As a mage, I just want to pursue the truth

Chapter 349 The economies most affected
Neon, Goryeo, and China, these three countries were born in the monster room of East Asia.

The advantage of the Confucian cultural circle is that the quality of the workforce is extremely high and it is easy to manage.

Basically, as long as there is technological spillover, these countries in the Confucian cultural circle can quickly seize the opportunity and develop rapidly.

It took only forty years for Goryeo to go from an underdeveloped country to a developed country.

In the 1960s, their per capita GDP was roughly the same as that of poorer African countries.

By 2004, their GDP had successfully exceeded one trillion US dollars.

Among the countries in the Confucian cultural circle, Goryeo is not the only example; there are many such examples.

It’s just that some countries are lucky and catch the development opportunities and become developed countries, while others are unlucky.

Annan was also unlucky. He did not enjoy much of the benefits of technology spillover, and international capital began to flow back to his home country.

As a result, Annan's economy has not yet developed. Just when it was about to take off, housing prices took off prematurely, and then economic development was interrupted. The annual inflation rate was comparable to that of Argentina.

If you pay attention to international economic news, you will often see news that the Argentine Central Bank has raised interest rates, and the increase often starts at several percentage points.

Argentina's central bank interest rate often appears at 75%.

You have to know that the Federal Reserve’s craziest idea of ​​raising interest rates is only 75 basis points, or 0.75%.

The Argentine central bank’s first move was 5%, 500 basis points.

Before Annan could enjoy China's economic take-off, its capital city had already enjoyed the housing prices of China's capital city in advance, and it also experienced the feeling of the bursting of Japan's real estate bubble.

It means that you have walked the journey that others would have walked in forty years in just ten years.

Neon and China also learn from each other. During the Tang Dynasty, envoys were sent to China. Later, China's economic system in recent decades was also learned from the Neon model.

China's strategy of using infrastructure to drive economic development has been culminated by Japan.

In the early days, countries such as England and America had tried to boost their economies through infrastructure, but none of them was as adept as Neon.

Korea does not rely on infrastructure to drive its economy, but rather on receiving economic spillovers from America and then seizing a few key areas to develop high value-added industries.

Neon is also following the same route, but in the development of high value-added industries, the government's guidance is relatively small and it still relies mainly on the market economy.

This is not the case with Korea. They mainly rely on policy guidance. From chemical industry and shipbuilding to semiconductors and consumer electronics, the traces of policy guidance are particularly serious.

Examples include the close ties between government and business, including the Goryeo government's targeted credit and import restriction policies during the development period.

Compared with Goryeo, China's policy support is nothing.

Therefore, the countries most affected by the rise of Kechuang Biotechnology are Korea and Japan.

China's automobile companies, relying on super lithium batteries, have taken over most of the market share of Japan's automobile industry in China.

Japan's automobile industry is their most core pillar industry, and China is their largest overseas market.

The price of losing the Chinese market is that in 2020, ten of the top companies in Japan are related to the automotive industry.

By 2030, among the top companies, only four will be related to the automotive industry, and the others will either disappear, struggle to survive, or be acquired by Chinese companies.

Compared with Neon, Goryeo has been more seriously affected in recent years.

Although their economy is developing rapidly, they are also facing serious problems.

That is, Goryeo is an almost completely export-oriented economy, with a high debt ratio and a large amount of short-term foreign debt.

Korea's exports account for half of their total GDP.

In addition, Goryeo has almost no restrictions on foreign investment.

This resulted in Goryeo's economic situation being particularly bad during the decade of state-owned enterprises when major economies around the world were all in a state of contraction.

Some people may say that Japan’s foreign debt is higher, and Goryeo’s foreign debt is nothing compared to Japan’s foreign debt.

It is true that Japan's foreign debt is 300% of their GDP.

In 2012, the figure was 219.1%, while Goryeo's foreign debt was only 35.1% of its GDP.

Neon's foreign debt is so exaggerated that only Zimbabwe's foreign debt accounts for a higher proportion of GDP.

But the difference between the two is that more than 40% of the Japanese government's foreign debt is held by the Japanese Central Bank, while about 90% of the foreign debt is owned by Japanese banks and Japanese residents.

