Study On China’s Economic Phenomenon Of "Real Economy Is Cold While Fictitious Economy Is Hot" After The Financial Crisis

The outbreak of the2007financial crisis, which impacts on China’s economic, coupled with our already existing economic problems, have led the real economy in cold case and fictitious economic overheating in the development of the economic system, a large number of capital and profits enter the fictitious economic sectors, while capital attraction of the real economy sector declined, and even part of the capital from the real economy sector outflow into the fictitious economic sector, this economic phenomenon is summarized as "real economy is cold while fictitious economy is hot". We need to note that the "real economy is cold while fictitious economy is hot" is not a global phenomenon, but a dynamic, localized economic phenomenon. The emergence of such a localized phenomenon shows that our real economic is facing a development bottleneck, if it cannot be well solved, localized phenomenon will have the potential to become a global problem, affecting China’s economic recovery after the financial crisis.In order to research "real economy is cold while fictitious economy is hot" we need to clarify the definition and scope of fictitious economy and real economy, so we researched the literature about the fictitious capital, the fictitious economy and real economy as well as the relationship between them. We believe that Liu Junmin’s point of view about the fictitious capital and fictitious economy is convincing, so this paper chose Liu Junmin’s narrow definition about fictitious economy as the basis of the study areas. For the relationship between fictitious economy and real economy, we think it should neither be too much emphasized on the negative impact on the real economy of the fictitious economy, for example, the result of the economic bubble and crisis, do not support independent development of the fictitious economy be too much out of the real economy. Because China is in the early stages of development of the fictitious economy, far from being to explore the huge potential of the fictitious economic about capital allocation and risk-averse, therefore, this paper advocates encouraging financial innovation under the premise of strengthening financial supervision, promoting coordinated development between fictitious economy and real economy.Through analysis on China’s "real economy is cold while fictitious economy is hot", we believe the phenomenon is essentially a phenomenon of a non-equilibrium flows of capital, we can get through the study of the flow of capital to the formation mechanism of this phenomenon. Problem of capital flows can be studied from two aspects of the power of capital flows and the way of capital flows, the way in which the power of capital flows reflect is the profit-driven nature of the capital, or proliferation of capital, when analyzing the way of capital flows, we must examine the characteristics of the capital movement firstly, capital movement is mainly reflected as the circulation of capital. Firstly, the proliferation of capital determines the capital must continue to seek higher profit margins, and ultimately the formation of the average profit margin within the department and between departments, but the average profit margin theory has two hidden theoretical premises:First, the market be able to provide enough information, the margin as capital flows oriented signal must be able to be known to the main players in the market, that information is symmetric; Second, capital flow channels must be kept open, capital can flow into higher-margin fields smoothly after getting profit margins signal. As long as a not met of these two theoretical premises will cause deviation of capital flows, one of the consequences of this bias is the phenomenon of "real economy is cold while fictitious economy is hot". Due to trends of fictitious economy’s independent development from the real economy are becoming evident, the expected characteristics of its pricing system is likely to cause market information asymmetry, while the typical characteristics of administrative monopoly in the economies in transition is difficult to eliminate, which makes capital flows obstruction there is an objective necessity. Secondly, the movement of capital determines the capital must enter circulation and achieve continuous loop proliferation, once the capital to stop the movement would wither away. Marx analyzed monetary capital movement in the real economy sector in detail, but there is no specific description of capital restrictions in the fictitious economy cycle due to historical conditions, which requires us to analyze the fictitious capital according to the characteristics of fictitious capital unique cycle mode, I learn from other scholar’s research by using G-F-F’-G’capital cycle formula to describe monetary capital in fictitious economy sector capital cycle. In contrast of capital circulation mode in the different sectors of the economy, I found differences in the monetary capital cycle characteristics of the real economy sector with its fictitious cycling characteristics of the fictitious economy sectors due to the different way of capital proliferation, one of the important differences is capital convertibility. This article made the difference as a basis for the establishment of the two departments of capital circulation model and proposed four different capital cycle modes, the four modes basically sum up the way of capital flows in the two major economy sectors. Subject to a variety of external conditions and internal factors, there will be some differences of the allocation of capital in a variety of cycle mode, such the allocation differences will affect the development of the two departments, the phenomenon of" real economy is cold while fictitious economy is hot" is also one result.After the study on capital flowing theory, we did empirical analysis of China’s actual situation. Mainly includes three parts:First, to verify the degree of departure between China’s fictitious economy and real economy. We measured the extent of deviation of our fictitious economy and real economy by correlation analysis of China’s stock market value and the nominal domestic GDP. We found that the correlation coefficient between the two kinds of growth rate is only0.066, which fully shows that the correlation between China’s stock market value growth rate and the nominal GDP growth rate is extremely low. Thus proving that the profit margin of China’s fictitious economy sector will not be able to judge by the real economy, it leads to information asymmetry in the market of China. Secondly, we did relevant verification and proved the capital flows obstacle exists in our market. In order to prove the presence of the factors that lead to capital flows obstacle, we selects representative industry data of the real economy sectors and the fictitious economy sector and found a high percentage of state-owned capital in these representative industry. It proved the objective existence of administrative monopoly in the real economy sector and the fictitious economy sector. Administrative monopoly has led to private capital in China is difficult to enter the monopoly Gregory industry, financial industry monopoly characteristics on the one hand lead to high profit margins of the financial industry, on the other hand to promote more capital inflow of fictitious economic sectors. Finally, we phased analysis of the phenomenon of the "real economy is cold while fictitious economy is hot" of China by combining China’s macroeconomic environment since the outbreak of the financial crisis. Since the outbreak of the financial crisis, China’s macro-economic environment has the three characteristics:First, investment-driven and export-oriented economic growth model is still significant, and the second is the long-term excess liquidity, the third is alternating inflation and deflation. According to these three features and analysis of China’s macro-control policies, we found that this period of "real economy is cold while fictitious economy is hot" has stage features and divide them into four stages.Finally, we summarized this article from the theoretical and empirical aspects, and put forward five suggestions to solve the problem of "real economy is cold while fictitious economy is hot":First, to enhance the technological innovation capability for new economic growth points. The second is the transformation of the mode of economic development, and to improve the domestic market demand. The third is to break the administrative monopoly in the real economy sector, and to reduce the corporate tax burden. The fourth is to break the financial monopoly in the fictitious economy sector and improve the efficiency of capital allocation. The fifth is to encourage financial innovation and strengthen the supervision of financial risks.