The financial crisis is showing signs of impacting China’s real economy

The global financial crisis caused by the U.S. subprime mortgage crisis has caused considerable damage to China’s real economy.
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The “China Economic Hotspot Analysis Report 2008 No. 18 – The Subprime Mortgage Crisis Enters a Climax, China’s Banking Industry Sounds the Alarm” jointly released by Bank United Information Network and Kaifu.com shows that a financial tsunami triggered by the U.S. subprime mortgage crisis It is sweeping the world, and the crisis reached its climax in early August 2007, forcing the European Central Bank, the Federal Reserve, and the central banks of Japan, Australia, Canada and other countries to inject funds multiple times to save the financial market. So far, the impact of the subprime mortgage crisis has not yet bottomed out. On the contrary, the negative impact caused by the subprime mortgage crisis has a tendency to further spread to the financial market and radiate to the real economy.
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Cong Yan, research director of UnionPay, said that during this financial crisis, the United States, Europe, and even the whole world were hit hard, the economy shrank, and consumer demand dropped significantly. China’s industries that are highly dependent on exports were the first to be affected.
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The future of toy companies is worrying. Wang Zhiguang, vice president of the Dongguan Toy Association, said on October 20 that Hejun Group, one of the world’s largest toy manufacturers, closed two of its factories in Dongguan last week. It is estimated that in another two years, more than 1,800 of the more than 3,800 toy companies in Dongguan City will close down one after another.
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It is difficult for steel production to exceed 500 million tons in 2008. Like the textile industry, the steel industry has also been greatly affected by the financial crisis. Zhong Jiayong, editor-in-chief of Kaifu.com, said that as of October 20, the average price of steel products nationwide has dropped by 20%. The situation faced by China’s steel industry in 2008 will be very severe. At the beginning of 2008, we originally expected that domestic steel production in 2008 would exceed 500 million tons. However, as the financial crisis spreads, global economic growth slows down significantly, and the situation is more serious than expected. many. At present, it seems that steel output in 2008 will be difficult to exceed 500 million tons.
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Textile and apparel exports are facing shrinkage. I believe that Hejun will not be alone. Fu Wenzhong, general manager of UnionPay, said that now the trend of bankruptcy has spread from small and medium-sized enterprises to large enterprises. Last week, Zhejiang Jianglong Holding Group Co., Ltd., the largest printing and dyeing enterprise in China, collapsed in an instant. The reason is also that the capital chain is broken. Jianglong Holdings owes 1.2 billion yuan in bank loans and at least 800 million yuan in private loans. Manufacturing companies must pull back and manage cash to save themselves.
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China’s textile industry is highly dependent on exports. The biggest problem facing China’s textile exports in the first half of 2008 was rising costs due to the depreciation of the U.S. dollar and rising labor costs. Profit margins were greatly compressed, and even losses were incurred. By the second half of 2008, insufficient foreign market demand has become the most difficult factor for China’s textile industry.
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Fu Wenzhong said that the European and American markets have always been important markets for China’s textile and apparel exports, supporting the export trade of many domestic textile companies. However, due to the impact of the financial crisis, the unemployment rate in the United States hit a four-year high of 5.7%, and the consumer confidence index dropped to 51.9, 1/2 of the same period in 2007. European countries such as Germany and the United Kingdom have also been deeply affected by the financial crisis, and have experienced economic contraction one after another. Naturally, consumer demand has also dropped significantly. What China’s textile and apparel exports are facing is not a shrinking of a single market, but a shrinking of the global market. For China’s textile industry This is undoubtedly a heavy blow.
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There are also foreign trade exports. Due to factors such as rising raw material costs, increased corporate management expenses, depression in the international market, and depreciation of the U.S. dollar, industries that are closely dependent on foreign trade exports have been hit hard.
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Foreign trade exports play an important role in China’s economy, and the United States is one of China’s largest sources of trade surplus. Therefore, the slowdown in the U.S. economy and the global credit crunch will tighten my country’s overall external environment. The steel and textile industries will bear the brunt and be severely affected. attack, but the impact definitely goes beyond that. Many other industries, especially those highly dependent on foreign trade, have been affected.
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The text finally stated that due to the existence of certain capital controls in our country, the direct impact of the subprime mortgage crisis on the stability and health of the Chinese economy through financial channels is relatively limited, and the short-term direct impact on the Chinese economy will not be too great overall. However, in today’s era of economic globalization, my country’s connections with the United States and the global economy are becoming increasingly close. Therefore, the indirect impact of the subprime mortgage crisis on the long-term development of our country’s economy cannot be underestimated. Now the impact of the financial crisis on our country’s real economy has been initially reflected.