Editor's note:

Mass consumer market, corresponding to the trend of insufficient effective demand and consumption downgrade; silver economy field, corresponding to the trend of aging and low birth rate; non-performing asset disposal, corresponding to the trend of debt clearing after the peak of debt; overseas expansion of enterprises and capital, corresponding to the trend of industrial transfer, cross-border investment, and multi-currency hedging in the era of slowing down of macro economy and contraction of international trade conditions.

The following article comes from Zhixinhe, the author is Qing He, President

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8182nd In-depth Good Article:**The Genesis of the Crisis** The global financial crisis of 2007-2008, often referred to as the "Great Recession," stands as the most severe economic downturn since the Great Depression of the 1930s. Its origins can be traced to a complex confluence of factors, rooted in the housing market and exacerbated by lax lending standards, excessive risk-taking, and a lack of regulatory oversight. **The Housing Bubble** Central to the crisis was a housing bubble that began in the early 2000s. Low interest rates fueled a surge in mortgage lending, making homeownership more accessible to a wider segment of the population. This increased demand led to rising home prices, creating a false sense of wealth among homeowners and encouraging further investment in real estate. **Subprime Lending** As the housing market expanded, so too did a type of risky lending known as subprime lending. Subprime mortgages were extended to borrowers with poor credit histories and low credit scores, who would otherwise not qualify for traditional mortgages. These borrowers often had to pay higher interest rates and fees, increasing their vulnerability to foreclosure if they fell behind on payments. **Securitization and Credit Default Swaps** The proliferation of subprime mortgages created a vast pool of risky assets. Investment banks responded by securitizing these mortgages, bundling them into complex financial instruments and selling them to investors worldwide. The perceived low risk of these investments, due to their diversification, attracted a wide range of buyers, including pension funds, hedge funds, and banks. However, as the housing bubble inflated, so too did the risk associated with these mortgage-backed securities. To hedge against potential losses, financial institutions purchased credit default swaps (CDSs), which functioned as insurance contracts against the default of the underlying mortgages. This created an illusion of safety, further fueling the demand for subprime mortgages and contributing to the perception of low risk. **Lax Regulation and Lack of Oversight** A lack of regulatory oversight compounded the underlying problems in the housing market. Government agencies failed to adequately supervise financial institutions, allowing them to take on excessive risk and engage in questionable lending practices. The absence of meaningful regulation allowed the housing bubble to grow unchecked, creating the conditions for a catastrophic financial crisis. **The Burst of the Bubble and Contagion** In 2006, the housing bubble burst. Rising interest rates and a slowing economy made it increasingly difficult for homeowners to keep up with their mortgage payments. As subprime borrowers defaulted at alarming rates, the value of mortgage-backed securities plummeted. This triggered a chain reaction, as investors lost confidence in the value of these investments and began to sell them off. The resulting panic spread throughout the financial system, as banks and other financial institutions became exposed to massive losses. Interconnectedness through complex financial instruments and derivatives amplified the contagion, leading to a global credit crunch and a sharp decline in economic activity. **Government Intervention** Faced with the prospect of a global financial meltdown, governments intervened with unprecedented measures. The United States government implemented the Troubled Asset Relief Program (TARP), which provided billions of dollars in aid to struggling banks and financial institutions. Other countries also implemented similar measures to stabilize their financial systems. Government intervention helped to prevent a complete collapse of the financial system, but it came at a significant cost to taxpayers. The long-term effects of the crisis, both economic and social, continue to be felt around the world. **Lessons Learned** The financial crisis of 2007-2008 was a profound wake-up call for policymakers and financial regulators. It exposed the systemic weaknesses in the global financial system and highlighted the need for stronger regulation to prevent similar crises in the future. Governments have since implemented a range of regulatory reforms, including increased capital requirements for banks, stricter lending standards, and enhanced supervision of financial institutions. These measures are designed to reduce the risk of excessive risk-taking and ensure the stability of the financial system. The crisis also emphasized the importance of financial literacy and consumer protection. Borrowers must be educated about the risks associated with financial products and services, and regulations must be in place to protect them from predatory lending practices. **Conclusion** The global financial crisis of 2007-2008 was a complex and multifaceted event that had a profound impact on the global economy. Its origins lay in a combination of factors, including the housing bubble, subprime lending, securitization, credit default swaps, lax regulation, and a lack of oversight. Government intervention prevented a complete collapse of the financial system, but it came at a significant cost. The long-term effects of the crisis continue to be felt around the world. The crisis served as a wake-up call for policymakers and financial regulators, leading to a range of regulatory reforms aimed at preventing similar crises in the future. The crisis also highlighted the importance of financial literacy and consumer protection. By addressing these underlying issues, we can help to ensure the stability of the financial system and prevent future financial crises.

