Reborn Industrial Tycoon

Chapter 438 Your crisis, my opportunity

When Li Weidong said the words "Asian Financial Crisis", everyone showed surprised expressions.

Situ Jian even said: "Xiao Li, you are a bit unreliable. Things like the financial crisis can't be waited for!"

Li Weidong guessed that there would be such a result, and he explained: "Teacher Situ, according to my judgment, within three to five years, there will definitely be a serious financial crisis in Asia. Southeast Asian countries are the first to be the most serious, and the economy is very likely to

Set back more than ten years."

"What's the basis?" Situ Jian asked immediately.

"I have said before that Japan's economy has serious structural problems. Among Asian countries, in addition to Japan, South Korea, Thailand, Malaysia, the Philippines, Indonesia, and Singapore also have structural problems in their economies.

Sexual issues.”

Li Weidong paused and then continued: "The source of all this is still Japan. Japan's large-scale investment in Southeast Asian countries has indeed brought economic growth to these countries, but it has also brought debt and economic bubbles to these countries.

."

"The Southeast Asian countries you mentioned are all richer than our country now!" the man with glasses said.

"Economic growth and GDP increase cannot cover up structural economic problems. For example, Thailand is a relatively wealthy country among Southeast Asian countries, right? But Thailand's short-term debt problem is very serious. As far as I know, Thailand's

The amount of short-term debt is already very serious and may have exceeded their foreign exchange reserves." Li Weidong said.

"Where did you get the data?" Huang Liwei's professor immediately asked.

"You don't need to look at the data, this is inevitable."

Li Weidong continued: "Let's start with Japan's investment in Thailand. In recent years, Japan has begun to invest in Thailand on a large scale. Initially, Japan invested in manufacturing, but Thailand's manufacturing capabilities cannot digest so much investment in a short time.

, so where did the excess hot money go?”

"Financial market." Huang Liwei replied without hesitation.

Li Weidong nodded: "Yes, it is the financial market. When hot money flows in in large quantities and the real market cannot digest it, what problems will it cause?"

"Inflation!" Professor Huang continued.

Li Weidong then asked: "If I don't want inflation, how should I regulate it at the financial level?"

"Raise interest rates!" Professor Huang said.

When banks raise interest rates, money will flow into banks, and there will be less hot money in the market, which will naturally weaken inflation. This is the most basic financial knowledge, and it is something that Professor Huang is too lazy to explain to his students.

Li Weidong immediately nodded: "Yes, Thailand uses this method to ensure that serious inflation will not occur in the country by maintaining a high interest rate. However, one thing to note is that Thailand implements a fixed exchange rate system!"

Upon hearing the words "fixed exchange rate system", Professor Huang's face changed slightly. He already realized the problem.

At that time, Thailand implemented a fixed exchange rate system. The exchange rate of the Thai baht was closely pegged to the US dollar. That is, the amount of Thai baht exchanged for one US dollar was fixed and would not fluctuate greatly.

At that time, the exchange rate between the U.S. dollar and the Thai baht was 25 baht per U.S. dollar. The Thai government used a lot of foreign exchange every year to maintain this exchange rate.

When the Thai baht exchange rate rose, those who held U.S. dollars found that converting the U.S. dollars into Thai baht and then depositing them in a Thai bank would earn more interest than directly depositing U.S. dollars. They could earn about 3% to 4%.

interest difference.

As a result, a large amount of overseas capital began to pour into Thailand and enter Thai banks to obtain higher interest rates. Naturally, the largest investor among them was Japan.

When these overseas hot money enters Thailand's financial system, in addition to spawning bubbles, it is not beneficial to the development of Thailand's real economy. At the same time, Thailand has to pay high interest on this hot money, so the hot money enters Thailand in the name of investment.

The financial markets have effectively become Thailand’s debt.

This is like taking a loan of one million from the bank, but locking the million at home without any investment or consumption. At the same time, you have to pay interest to the bank. This will definitely result in a loss!

The more overseas funds flow into Thailand, the more debt Thailand will have. The more debt there is, the less money it will have to repay it. At this time, the only way is to use debt to finance the debt, tear down the east wall to pay for the west wall, and use new debt to repay the old debt.

.

This is actually a bit like a Ponzi scheme, promising high returns to new members, asking them to invest money, and then sending the money to old members as a return on investment to keep the scam going.

