1. China's Economic Transformation

China’s economy has now reached a stage in which the macro leverage ratio is effectively controlled, the central market interest rate (one-year fixed interest rate) has gone down, and liquidity is relatively abundant. However, financial institutions are generally reluctant to lend, the local governments are unwilling to act, and the fact that liquidity released by the central bank cannot be effectively transmitted to the real economy is leading to a contraction of credit and higher financing costs for private enterprises. Meanwhile, the downturn in the internal economic cycle has been exacerbated by the external shocks caused by frictions in Sino-US trade, and this set of circumstances has contributed to the polarization of expectations regarding China's real economic prospects, as seen for example in the discussions about policy trends relevant to the private economy. Indeed, one might claim that the current confusion of expectations even exceeds that of 2008, when the international financial crisis broke out.