Macro Trends

JPMorgan says:

Grasp the overall situation from a macro perspective, and seek opportunities from a micro perspective.

For a transforming country, take-off is a special event, landing is an inevitable event, and crash landing is a probabilistic event.

China's economy is currently shifting away from an era of rapid growth and progressively transitioning into a unique lifecycle marked by the convergence of several factors: a peak in growth, a peak in debt, a peak in population, a peak in real estate activity, and a peak in favorable international trade conditions and technology transfer benefits. This period is characterized by the intertwining of macroeconomic concerns and structural issues, as well as the intermingling of short-term and long-term contradictions.

However, from a micro perspective, there are four major tracks for China's future:

The mass consumer market corresponds to the trend of insufficient effective demand and consumption downgrade; the silver economic sector corresponds to the trend of aging and small number of births; the disposal of non-performing assets corresponds to the trend of debt clearing after debt peaks; enterprises going out to sea and funds going out to sea correspond to the macroeconomic slowdown and the trend of industrial migration, cross-border investment, and multi-currency hedging in the era of tightening international trade terms.

This article analyzes the investment opportunities in the above four tracks.

Their lives are also pitifully poor.:

1. Mass consumer market

2. Silver Economy Sector

III. Non-performing asset disposal

4. Enterprise Capital Outbound

1. Mass consumer market

How should businesses navigate a new, lower growth trend for an economy, with reduced or even negative demand growth?

“Crossing the river by feeling the stones in Japan.” Japan is a case worth referring to. From high growth to recession, what did Japanese enterprises experience? Bankruptcy, debt clearance, balance sheet recession...

However, in the era of the Long Depression, there is an area that runs counter to the trend, which is the mass consumer market.

Mass consumer brands, such as Uniqlo, Muji, and 7-11, have developed gradually and expanded globally.

Following the collapse of the asset price bubble in 1990, property and stock values in Japan fell sharply, eroding corporate balance sheets, causing economic growth to stall, and eventually, resulting in a debt-deflation spiral.

During this process, effective demand declined, purchasing power shrank, and consumption was severely downgraded, with many middle-class families falling into the lower-middle income class.

Japanese scholar Kenichi Ohmae called this structure "M-shaped society". I prefer to call it "exponential society".

** **

Bottom-end society, shrinking middle class, and consumption downgrade, thus accumulating a large mass consumption market. Where are the opportunities in the mass consumer market?

Let's first look at the characteristics of mass consumption. Japanese household consumption concept and behavior have experienced profound changes from high growth to recession.

A typical feature of the high-growth period is "buy, buy, buy." The people of China have also experienced it in the past. Japanese consumer expert Miura Hiroshi (The Lonely Society, 2005) found that the remnants of the bubble economy could still be seen in Japan's commercial areas up until 1997. Around that time, women wore white shirts, tight skirts, Hermès scarves, and high heels.

However, this came to an abrupt end in 1998 when streetwear, representing the Ura-Harajuku culture, became mainstream.

What happened in between? For Japan, the Asian financial crisis of 1997 was a further blow that destroyed any lingering confidence in economic recovery.

