08/08/2017
■ Market players have been widely expecting that the global markets are worsening and that there will be another wave of worldwide crisis. Anbound observed that this is mainly caused by Federal Reserve's rate hike, monetary policy adjustment by European Central Bank and debt problems in China. Central Banks around the world may need to move towards a coalition or coalition system for the purpose of resolving the contradictions between the global economy and the independent monetary policy.
■ The prospect of Sino-US trade relationship appears to be increasingly pessimistic. Anbound’s information tracking analysis shows that "trade war" is a frequently mentioned issue among the American public opinion, think tanks and governmental officials. It is said the Trump administration has considered several trade countermeasures; one is the request for tougher crackdown on China’s intellectual piracy, another is that China should loosen rules no longer require U.S. companies to share their advanced technology as a prerequisite to access China’s market.
■ Under the pressure of RMB fluctuation and capital outflow, China should increase its external debts, particularly in the form of sovereign bond, re-proposed Anbound Chief Researcher Mr. Chen Gong. The risk and cost for issuing bonds will mainly be reflected in bond rate. This measure would be helpful to counteract the impact of capital outflow from the Chinese market, further stabilizing the exchange rate of RMB. Also, the Central Bank of China should enable more flexibility in its monetary policy.
■ On problems faced by its financial system, China is more concerned about “gray rhino", referring to the large and visible problems that were ignored until they produced serious consequences or events. Nowadays in China, the potential risks that might be posed by "gray rhinos" include shadow banks, real-estate bubble, highly-leveraged SOEs (state-owned enterprises), local government debts, illegally-raised funds and deals alike. China should rethink adjusting the relationship between financial sector and the real economy dominated by manufacturing, and allocating capital resources to the real economy, as well the extent of the innovation and upgrade of its financial industry.
■ The development of “Characteristic Towns” in China inclines towards quick success, as local governments are often anxious to achieve their goals. Anbound’s Chen Gong warned of potential risks in this regard, including the town’s economy and the industrial life cycle, investment and operational risk in the town’s industries, small towns without unique characteristics turning into property development, the issue of balancing the contradictions between urban cities and rural areas, effects of aging population, counter-urbanization and town constructions, and finally, the issue of who will be liable for the development of Characteristic Towns.
■ As the world enters the era of mass consumption, there is a phenomenon of low inflation. In transitional societies, the content and the form of consumption have changed as well. The consumption of material goods has decreased, while service consumption increases, and there is more spending in education, sports, culture, and tourism. Inflation, an indicator based on material consumer goods, will be lower. The cost of services will be rising, led by high labor cost. With the aging and urbanization process, China's service industry also demands improvement as an important part of the supply-side reform.
■ China's enterprises and society have gradually reached the stage of intergenerational transition, and social pressure is increasingly larger. The term "rebellious" is often used to describe China's younger generation, because of their differences from the older generation. Adjectives like this are superficial, says Anbound’s social study. “Rebellious” has the connotation of a certain kind of ideological spirit, rather than concerning itself with physical materials. Chinese youths enjoy the fruits of economic achievements, but seldom voice out their own opinions, with little creativity output. The young are only regarded as appendage in the era at high-speed growth; they are prone to take easy path and in fact, unwilling to disobey. In China's so-called intergenerational problem, there is little rebelliousness among the youths; instead they are the "obedient kids" of social development.
■ Large enterprises are moving out of Taiwan, foreshadowing the island’s bleak future. There are two main reasons for the business relocation in the United States; first, the unresolved issues of lack of water, electricity, workers; second, the confrontations between the Taiwan and the Mainland. Taiwan administration is ready to further restrict Taiwan's youths who are seeking employment in the Mainland. Several leading enterprises in Taiwan have relocated or plan to do so. Foxconn Group announced 10 billion US dollars to set up factories in the United States; Formosa Plastics Group plans to move to Louisiana where more than 90 billion US dollars have been invested in factories. E-United Group also looks to invest in steel mills in the United States, while TSMC worried about Taiwan's power supply and ever considered investing in U.S. as well.
