(Countering New Crown Pneumonia) China's Economic War Epidemic: Interview with Morgan Stanley and Xing Ziqiang: Four factors make global financial markets worse
China News Agency, Beijing, March 13 (Xia Bin) From "Black Monday" to "Black Week" in the global financial markets, the stock markets of more than 10 countries have "melted out", and gold and crude oil have plummeted. Xing Ziqiang, chief economist of Morgan Stanley China, said in an exclusive interview with China News Agency on the 13th that the main cause of the recent "tsunami" in the financial market is the global spread of the new crown pneumonia epidemic and the risk of economic recession increasing sharply. Make it even worse.
Specifically, Xing Ziqiang pointed out that first of all, the “ultra-long standby” bull market in the US economy and financial markets has accumulated fragility and fatigue in the past decade, and the epidemic is more like “the last straw that overwhelmed camels”.
Secondly, the overseas epidemic is not decisive enough. Xing Ziqiang believes that some countries in Europe and the United States have not moved quickly to take effective isolation measures. Morgan Stanley predicts that if overseas countries do not adopt stricter containment policies and only rely on drugs and warmer weather to curb the epidemic, there will be greater uncertainty, and the epidemic may continue into the summer, or even the third quarter. As a result, "short pain becomes long pain" for the global economy.
Third, the stimulus space for national policies has narrowed. Xing Ziqiang said that in 2008, central banks in various countries could cut interest rates all the way down from high interest rates, and now their own interest rates are extremely low. They may be reduced to zero interest rates within a few weeks. There are not many bullets available, and they can only restart quantitative easing. The Federal Reserve may buy Treasuries and risky assets.
At the same time, fiscal space is also constrained. Because the United States coincides with the election year, it is difficult to see the two parties cooperate in launching a larger fiscal stimulus plan.
Fourth, there is a lack of global coordination. Xing Ziqiang bluntly said that before the outbreak, the world had undergone multiple rounds of "retreat" examinations by international organizations such as Britain's "Brexit", trade friction, and OPEC oil price war. strength.
"The economic 'anti-epidemic' should go in three steps, first, contain the virus, second, resume production, and third, stimulate demand, and answer the questions in the right order." Xing Ziqiang said that the epidemic must be controlled first, and then the stimulus policy can boost confidence. Otherwise, we will go over the first two questions and go straight to the last one. Even if it is zero interest rate plus fiscal stimulus consumption, the epidemic situation is not controlled, and the effect on the market and the economy is like a bull in the mountains.
How should China "appropriate remedies"? Xing Ziqiang said that it is necessary to use a combination of boxing, long and short, directional support, avoid excessive stimulation, and make two suggestions.
The first is to establish a "special deficit in the 2020 epidemic." Increase this year's fiscal deficit and issue special government bonds, some of which can be used for tax rebates and consumer coupons. This is a one-time deficit, not a long-term structural deficit, so it is not bound by a 3% deficit rate.
The second is to accelerate the reform of urbanization 2.0, focusing on the shortcomings exposed by the epidemic. In five key urban agglomerations, implement reforms to revitalize the health care system and increase public health investment, including tax exemption for the medical and medical equipment industries, and long-term pay increases for medical personnel. , Medical schools promote scholarships, key cities to build infectious disease centers, protective equipment reserves.
The epidemic brought a big test to the resilience of the global industry chain. Morgan Stanley survey results show that China and Asia's role in the global industry chain is difficult to replace.
Xing Ziqiang reminded that stress tests show that if the manufacturing production is disrupted for more than four to six weeks, the current highly integrated supply chain in Asia will have a dislocation risk, and its spillover effects will have a large impact on global business operations and the economy. However, the current global industry chain has been “stretched very tightly”. Once China's resumption of labor is slow or the epidemic situation in neighboring countries is not controlled in time, it will in turn affect China's resumption of labor. The global economy and markets may face a second round of shocks The risks cannot be ignored. (Finish)