Japanese media: China has entered the era of "bubble relay"

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According to the Nikkei , the office of China's large-scale bitcoin exchange "Bitcoin Exchange" is located in Zhongguancun, which is known as China's Silicon Valley and is home to many famous universities such as Peking University and Beijing Institute of Technology, in the northwest of Beijing.

In an office in an old office building, about 20 young people are sitting in front of computers , answering customer calls and monitoring Bitcoin transactions. The person in charge said calmly: "Some customers use it to remit money abroad, and some come for speculation."

Market rumors say that 40% of Bitcoin investors and 80% of transactions are from China. The RMB price of Bitcoin has increased 1.5 times from around RMB 2,800 at the end of 2015 to around RMB 4,300.

China's economic growth has slowed down, and it has to adopt a more relaxed monetary policy. Chinese government officials said that in order to moderately expand domestic demand, "China must continue to implement a proactive fiscal policy and a prudent financial policy." The surging funds will flow into one market after another, thereby inducing a "bubble relay" in the market, and the Bitcoin market is becoming the next target.

China's "bubble relay" has been recurring since the 2000s. In November 2008, after the Lehman crisis, China announced a 4 trillion yuan economic stimulus policy, and personal funds poured into the real estate market in coastal areas such as Beijing, Shanghai and Shenzhen. It was not until the " purchase restriction order" was issued to restrict the purchase of commercial housing after the second house was released that the overheated real estate investment was cooled down. The subsequent investment "bubble" of financial products began to emerge.

In 2014, as the government realized that financial products were a dangerous source of shadow banking, it began to strengthen supervision, and funds flowed into the stock market. Real estate, financial products, and the stock market, if the stock market "bubble" in 2007 is included, we can see the overwhelming flow of funds in the Chinese market.

In June 2015, the stock market fell sharply from its peak again, and investors' attention was dispersed to various investment targets. Some funds went into the commodity futures market and the real estate market, while the other part flowed into Internet finance.

The rush of capital has left behind many aftereffects. Influenced by the rapid rise in steel futures prices, private steel companies have resumed production one after another. This goes against the Chinese government's policy of reducing excess production capacity. The real estate "bubble" has even spread to core cities such as Nanjing , Hefei, and Xiamen .

In the area of ​​Internet finance, there are even products that encourage investment in the newly opened Shanghai Disneyland. The Chinese government warns that one-third of Internet finance has problems.

As the market is worried about the depreciation of the RMB, Bitcoin may continue to be purchased as a safe haven for capital. Just as the Chinese government began to take measures to curb real estate speculation after the early spring, there may be some restrictions that will affect Bitcoin transactions.

In any case, after the Bitcoin "bubble" subsides, it is conceivable that the market will usher in another round of stock market "bubble". This is the essence of "bubble relay" under excessive capital liquidity. As long as the government intervenes too strongly, the current situation where stock market liberalization cannot be promoted will not be changed, and the situation where funds will not stay for a long time will recur as before.