In order to survive the crisis, the government needs to stimulate economic growth, and most governments will take the road of government procurement. At the same time, they will also build trade barriers to protect domestic consumption.
The most direct product of government procurement is military products. Although the procurement of weapons and equipment can effectively stimulate the economy, it does not produce profits. The government will soon have to print more money to pay due to insufficient funds, which will inevitably cause inflation.
The skyrocketing prices will cause domestic conflicts to intensify. In order to divert public attention, countries will eventually have to resort to war to resolve the crisis. Therefore, Fang Xiaoyu believes that when the economic crisis affects the world, the bell of war will soon ring.
Regardless of when the war will occur, Fang Xiaoyu's foresight prompted him to first consider dealing with future economic crises. The current Chinese government does not have sufficient funds, and a large amount of money is invested in infrastructure construction.
The funds of the Bank of China are also heavily invested in industrial production. Only the funds of the China Group Company are still relatively abundant, but these funds are not enough to help the entire China survive the possible economic crisis. In order to speed up the sale of various commodities of the China Group Company,
Fang Xiaoyu thought of setting up a world expo.
After having a preliminary plan, Fang Xiaoyu sent invitations to governments around the world in the name of the Chinese People’s Liberation Army. The Chinese People’s Liberation Army will hold the first World Expo in the second year of the new century, that is, in 901 of the Taiyuan calendar. This invitation was sent out quickly.
With the support of the Yaman Empire and good relations with the Chinese leaders, the Yaman Empire government directly announced that the Yaman Empire would participate on time even though it was still unclear about the meaning of the World Expo.
It is undeniable that the appeal of the great powers is huge. With the support of the two great powers, the Chinese Territory and the Yaman Empire, many countries have expressed that they will participate in the expo, including the other four great powers.
Only the Boston Empire and its invisible ally, the Moss Kingdom, announced that they would not participate due to the great estrangement between the St. Martin Empire and the seats of the great powers and the Chinese community. However, many Boston businessmen sensed the business opportunities.
Although the Boston Imperial Government did not participate and would not build a domestic venue. Without a venue, merchants could not set up stalls and display their products, but many people still decided to visit when the time came.
The venues for the World Expo need to be built by themselves. Each country has sent engineers and construction teams to the predetermined location of the venue based on its own national strength. China has built venues on the outskirts of Vladivostok Port, the most prosperous port. The buildings of these venues have also allowed China to build cement, steel and other buildings.
Material suppliers made a killing.
The World Expo is an excellent opportunity to showcase one's own country and stimulate foreign trade. With this opportunity, I believe that China's products will be more popular. As long as we can earn more foreign exchange and hard currency, we can be confident that we can survive the possibility.
The emerging economic crisis.
However, it is easy for problems to arise in an export-oriented economy such as over-reliance on foreign trade. China's industries are quite comprehensive and basically do not require imports. Moreover, its own products have high technological advantages. Due to the low cost of mechanized production, the external competitiveness is
Quite high.
Such an economic model causes a large amount of external gold and silver and other hard currencies to flow into the Chinese territory, causing trade deficits in other countries. In this way, the Chinese collar becomes richer and richer, and other countries become poorer. Their governments can only exploit their own people to make up for it.
The difference has resulted in a decline in the purchasing power of its domestic people.
The decline in people's purchasing power will affect product sales and cause product costs to rise. Coupled with the possible trade barriers that may arise in various countries, this will form a vicious cycle. Once it reaches a certain level, an economic crisis will occur that will affect the world.
The global economic crisis has a great impact on the export-oriented economy. It will cause a serious decline in foreign purchasing power. Factories that rely on exports will close down in large numbers due to product backlogs and broken capital chains. The closed factories will cause many people to lose their jobs.
It also loses purchasing power, which in turn affects the purchasing power of the domestic market, causing factories that rely on domestic demand to be in the same disadvantageous situation.
In addition to these hazards, banks will also have an impact. Many factories were built with bank loans. The failure of these factories will inevitably cause a large number of bank bad debts and cause a debt crisis. Eventually, banks will also be forced to fail. When the financial collapse occurs, the real
The economic crisis is coming, and no country or region with an export-oriented economy will be immune.
The current powerful countries in the Western Continent, including the Boston Empire in the New World, are all based on export-oriented economies. Either their land area and population are too small to establish a comprehensive industrial chain, or they lack scientific and technological strength to produce products.
high-end products, so their economies are complementary.
What's more, most of the powerful countries in the Western Continent develop their economies by squeezing their colonies and dumping industrial products into the colonies. They rely too much on overseas colonization. Once the fragile economies of the colonies have problems, their own economies will also have problems. Such an economic model
, lacks defense against economic fluctuations.
The several great economic depressions on earth were mostly caused by such reasons. Facts have proved that the market's self-regulatory ability is not strong enough. Once it enters a vicious economic cycle, without government intervention, the market will collapse in a short period of time.
It is impossible for the economy to recover, but even with government intervention, the economy will suffer heavy losses.
Fang Xiaoyu didn't want the economic system he had worked so hard to create to suffer such losses, so he had to find a way to spare the Chinese nation when the world was suffering from an economic crisis. Although reserve large amounts of hard currency and foreign exchange was a method, it failed to treat the symptoms.
To address the root cause, if we want to fundamentally solve this problem, we still need to stimulate domestic demand.
The most necessary way to stimulate domestic demand is to eliminate the gap between the rich and the poor as much as possible and cultivate a large middle class. Only a sufficient middle class is the most benign supplement to the entire society. They are also the most important force in the country's fight against the economic crisis.
Of course, these must be the real middle class. If it is like the United States in later generations, the middle class cultivated by loans is just an illusion. When the economic crisis comes, these illusions supported by loans will be disillusioned like a bubble, causing
The national economy is in greater turmoil, which is why the United States on Earth cannot eliminate the economic crisis.
To narrow the gap between rich and poor, Fang Xiaoyu needs to increase the income and welfare of ordinary people, provide them with free education and free medical care, increase opportunities for entrepreneurship, and impose heavy taxes on high-income people, as well as heavy taxes on luxury goods.
Only in this way can we effectively cultivate a large middle class.