By 1996, Thailand's foreign debt reached 112.6 billion U.S. dollars, of which 48 billion was short-term debt that was about to be repaid. At that time, Thailand's foreign exchange reserves were only 38 billion U.S. dollars. Thailand's foreign exchange reserves were obviously not enough to repay the debt.

At the same time, Japan began to fall into economic recession, investment from Japan decreased, and the lower yen exchange rate made Japan's exports more competitive, thus weakening Thailand's exports.

The so-called "Four Asian Tigers" at that time were all export-oriented economies. The decline in foreign investment, coupled with the decline in the competitiveness of their own exports, made the "Ponzi scheme" of Thailand's debt unsustainable.

In the end, Thailand decided to abandon the fixed exchange rate in order to reduce the pressure of debt.

However, international financial giants such as Soros have long seen the problems existing in Thailand's financial level. When Thailand gave up its fixed exchange rate, international hedge funds immediately launched an attack on the Thai baht, and the prelude to the Asian financial crisis began.

The situation of other "Asian tigers" is similar to that of Thailand. In order to attract foreign investment, they maintain fixed exchange rates while expanding financial freedom.

When a large amount of hot money flows in, in order to maintain the exchange rate, foreign exchange reserves can only be used to make up for it, leading to an increase in foreign debt and giving international speculators an opportunity.

Strictly speaking, the Asian financial crisis was not the reason why the "Four Asian Tigers" fell into recession.

The reason why the Four Asian Tigers declined was that their export-oriented economies had structural problems and were too dependent on foreign capital. The Asian financial crisis only induced these structural problems.

Huang Liwei is a professor at the Central University of Finance and Economics, and his knowledge is naturally very profound. When Li Weidong mentioned that Thailand has a fixed exchange rate, Huang Liwei already understood the debt problem that exists in Thailand.

In an instant, Huang Liwei's expression became serious, and Situ Jian and the man wearing glasses next to him saw Huang Liwei's look and immediately understood that Li Weidong must have been right!

Before the two of them had time to ask in detail, Huang Liwei was the first to ask: "Xiao Li, even if Thailand has a very serious debt problem as you said, it does not mean that a regional financial crisis will break out, or even an Asian financial crisis."

Crisis?

Moreover, Thailand’s economic departments are not fools. They can’t just watch Thailand have problems, right? Thailand’s ruling authorities will definitely introduce some measures.”

"Professor Huang, what method do you think should be used to solve Thailand's debt problem?" Li Weidong asked with a smile.

"We can start from two aspects. One is to restrict the circulation of capital, such as controlling foreign exchange exchange, so that hot money can be restricted at the source." Huang Liwei replied.

Li Weidong laughed and said: "Capital controls are almost impossible in capitalist countries. I can guarantee that if Thailand says it will restrict capital circulation today, those foreign investors will flee Thailand tomorrow."

"Then use the second method, starting from the exchange rate, and you can use some means to control the exchange rate to a certain extent." Huang Liwei continued.

In Li Weidong's mind, Huang Liwei is worthy of being China's financial expert, and his first move was to use capital controls and exchange rate manipulation, two common methods.

Then Li Weidong said: "If we start with the exchange rate, it will be equivalent to giving up the fixed exchange rate. Not only will foreign capital decrease, but Thailand's domestic capital will also flee, and the Thai baht will inevitably depreciate. This can indeed solve the problem of hot money inflows."

.

But there is another problem. How to deal with those international financial speculators who want to take a piece of the pie? Don't forget that Thailand's financial market is completely open, and those international hedge funds can enter at any time.

Thailand’s foreign exchange reserves are not large. Once Thailand runs out of bullets, what will be the consequences?”

Huang Liwei frowned and thought for a while, then replied: "If what you said comes true, then Thailand will become a meal for international financial giants, and the entire Thai economy will be finished!",

"You are right, and after the international financial giants eat the meal from Thailand, they will become stronger and accumulate more ammunition. At that time, they will launch attacks like other countries and regions around them, such as the Philippines and Malaysia.

, Indonesia, the economic structures of these countries are very similar to Thailand."

Li Weidong paused and then said: "These countries are enough to feed the international financial giants. Once these people are fed and drunk, the whole of Asia will probably suffer. Even South Korea and Japan,

It’s hard to escape! This will be an Asian financial crisis!”

Next to him, Situ Jian said: "Xiao Li, what you said sounds like you are acting in a movie, but if you think about it carefully, it is not impossible. The Asian financial crisis, the word even sounds scary.

!”