The money owed by the Korean government is all from the international capital market.

Because Japan borrowed money from its own residents and institutions, they dared to lower the long-term government bond interest rate to below 0.5%.

Does Korea dare? The interest rate of Korean government bonds is about to break 4%.

Therefore, on the eve of the release of the virtual reality device, the most anxious country was not Japan. Although Japan had received the news, the most anxious country was Korea.

Virtual reality technology will cause Goryeo’s economic system to collapse overnight.

Although it is not far from collapse now.

Samsung's market value has historically fallen below 100 billion US dollars. Previously, Samsung's market value exceeded 400 billion US dollars.

The drop was more than seventy percent.

Goryeo's government bond interest rate is approaching five percent.

This is even after the Bank of Korea announced an interest rate hike.

Generally speaking, when the central bank raises interest rates, the interest rate on government bonds will fall.

The surge in government bond interest rates means that the number of investors willing to buy Korean government bonds and who recognize Korea's national credit is rapidly decreasing.

Goryeo's market liquidity crisis is already underway.

Bridgewater Fund has been openly shorting the Korean stock market, with a short position exceeding 3 billion US dollars.

As the world's largest hedge fund, Bridgewater was just the starting gun. Before the starting gun was fired, many financial institutions on Wall Street had already rushed in.

Everyone knows that Goryeo is a sure thing, the only question is when to slaughter it.

A wave of public opinion has already formed.

Japan is not having a good time either, but thanks to its huge overseas assets and domestic monetary policy, there is still room for easing, and they are not as anxious as Korea.

The Neon side knew that the information America passed to them was an attempt to get them to fight against Zheng Li and the China behind Zheng Li.

Neon is not that stupid. For them, the current economic situation still has room for maneuver. At the same time, relying on its huge overseas assets and land in Brazil, Neon may be able to make a difference in the era of the virtual world.

However, the negative impact of virtual reality on them is real, so America instigated Japan, and Japan chose to deliberately reveal this information to the Koreans.

This is a casual move, and Japan doesn't know whether it will work.

America wants Japan to test Zheng Li's strength, while Japan wants Korea to go.

In comparison, Goryeo is even closer to the edge of the cliff.

They are only one step away from Argentina's retreat from a developed country to an underdeveloped country.

"The situation we are facing now is even more difficult for the Korean economy than the Asian financial crisis of 1997-1998. What we are facing now is not a financial crisis, but a technological crisis. The technology from China has a dimensionality-reducing impact on us.

The crisis we are currently facing in the financial sector is just a derivative of the technological crisis.

In 1997, we were able to turn to the IMF for help in avoiding the worst-case scenario, a sovereign default.

In order to meet the requirements of the International Monetary Fund, we implemented many institutional and policy reforms.

But today, what kind of sincerity should we show to satisfy Mr. Zheng from China?
Whether it's from the communication between Samsung and CStone Biotech, or when our high-level officials went to Suzhou for research, CStone Biotech did not seem to have a good impression of Korea.

And organizations that would be willing to negotiate with us and postpone their established plans.

The most important thing is that we can't come up with any chips that can impress Mr. Zheng.

The more serious problem is that even if Kechuang Bio is willing to delay the launch of the virtual reality world, we will only delay the arrival of the crisis, but will not be able to solve it. "

Goryeo financial officials were the first to report.

The financial crisis of the 1990s he mentioned can be traced back to for Goryeo.

In 1990, Korea's current account balance began to deteriorate due to rising inflation, appreciation of the won, and the recession of the world economy.

To finance the growing current account deficit of $1991 billion in 87, more than four times the level of the previous year, the Korean government encouraged capital inflows.

And in 1991, the capital account liberalization was accelerated by amending the Foreign Exchange Management Law. The limited capital account liberalization implemented led to a large amount of capital inflows.

In 1993, the South Korean government also announced a blueprint for financial sector liberalization, removing restrictions on financial institutions' asset and liability management.

However, they ignored the need for adequate prudential supervision in this move, which led to an increase in short-term foreign exchange liabilities of financial institutions.

Furthermore, as part of Korea's requirements to join the OECD in 1996, the government implemented further financial deregulation and capital market opening.

