Currently, China's macro-economy is facing unprecedented challenges. The pandemic has consumed a large amount of social wealth in the past three years, causing unstable income expectations and weak domestic consumption demand. The driving effects of traditional investment, consumption, and export on economic growth have shown insufficient power, and the cumulative risk factors of economic fundamentals have increased.
While the real economy is facing difficulties, the financial market risk cannot be ignored either. The real estate and the exchange rate risk are the biggest hidden dangers to China's current economic security. As the Federal Reserve continues to raise interest rates, the yield rates of US Treasuries, which represent risk-free assets, have reached a record high. Therefore, the demand for global capital to allocate US dollar assets has increased, the pressure of domestic capital flight has increased, and the RMB exchange rate has continued to depreciate. As a result, the assets denominated in RMB face the risk of significant shrinkage, and the domestic stock market and real estate market are lack of investment attraction. The rapid depreciation of the RMB increases risks in China's asset markets such as A-shares and real estate, further spreads to the real economy along the real estate industrial chain, and then affects the entire macro-economy.
In the short term, to address current macroeconomic risks, we should reverse the continuous decline of the real estate market and increase the RMB exchange rate to stabilize residents' expectations as soon as possible. In the long run, we must implement precise policies targeting key risks in economic operation, so as to ensure the national economy remains stable in the complex international competitive environment.