The man wearing glasses said, "According to what you said, foreign investment is not necessarily a good thing! As you said, Thailand has problems because of too much foreign investment. Our country

Should we also be careful about this?"

Li Weidong smiled slightly and replied: "Southeast Asian countries are all small countries. Their population, land and resources cannot support huge investments. It is no exaggeration to say that the entire Southeast Asia, even including Myanmar, Vietnam and Cambodia, cannot afford it.

Investment in Japan.

But our country is different. We are a big country. Our country’s population, land and resources can absorb foreign investment. Let alone Japan, even if the whole world comes to invest, we can absorb it!”

The man wearing glasses nodded, and then asked: "If the Asian financial crisis you mentioned really happened, what good would it do to our negotiations to enter the World Trade Organization?"

"Our country's financial market is not open to the outside world, so the financial crisis will not have an impact on us. When other markets in Asia are in severe recession, our Chinese market will become particularly important!"

Li Weidong continued: "Foreigners ask us to join the World Trade Organization, not to help China develop trade, but to gain access to China's market. China's joining the World Trade Organization will make it easier for their products and services to be sold to China.

Come.

Therefore, the more eager a country is to gain access to the Chinese market, the more urgent it is for China to join the World Trade Organization as soon as possible. If we want to speed up negotiations or find better conditions, we must ask other countries to join China.

The level of market desire.

If the other party feels that without the Chinese market, their economy will not be able to grow, will stagnate, or even collapse, then this country will beg us to negotiate, will be eager for us to join the WTO one day early, and will even help

Let's convince other member states.

To achieve this, we must first be strong ourselves and do a good job in our own economic construction. When our economy develops and the market becomes bigger, other countries will have to count on us for food, and they will have to look at our faces.

Things like joining the WTO will naturally happen naturally.

Secondly, it is to rely on external forces. The Asian financial crisis is an external factor. Take Japan as an example. Japan has huge investments in many Asian countries. If an Asian financial crisis occurs, Japan's economic losses will be the most serious.

By then, a healthy and growing Chinese market will be the life-saving straw for Japan's economy. Do you think Japan will still block our participation in the World Trade Organization?

The same principle can be applied to the United States and European countries. If other markets in Asia decline or even collapse, Americans will have to find a new market to make up for their losses, and the Chinese market will be their only one.

Since the Americans want us to have a choice, will our WTO accession negotiations with the United States become much easier?"

"That's it!" The man with glasses nodded in realization.

At this time, Situ Jian next to him finally introduced: "Xiao Li, this is Bu Feng. Our country's WTO negotiations were led by Bu Feng. Today's meeting was also convened by him."

Li Weidong secretly thought that the official surname of the Ministry of Foreign Trade and Economic Cooperation was not Feng, which meant that this Feng must be a deputy, but he could lead such an important task as WTO negotiations. Among the several deputies in the Ministry of Foreign Trade and Economic Cooperation, Feng should be one of the most important.

It is also ranked high.

Then Li Weidong quickly introduced himself: "Bu Feng, hello, my name is Li Weidong. I am the chairman of the Puppy Group."

"Chairman Li, you don't need to introduce yourself. I know you. I was there when you gave a lecture last time!" Feng Bu said.

"It's all just trivial tricks, showing off one's ugliness!" Li Weidong replied modestly.

But Feng Bu shook his head: "Chairman Li, your judgment about the Asian financial crisis just now really opened my eyes. Let's not talk about whether the Asian financial crisis will really happen. Just your train of thought.

It’s of great reference value. I don’t know if it’s inconvenient for you to write down what you just said, so that I can study it carefully.”

Situ Jian, who was next to him, also advised: "Xiao Li, the possibility of the Asian financial crisis you raised is indeed of great reference value. When you go back, prepare a detailed written report, and then let the comrades from the Ministry of Foreign Trade and Economic Cooperation

Streamline the content and submit it to the leader for review."

"It seems it's time for me, the prophet, to make a judgment again!" Li Weidong thought to himself.

He knew very well that every report, as long as it could be submitted to the leadership, would become his political capital. Of course, he could not refuse such a thing.

So Li Weidong nodded and replied: "When I go back, I will immediately compile a written report and give it to the two teachers and Director Feng for review!"

Today's update arrived. The last chapter was blocked. I couldn't find the reason. If this one is blocked again, it may be a plot problem, and then this plot will be useless. Please subscribe as soon as possible to read the last two chapters!

There is really no way to get over this kind of thing. I hope you parents will understand!