Although intellectuals have already called for China to "de-financialize", just as the USA's deleveraging will take another three to four years to complete, China's re-emerging "bubble" will also last for some time. Moreover, compared to the stock price bubble around 6000 points, the bubble at around 3000 points cannot be considered a high-level bubble. Meanwhile, those who insist on holding cash have been rapidly marginalized since the beginning of this year.
In times when the real economy is not so prosperous but rags-to-riches stories are increasing, it is easy for oversubscribed varieties that can be easily "financialized" to be hyped, such as garlic in mainland China recently, which is playing out a story similar to tulip mania. We need to pay attention to when the USA will raise interest rates because once the USA raises interest rates, it indicates that the USA's economy has fully recovered, and it also means that China's monetary policy will become moderately tight, which is unfavorable for asset bubbles.
At the forum, relevant officials from China’s State Administration of Foreign Exchange and People’s Bank of China talked about China’s response to the financial crisis and progress in financial system reform. They analyzed the current status and prospects of Asian financial cooperation and expressed their views on how to strengthen East Asian regional partnerships and resist financial crises.
This forum was co-hosted by Japan's Sasakawa Peace Foundation and China International Fellowship of Friends. Many Chinese financial officials and experts from organizations such as the State-owned Assets Supervision and Administration Commission, Ministry of Finance, People's Bank of China, and State Administration of Taxation participated in the forum and engaged in in-depth exchanges with Japanese counterparts.
The Sino-Japanese Economic Forum themed "Sino-Japanese Partnership Towards a New International Financial Framework" was held in Tokyo on the 3rd day. Participants exchanged opinions on issues such as the state of the financial crisis, the prospects of Sino-Japanese partnership in dealing with the crisis, and the new international financial framework, promoting mutual understanding between both sides in terms of financial partnership and joint crisis response, and clarifying future directions for cooperation.
Mr. Li Zhaoxing, Chairman of the Foreign Affairs Committee of the Standing Committee of the National People's Congress, President of the China International Fellowship of Friends, and head of the Chinese delegation of this forum, said in his speech at the conference that the international financial crisis triggered by the USA subprime mortgage crisis continues to spread, posing severe challenges to countries worldwide. China and Japan are neighbors and important financial entities in the world. Both countries are also each other's most important trading partners. They should strengthen their partnership and jointly respond to the financial crisis, promoting the rapid recovery of their respective finances and global finance.
Finance is the general term for currency circulation, credit activities, and related financial activities. Simply put, it is the flow of funds, originally not complex. However, with the expansion of "continuing" transactions and "needs," various financial derivatives have emerged. The mutation of finance actually happened long ago and is not a new thing. For example, the tulip speculation that occurred in the Netherlands in the 17th century was a case where plants were given financial attributes. Another example is the USA subprime mortgage crisis in 2007, where the main culprits were CDOs and CDS-like derivatives.
Former Japanese central bank official and Director of Research at the Canon Institute for Global Studies, Seigou Kiyoyuki, stated that Japan has a lot of experience and lessons in financial system construction. He hopes that Japan can provide these beneficial experiences and strengthen cooperation with China. Some Japanese officials from financial departments and private think tank scholars also proposed views on the direction of progress of the international financial framework and the prospects for Sino-Japanese cooperation in relevant fields.
Strengthening financial cooperation between the economic sectors of China and Japan: In this situation where "stock price increases also become monetary phenomena," institutional investors indeed face difficulties in selection for long-term holdings, and investment risks have significantly increased since the beginning of the year due to excessively high prices. However, the risk of not converting your broad money into assets seems even greater because the housing price index has turned into a rich person's index, the stock price index has turned into a middle-class index, and only the CPI remains unchanged, undoubtedly serving as a poor person's index.
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