Starting in 1998, the number of suicides in Japan skyrocketed, resulting in more than 30,000 suicides for ten consecutive years. Japanese sociologist Masahiro Yamada has termed this the “1998 Problem.”

Miura Akira believes that 1997 ended Japan’s third generation of consumption, the period of high growth consumption. From 1998, Japan formally entered the fourth generation of consumption, the period of great recession consumption.

What are the characteristics of consumption during this period?

有一句话很有代表性，There are more and more young people who think that wearing Uniqlo from head to toe is not bad, and fewer and fewer young people use luxury brands to express their individuality.

Consumer mentality has shifted towards modesty and pragmatism, prioritizing substance over style and moving away from luxury and branding. Japanese mass-market brands such as Uniqlo and Muji have captured and catered to this shift in consumer psychology.

Mass consumer products share some common characteristics:

Good quality at a low price, and simple but tasteful and attractive in design, service that is just right, that is, neither neglect nor excessive, and that pursues a high degree of value for money.

Compared with Uniqlo / Muji, ZARA / H&M, these four budget brands expanded rapidly in China more than ten years ago, but their consumption logic is different.

Z ARA/H&M belongs to the logic of the era of high-growth. It focuses on "fast fashion". By imitating big-name designs, products are rapidly iterated, pursuing novel styles, and not paying attention to product quality.

Uniqlo/Muji is the logic of mass consumption during the Great Recession in Japan, focusing on cost performance, simple design, weak brand presence, emphasizing products, and globalized standardized production, supply, and sales.

To operate in the mass consumer market is, in essence, to pursue cost-effectiveness. How can one optimize cost-effectiveness?

During an era of mass consumption, there is inadequate purchasing power, and prices should be lowered, but quality and design cannot be too poor. With wage increases in an aging era, how can costs be reduced?

Fundamentally, it is about doing to supply chain what the best do. 日本企业经过了几轮出海，把工厂迁移到中国，整合全球资源，使用最廉价的日元融资，使用新兴国家最廉价的土地和劳动力，使用自己和欧美国家的技术，形成高效的全球供应链，把性价比做到极致。

In China, in recent years, the mass consumption trend has been very obvious, with the middle class falling and consumption downgrading, and Chinese brands unable to compete with mass brands.

Pinduoduo rises and share price soars, growth rate exceeds Taobao Tmall and JD; Luckin Coffee’s sales surpass Starbucks, Michelle Ice City blooms everywhere, Heytea and Nayuki are forced to lower prices.

Barbershops offer fewer top-up packages costing thousands, shopping tours to Hong Kong have disappeared, the number of international school dropouts has increased, live streaming with goods has become popular on a large scale, and rural tourism has become hot across the country.

Nowadays, the elderly are full of vigor, while the younger generation is listless; women dare to try and play, while men smoke with their heads down. Affected by economic and non-economic factors, the middle class is hit by both demand and supply.

The majority of middle-class assets are allocated to real estate and stocks, which could have lost 30-40% over the past three years.

Middle-income job sectors such as real estate, education and training, internet, finance, and a large number of self-employed individuals and small businesses have been hit hard. Large companies are laying off staff, shops are closing, incomes are falling, and consumption is becoming more cautious.

In today's world and even more so in the future, the money of the middle class is the hardest to earn, especially the middle-aged men of the middle class. The wallets of middle-aged men of the middle class are controlled by their wives, who manage the household budget very carefully.

NIO, Xpeng, and Li Auto's target group is middle-aged males from middle-class families. This path is destined to become harder and harder to continue down.

Currently, Chinese consumer brands have traveled to Japan in droves to study how to seize opportunities in the mass consumer market. Are there any Chinese companies that have been relatively successful in their studies?

Probably Miniso. The company started in 2013 and quickly expanded. Its main strategy is cost-effectiveness - simple design, low prices, average quality. The key to its operation is global sourcing, taking the supply chain to the extreme.

