What is the financial crisis in 2004 11.9 Financial crisis refers to all or most of the financial indicators (such as: short-term interest rates, monetary assets, securities, real estate, land (prices), number of business bankruptcies and the collapse of financial institutions in a country or several countries and regions

number) sharp, short-lived and super-cyclical deterioration.

It is characterized by people's expectations that the economy will be more pessimistic in the future. The currency value of the entire region has depreciated significantly, the total economic volume and economic scale have suffered greater losses, and economic growth has been hit.

It is often accompanied by the collapse of a large number of companies, increased unemployment, general economic depression in society, and sometimes even social unrest or turmoil at the national political level.

Financial crises can be divided into currency crises, debt crises, banking crises and other types.

Financial crises in recent years have increasingly taken on some form of hybrid crisis.

July 9, 2005 14:59 China Business News Author: Liu Junhong Source: China Business News On July 2, 1997, the Thai baht depreciated, and the Southeast Asian financial crisis broke out. The Southeast Asian economy fell from "miracle" to "crisis". As of this month

, exactly eight years ago.

The contagious characteristics of the Southeast Asian financial crisis tell people that in the context of globalization of economic activities, changes in the economies of neighboring countries and regions are not just a matter of concern to others, and the lessons of the Southeast Asian financial crisis are not past events that we can easily ignore.

Reflection: "Double dislocation" brought down the economies of many countries. It is generally believed that the financial crisis in Southeast Asia first manifested itself as a currency crisis.

That is to say, the plummeting currencies of Southeast Asian countries triggered a large-scale bank credit crisis, which further evolved into an overall economic crisis due to contagion and contagion effects.

As a premise, the depreciation of the yen against the U.S. dollar after the summer of 1995 led to a decline in the export competitiveness of Southeast Asian countries, resulting in a trade balance deficit and a sharp decline in the attractiveness of direct investment.

This situation continued until the eve of the crisis.

At the same time, in mid-1997, in the context of global financial liberalization, Southeast Asian countries such as Thailand, Malaysia, and the Philippines successively implemented exchange system reforms, established floating exchange rates, and allowed free entry and exit of capital, resulting in short-term financial reforms led by foreign banks and hedge funds.

There was a huge inflow of money.

For example, in the 1995 Southeast Asian crisis, the current balance of payments of various countries experienced a deficit of US$41 billion, while the capital balance showed a surplus of US$81.5 billion. In 1996, the capital balance surplus further exceeded US$100 billion, while direct investment was only US$5.8 billion, which means

Most of the capital is short-term hot money.

Short-term capital is highly mobile and carries the risk of sharp fluctuations.

In particular, under the premise that the financial systems of Southeast Asian countries still lack the "financial transformer" function, most short-term foreign capital is directly applied to domestic long-term industrial investment, such as real estate investment, through local banks, without being "transformed" by the financial capital market.

.

These "high-energy" funds are directly used in domestic industrial projects. For example, "high-voltage power supply" is directly inserted into "low-voltage electrical appliances" without a transformer. The dangers can be imagined.

When foreign resources continue to flow in, this kind of "dislocation" financing can continue. However, when foreign capital withdraws intensively, the funds are tied up in long-term projects and cannot be repaid immediately, resulting in a bank credit crisis.

On the other hand, short-term hot money is mostly in US dollars, and foreign capital has intensively withdrawn from the Southeast Asian market, resulting in a concentrated rush to buy US dollars and sell off local currencies in the foreign exchange market, which directly induces the depreciation of local currencies and creates a "dislocation" of currencies.

This "double dislocation" is considered to be the culprit of Southeast Asia's currency and financial crisis.

Early warning: New risks loom in the economic structure. Today, eight years later, although the economies of Southeast Asian countries have fully recovered, direct investment has continued to increase, and foreign exchange reserve balances have increased across the board.

However, the Southeast Asian economy has shown new risks in its structure.

First of all, the current trade structure in Southeast Asia has formed a triangular trade relationship between Japan, China and the Four Southeast Asian Tigers; in terms of industrial division of labor, the industrial gradient has been re-established with Japan first, then the "Four Tigers", and then China.

Japan mainly produces high value-added core components and intermediate products, and provides production equipment, raw materials and core components to the Four Southeast Asian Tigers and China; the "Four Southeast Asian Tigers" serve as secondary production bases for relatively advanced manufacturing and production; while China provides

Assembling processing workshops and then exporting final products to the US and Japanese markets.

In terms of industry, Japan is the "leading goose", and in terms of trade, China is the "leader".

Under this structure, China has become a "transit station" for exports from Japan and Southeast Asia, facing the risk of US trade sanctions.

Secondly, regarding the exchange system, since around 2001, Southeast Asia has had a de facto linkage relationship with the U.S. dollar, re-exhibiting exchange risks under the new situation.

Thirdly, in order to maintain the linkage relationship with the US dollar, against the backdrop of the previous depreciation of the US dollar, Southeast Asian countries purchased large amounts of US dollars to balance the exchange rate, resulting in a sharp increase in foreign exchange reserves.

By the end of 2004, the total foreign exchange reserves of Southeast Asia, including Japan, had exceeded US$2 trillion.

The direction of use of the huge amount of U.S. dollar assets held by central banks has become a problem for various countries.

So far, central banks have mainly used their reserve dollar assets to purchase U.S. Treasury bonds, leading to a sharp rise in U.S. Treasury bond prices.

However, given the changes in the following three factors, the foreign exchange reserves of Southeast Asian countries are full of exchange risks.