This led to massive reaping of profits by short-selling institutions led by Soros across Asia, with Korea being the second-largest piece of fat meat after Japan.

The sudden change in policy of the American Treasury Department coordinated perfectly with these short-selling institutions.

After Robert Rubin took over the Treasury Department, he adopted a strong dollar policy, which directly led to a rapid increase in Goryeo's trade deficit and a serious decline in the profitability of export investment.

This has led to financial difficulties for a large number of companies. As mentioned earlier, Korea is a serious foreign trade-dependent economy.

The non-performing loans of Korea's banking institutions have increased sharply, and Korea's seemingly reliable financial situation is actually shaky.

Compared to 1997, at least we can understand the whole story and have many options for dealing with it.

It’s just the difference of cutting more or less.

Anyway, it's the same whether it's cut by the American government or Wall Street.

But this time we are facing an unprecedented crisis, an all-round crisis of survival for all industries.

Even Goryeo, the most confident cultural industry, has to face the impact of real idols.

It is still unknown how much fighting power the idols and Korean Wave cultivated by Goryeo can have in the face of virtual idols.

From top to bottom, everyone in Goryeo seemed to have lost their direction.

“Our current account is out of balance and our exchange rate is in free fall.

The exchange rate of the Korean won to the US dollar has fallen below 2000 won to 1 US dollar, hitting a new low in years.

早已比1997年12月13日亚洲金融危机时的1737.6比1更低。

The central bank currently predicts that we will not even be able to hold the 2500 to 1 mark in the face of fierce attacks from international speculators."

The voice of the Goryeo financial official on the stage echoed throughout the entire venue, and no other sound was produced.

It seems like it's normal for the Korean won to fall below 2000 against the US dollar.

If this had happened ten years ago, the Blue House would have faced ten attacks.

But it is the same now, the Blue House has long been occupied by the people.

“Now that the crisis is ongoing, how can I face the aliens?
Or an alien with super powers."

The highest-ranking officials of Goryeo knew more information than others.

He was desperate inside.

Because the opponent they faced was completely unreasonable, Goryeo could not come up with any valuable chips.

After the finance official finished speaking, it was the turn of the science and technology official to speak. His voice became even more solemn, as if he wanted to be more sad than anyone else.

"The decline in memory chip exports, which have the highest profit margins in our export trade, is the largest since 2000, and global economic growth is further reducing interest in traditional carbon-based chips.

All major consumer electronics manufacturers and enterprise hardware manufacturers around the world are watching and shrinking.

All companies are waiting for the release of Ke Chuang Bio's virtual reality equipment before deciding on subsequent production and sales plans.

DRAM shipments fell 2% year-on-year in February, compared with a 74.7% increase in the previous month, according to data compiled by the trade ministry on Friday.

DRAM accounts for nearly half of Korea's memory chip exports and is a key indicator for observing my country's semiconductor industry exports.

It's not just the chip industry that is facing its toughest time ever. Export data from all walks of life are facing a cliff-like decline.

Almost all industries are shrinking.

At the same time, if the supply chain system we have spent a lot of effort to build is cut off due to a lack of exports, it will be difficult to rebuild in the future."

Goryeo was an export-oriented country. Due to its lack of domestic resources, it was heavily dependent on imports.

Korea can be said to be the country that pays the most attention to supply chain resilience among all countries.

Because they once found that their supply chain was extremely fragile.

Taking DEF as an example, Goryeo previously relied on China for more than 97% of its DEF imports.

But that came after China restricted exports of urea, a key ingredient in DEF used to reduce toxic emissions from diesel engines.

The Korean military was forced to airlift tens of thousands of litres of liquid from the Kangaroo Country, Southeast Asia and the Middle East.

They later spent a lot of money to rebuild the global supply chain system.

But the supply chain system is very realistic.

If you can't feed others, they will naturally turn to other economies.

"Korea's total exports this month broke its third straight month of growth since November last year, falling more than 11 percent due to the combined effects of a weak won and high energy costs.

The trade deficit is snowballing to record levels.

The depreciation of the won that is happening this month has a far greater negative impact on trade than a positive one.”

This chapter mainly deduce that if virtual reality technology really emerges suddenly, which country in the world will be most affected.

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(End of this chapter)