Take Xiaomi as an example. Xiaomi has been entering into relatively mature markets, such as mobile phones, televisions, various small household appliances, and now new energy vehicles. Why?

Xiaomi relies on the ability to integrate the industrial chain. Unlike traditional mobile phone, home appliance and automobile manufacturers, Lei Jun comes from the Internet industry. Therefore, Xiaomi not only integrates the industrial chain but also the Internet industry chain. This is version 2.0 of industrial chain integration, and the patent belongs to Jobs.

Mass consumer market is a rare major opportunity for China's next 20 years.

Laugh at Japan, understand Japan, learn from Japan, and become Uniqlo. This is an inevitable trend in the era of mass consumption, and many consumer companies and consumers are "Uniqlo".

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2. Silver Economy Sector

The silver economy is the “only” two relatively certain big opportunities at a time of economic slowdown and aging.

We need to understand the laws of the silver-hair economy and the characteristics of senior citizen spending.

Typically, when an economy enters the aging and deep aging stages, government fiscal expenditure gradually shifts to family welfare, especially pension.

In other words, a large amount of tax and government debt financing is transferred to retired people. The spending power, expectations and preferences of retired people have a great impact on economic growth and structural opportunities.

After the bubble crisis, Japan's aging population and Great Recession began to overlap. The two may have influenced each other; the aging population may have accelerated the Great Recession, while the Great Recession may have exacerbated the declining birthrate and pension pressures.

In fact, in 1993 after the bubble economy crisis, the Japanese government greatly expanded infrastructure investment, trying to drive overall demand, to plug the gap left by the decline in real estate investment, and thus prevent the downward trend in economic growth.

This has had little effect. With the population rapidly aging, Japan's government has been forced to divert an increasing share of its spending to social security, largely in the form of pension and interest payments.

Government's investment in pensions essentially determines the consumption capacity of the elderly. Let's look at a key indicator, called the pension replacement rate.

Pension replacement rate refers to the percentage of pension to salary; if a person's salary before retirement is 10000, and the pension after retirement is 6000, then the pension replacement rate is 60%.

它能够衡量老人退休后的生活水平落差。According to the World Bank, the pension replacement rate needs to be no less than 70% to maintain a standard of living before retirement.

** **

The pension replacement ratio in Japan is currently around 61%, slightly higher than the OECD average of 58%, but lower than the 81% in the US and the prevalent levels in the Nordic countries.

A retired couple in Japan receives about 60% of their pre-retirement salary as pension, which is roughly the same as the monthly income of young working couples.

Therefore, although the Japanese government is heavily indebted, the elderly in Japan have the ability to consume.

At the same income level, elderly families have lower consumption expectations than younger families, and the reason for this is complex. Perhaps it is related to the life cycle, where elderly people have reduced consumption vitality and interest; or perhaps it is related to the credit market, where younger families are more willing to borrow to consume.

The consumption preferences of the elderly are bound to vary, with a greater shift towards products and services related to health, such as medical devices, biomanufacturing, food for the elderly, elderly care services, and companion robots.

GROOVE X, a Japanese company, manufactures companion robots, while Meiji, a major food company, develops a variety of foods tailored to the needs of elderly people.

Nowadays, the silver economy in Japan is very mature. Many domestic health care companies have also visited Japan to explore the health care and aging market, learning how Japanese companies thrive in health care.

However, we also need to understand China's aging trend and the characteristics of silver economy.

First of all, China's fertility rate is currently lower than Japan's, the number of children is accelerating, and China's aging to deep aging is faster than Japan's. This is a certain event.

其次，中国老年人的养老金处于什么水平？The pension replacement rate in China is currently around 41%, which is lower than the 55% minimum standard recommended by the International Labour Organization.

China's pension system has a "three-tier" structure, with rural elderly people receiving two to three hundred yuan per month, employees' average pension being 17 times that of farmers' pensions, and those in the system receiving an average pension more than 20 times that of farmers' pensions.

