China’s Minsky Moment (Economists warn of risks faced by China)

China’s Minsky Moment, the term It has appeared frequently in the field of economics in recent years. The Minsky moment refers to a state of economic crisis, that is, when an economic boom extends too far, leading to rising debt levels and ultimately an economic collapse. This concept was first proposed by American economist Hyman Minsky, but now it has been widely used in economic analysis in countries around the world.

As the world's second largest economy, China has achieved impressive economic growth in recent years. However, some economists are beginning to warn that China is at risk of a Minsky moment. This article will explore the risks faced by China and provide some strategies to deal with them.

1. The fragility of China’s economy

The fragility of China’s economy is mainly reflected in the following aspects:

1. Excessive debt levels: Chinese enterprises and government debt levels have reached historic highs. Over-reliance on debt to drive economic growth has put the Chinese economy under pressure from debt defaults and financial risks.

2. Real estate bubble: China’s real estate market has long had the risk of bubbles. High housing prices and over-investment have made the real estate market a major vulnerability for the Chinese economy.

3. Financial system risks: There are hidden risks in China’s financial system, such as shadow banking, illegal fund-raising, etc. These risks may be exposed during an economic downturn and trigger a financial crisis.

2. Signs of China’s Minsky Moment

1. Slowing economic growth: In recent years, China’s economic growth has gradually slowed down, shifting from double-digit growth to mid-to-high growth. Single digit growth. This shows that China's economy has entered a new stage and the driving force for economic growth is no longer strong.

2. Overcapacity: China has always faced the problem of overcapacity, especially in some traditional industries such as steel and coal. Overcapacity leads to a decline in corporate profits, which in turn affects economic growth.

3. Intensified financial risks: As debt levels rise, China faces intensified financial risks. The increase in non-performing loans and the risk exposure of financial institutions may trigger the collapse of the financial system.

3. Strategies to deal with China’s Minsky moment

1. Promote structural reforms: China needs to accelerate the pace of structural reforms, reduce dependence on investment and exports, and promote economic development. changes in development models. Achieve sustainable economic growth by improving labor productivity and innovation capabilities.

2. Strengthen financial supervision: China needs to strengthen financial supervision and increase the prevention of financial risks. Establish a sound financial risk monitoring and assessment mechanism to detect and respond to financial risks in a timely manner.

3. Promote consumption upgrading: China should encourage consumption upgrading and improve residents’ consumption levels. By improving income distributionmechanism to increase residents’ income levels, stimulate consumption potential, and promote economic growth.

Conclusion:

The risks of China’s Minsky moment cannot be ignored, but they are not insurmountable. By promoting structural reforms, strengthening financial supervision and promoting consumption upgrades, China can effectively deal with the risks of the Minsky moment and achieve sustainable economic development. The Chinese government and relevant departments should pay close attention to changes in the economic situation and take timely measures to ensure economic stability and sustainable growth. Only in this way can China truly step out of the shadow of the Minsky moment and achieve long-term economic prosperity.