the economy were stimulated.
However, it was all short-lived, and Japan's economy soon fell into decades of stagnation and recession.
From this, we can find that low-price competition and speculation alone cannot be sustainable, and will only lead to the waste of resources and the outbreak of crises.
China is now facing a similar problem, we have become the world's largest manufacturer of consumer goods, but our real estate market is also full of bubbles that could trigger a financial crisis at any time. To avoid repeating Japan's mistakes, China must change its development model, improve its innovation capabilities, optimize its industrial structure, and achieve high-quality growth.
Now the Internet is full of talk that China's economy is going to recession. Saying that ours is very big with the housing market has made many people worry and panic. Not only that, but many of our companies are also heavily indebted, even more than in Japan.
You know, Japan used to be the world's second largest economy, but its debt problems led to decades-long economic stagnation.
Housing prices in China are also starting to decline. Some people worry that China will repeat Japan's mistakes and plunge its economy into a prolonged depression.
Actually, there is no need to worry about this. Because the situation in China is very different from that in Japan. First, China's debt is mostly owed by state-owned enterprises and real estate developers. Most of their debts are lent by banks. This means that the state has the ability and the means to prevent them from failing and avoid triggering a financial crisis.
Second, China's economy has not stopped advancing. On the contrary, China's economy has maintained steady growth, creating many jobs and income. The living standards of the Chinese people are also improving, and they enjoy better education, health care and social security. Many companies in China are also innovating to improve their competitiveness and profitability.
Although, China's foreign trade has been hit hard. China's exports and imports are decreasing. However, we don't have to be too pessimistic, because we also have an incomparable advantage, and that is our own domestic market.
If you think about it, our population is 7 times that of Japan, which means that we have endless consumer demand and market space. Moreover, Europe is now in a difficult situation, because they do not want to buy cheap energy from Russia and as a result, they make their own costs high. This gives us a rare opportunity to gain the upper hand in the international market and win more shares in the Russian market.
Although our economy is under pressure, both the ** and the housing market are in crisis, and many companies are in high debt, even surpassing Japan. Our house prices are also starting to go downhill. There are fears that we will be in a prolonged depression, as Japan has done.
But we are very good at learning from the experiences and lessons of others, and we will not get bogged down in the quagmire of the 1990s, as Japan did. At the same time, the changes in the international situation and the confrontation between Russia and the West have also given us an opportunity to improve our own strength.
Moreover, our economy has not stood still. On the contrary, our economy is still growing, and the living standards of the people and the profits of businesses are rising. According to authoritative **, China's economic growth rate will reach 54%。This is a remarkable achievement for a country of 1.4 billion people.
So, there is no reason to lose confidence in the Chinese economy.
Kunpeng Project