In the end, elderly people in ordinary Chinese families have more conservative consumption expectations, tend to save more, and would only leave their small pension to their spouse, the next generation, grandchildren.

Therefore, low pension replacement rate, insufficient pensions, and the "three-track system" are the demand characteristics of China's silver hair economy. This determines that China's silver hair market is an unbalanced market with structural opportunities, and the main purchasing power comes from retirees within the system.

Back to the specific market, constrained by traditional culture and purchasing power, nursing home services are a difficult market to operate in, and light-asset community-based elderly care has been easier said than done.

Health foods, biopharmaceuticals, medical devices for the elderly, and wearable medical devices and pre-emptive treatment have great potential.

Dental implant market, the so-called "old and toothless", bad teeth will affect chewing and digestion, and thus affect the life of the elderly, dental implants will usher in a long bull market.

In March, I took my family to a hospital to get a dental implant. The place was packed, and the doctor told me that 80 percent of their patients were elderly people from Hong Kong. Shenzhen is benefiting from the spillover of Hong Kong's ageing population.

Two markets that stand out as worth watching:

One is transnational elderly care. Many elderly people from Japan and South Korea go to Thailand and other Southeast Asian countries to retire, and elderly people from Northeast China go to Hainan to retire. In the future, they may also go to Southeast Asia. This group is mainly composed of retirees with higher incomes.

Investment opportunities in the aging era，日本、欧洲、美国在股票投资上的风险偏好差异很大，但无一例外地将保险 （储蓄、养老和重疾） 和养老金的配置比例提高到26-30%。

III. Non-performing asset disposal

The debt write-off cycle is a bull market for bad asset disposals, but not everyone can participate in this bull market.

The speed and manner of debt liquidation can vary greatly, reflecting a combination of a country's culture, debt characteristics, bankruptcy legislation, and the effectiveness of the judicial system.

The heat and risks of the three sub-markets, asset sales, debt restructuring, and bankruptcy liquidation, vary.

Following the outbreak of the U.S. subprime mortgage crisis in 2007, household debt was largely liquidated in a “violent” manner in line with market principles. The U.S. personal bankruptcy law is well-developed, and many families quickly entered bankruptcy proceedings after defaulting on subprime mortgages.

Major financial institutions including Fannie Mae, Freddie Mac and Bear Stearns were bailed out by the Federal Reserve and the federal government.

** **

So, in this round of debt restructuring, households and small and medium enterprises focused on bankruptcy liquidation, while large enterprises focused on debt restructuring.

After the bubble crisis in 1990, many Japanese companies went bankrupt, but the speed of Japanese corporate debt clearance was slower than that of the United States. The balance sheets of many Japanese companies were blown through, and they chose to conceal the situation of asset shrinkage, and insisted on repaying loans through the sale of assets and provisions for profits, avoiding the re-evaluation of assets by banks, leading to the bankruptcy of the squeeze.

At that time, many Japanese companies were manipulating their financial statements. Hence, in this round of debt cleanup, the asset sale market in Japan became more active.

** **

Japanese home appliances and electronics companies have been selling their terminal businesses, many of which have been acquired by Chinese companies.

Haier acquired Sanyo's home appliance business in Southeast Asia, Lenovo acquired NEC's PC business, Changhong acquired Sanyo's TV business, Hisense acquired Sharp's Mexican plant and the authorization of TV brands in the Americas except Brazil, Skyworth acquired Toshiba's home appliance business, and Midea acquired Toshiba's home appliance business.

Let's focus on China's distressed asset disposal market.

Currently, we are in the stage of excessive borrowing, with local government debt of about 100 trillion yuan (40 trillion yuan in explicit debt and more than 50 trillion yuan in urban investment bonds), household sector debt of 77 trillion yuan (38 trillion yuan in mortgage loans), and non-financial corporate sector debt of 150 trillion yuan (excluding urban investment bonds), three debts totaling more than 300 trillion yuan, which is a huge potential market for disposal of non-performing assets.

