Although the U.S. Senate voted to pass a procedural motion appreciation of the renminbi, although some aspects of China’s financial and economic problems and risks do exist, but in the current international market, the global hedge fund short in the overall China is an indisputable fact. Whether it is the year of RMB non-deliverable forward exchange rate depreciation, or the recent U.S. stocks in China and Hong Kong H shares plummeted comprehensive, all-round means that the global hedge fund short in China and the Chinese economy.
It can be said, whether the recent financial market bust Wenzhou private or national housing prices started to decline, the cumulative risk of domestic financing platform and the domestic banks will face a huge risk, but these are insufficient to allow the yuan appreciation as the depreciation of the way suddenly reversed, is also inadequate for Hong Kong’s H shares tumble legs in the air. Because, from the current situation of Chinese entities and financial situation, the actual cause of systemic risk China faces a huge key is not the specific financial risks of these outbreaks, but current Chinese government is aware of the seriousness of the financial market risks. If the Chinese government to realize the seriousness of the current financial system risk is fully able to find these specific measures and methods of risk.
For example, China’s current economic and financial system, the biggest risk is not aware of a huge real estate bubble in China’s current level. Because the current situation, because in recent years, national governments, excessive concessions to the real estate credit policy and tax policy as a tool for the Chinese real estate bubble blowing rarely seen in history. The real estate bubble of the great, and then offer the real estate if the policy continues to blow down, then the real estate bubble burst is inevitable. In this case, if the real estate bubble burst, then the Chinese banking crisis, financial crisis, economic crisis and social crisis will naturally follow. Global hedge funds do not short China, China’s economy will face great danger and even there is a general recession.
However, no bubble in Chinese real estate market, added to the seriousness of the government which is to be aware of. From ten countries in 2010, the government has a serious real estate bubble out of a little reluctantly, always mistaken neither out of the real estate bubble real estate market but also to ensure the healthy development, but the seriousness of these documents for real estate understanding is clear, out of these tools is the real estate bubble are very clear. Such as how to make more use of economic levers that come out of the tax credit and the real estate bubble. Can say that if the basic purpose of determining the domestic real estate development, the government will be able to use the current economic leverage (real estate credit and tax policy) to gradually squeeze the real estate bubble, and let the Chinese economy gradually return to rational. Recent macro-control government officials stand on the property is basically out of the real estate bubble is a comprehensive, in order to gradually allow domestic real estate market, the road back to health. If so, despite the current financial market and the Chinese economy is facing many problems, but these problems can be solved.
The current global hedge short China, the latest problem is that the Chinese government’s macro-control on the domestic real estate hesitant, is that national governments can not adopt internationally accepted as an economic lever (real estate and real estate tax credit) to out the real estate bubble, but too much administrative intervention to the means and tools. Can be said that the government used administrative measures on the property up and the most frequent, if the domestic real estate is still one of the most major investment vehicle to make money, so investors do not find housing that the government macro-control to resolve the administrative means. For example, the current domestic real estate tax policy is the world’s most outrageous tax. Whether the transfer of part of the housing speculation still holding part of the housing tax policy, are those who protect the housing speculation. Such as housing and housing estate holding tax of zero, how can those who do not encourage housing speculation into the real estate market? Therefore, the Government of the pain out of the country determined the real estate bubble.
Face of the global hedge fund shorting China, the Chinese government must not be taken lightly or laissez-faire it is, but the close attention to the time to take the initiative. The way the government initiative, first to their own domestic economic problems to solve. And solve domestic economic problems, we must first take effective overall out of the current domestic economic leverage huge real estate bubble. For example the most simple way is like Hong Kong, Singapore and Taiwan, as comprehensively improve the housing trading turnover tax (Hong Kong housing within six months, one year, trade turnover tax within two years were 19.25%, 14.25%, 9.25%, why China does not adopt) and housing transaction tax, housing property tax levy to determine the timing and rate. To alter the current system of housing mortgage loans, such as the proportion of overall increase down payment mortgage loans and interest rate, shorten the mortgage term (such as mortgage loan shall not exceed 10 or 15 years). If the government can be removed through effective economic leverage effect of the housing market to make money, it will be out of the real estate market bubble. No housing speculation, how could the domestic real estate market and economic issues rather than how many healthy development?
Secondly, the cheap uggs should use the powerful force in the foreign exchange and stock markets a comprehensive attack, do not let the world’s hedge funds to China and Hong Kong H-currency set up their ATMs. We should clearly see that in the current international financial markets, more than ten trillion-dollar hedge funds all the time in the use of existing financial derivatives big benefit. Both the financial markets up or down they are capable, to reap huge profits. Such as the International Air China hedge funds do, they would have to put short China as an “ATM” to prepare multiple derivatives. Example, in 1998 in Hong Kong. If the Chinese Government has been in the domestic real estate policy based on the adjustment and improvement, such as the Hong Kong Government in 1998 as hedge funds for short to take the initiative in China, China is not difficult to beat them short.
Third, the Chinese Government and the Hong Kong Government and the neighboring Asian countries to work together to improve and amend existing laws and regulations of financial markets, weakening the impact of financial derivatives and influence on the market. The United States early in 2008 and European governments in the near future rules for the operation of financial derivatives and regulatory systems are adjusted, but Asian countries, particularly Hong Kong, nothing happened. Therefore, the rules of the Asian financial market system is a comprehensive reflection and modification time.
In short, the Chinese government should pay close attention to the recent international trend of China hedge funds do, and to adopt policies and measures. Do not let the Chinese market vulnerable to attack as their ATM, but to such as the Hong Kong Government in 1998 to take the initiative in order to protect China’s national interests, to protect China’s economic achievements.