Real estate debt is the "main event" in the disposal of non-performing assets. The total interest-bearing debt in the real estate sector is 53 trillion yuan. After excluding mortgages of 38 trillion yuan, about 15 trillion yuan of developers' bank loans remain.

Bank loans are merely the tip of the iceberg of the developer's debt; the bulk of it is building completion and contractual liabilities.

Non-performing assets business currently mainly targets those developers who are falling into liquidity trouble, some real estate companies, and related companies waiting for money to save their lives.

In this market, some seek money, others seek people, and still others seek projects. Some financial institutions look for sponsors in the Middle East, attempting to attract Middle Eastern consortiums to buy up domestic assets.

Wanda's core asset, Dalian Wanda Commercial Management, was recently acquired by five investment institutions in a deal that brought Wanda Commercial Management Group RMB 60 billion in liquidity, at the cost of 60% of its equity.

Among the five investment institutions participating in the acquisition are Ares Management with US-funded background, Asian private equity firm Taimeng Investment, CITIC Capital, a subsidiary of China's state-owned enterprise CITIC Group, and Middle East consortiums-Abu Dhabi Investment Authority and Mubadala Investment Company controlled by the Ministry of Finance of the United Arab Emirates.

可以预测的是，未来十年内，中国相当大一笔资产将易主，Many private assets will be acquired by powerful Chinese and foreign consortiums, which will change the pattern of asset ownership among the wealthy.

However, China’s efficiency in clearing this round of debt is inadequate.

While the real-estate market outlook is uncertain and price adjustment and debt clearance still have a long way to go, local governments may condone developers to sell houses at greater discounts this year, to speed up asset sales and sales revenue collection.

On the other hand, China's bankruptcy law and corresponding judicial procedures are inadequate, and out of concern for social risks, judicial actions to promote debt restructuring or bankruptcy are slow.

In the future, asset disposal market will continue to grow, and it is the one with the largest opportunity as well as the biggest risk; debt restructuring market is difficult to operate; bankruptcy liquidation market is relatively small in size and quite dispensable.

Inefficiency and uncertainty of debt resolution can heighten risk of NPL disposal

Some enterprises may miss the window of debt rescheduling. The sustained fall of asset prices will lead to negative equity, resulting in substantive bankruptcy but difficulty in legal bankruptcy proceedings.

On the other hand, some of the enterprises that take over the project may underestimate various uncertainties and find themselves entangled in debts that they cannot extricate themselves from.

Unlike the mass consumer market, aging, and elderly care markets, the distressed assets disposal market is full of both opportunities and risks.

In the era of post-debts-peaking but debt-clearing stagnation, buying Chinese assets at a low price is not only a technical work, but also a relationship skill. Only "smart people" can do this.

4. Enterprise Capital Outbound

Overseas enterprises and capital outflows are one of China's four major tracks for the future.

This year, some people have shouted the slogan "Stay ashore and be out of the game". There are two core motivations for companies/industries to go overseas::

China's economy is bidding farewell to high growth, and the era of increases is gradually transforming into an era of stock, with internal friction pressure growing.

Today, Chinese companies face unprecedented opportunities and challenges overseas. China provides 30% of the world's production capacity but only contributes 14% of consumption. With insufficient domestic demand and tightened foreign trade conditions, a large amount of production capacity needs to go overseas.

For Chinese companies, industrial globalization is equivalent to exploring no man's land, and of course one can use the Japanese companies' overseas experience for reference.

The experience of Japanese companies in sailing is very mature and successful. They have a strong sense of going out to sea. Whenever the domestic economy encounters risks, they choose to go out to sea to transfer excess production capacity to emerging countries, and at the same time enter the European and American markets to "dance with wolves".

This has also driven the continuous transformation and upgrading of Japan's industrial structure over the past 70 years.

During the Great Recession, with a domestic slump in demand, Japanese firms again successfully shifted production en masse to emerging countries in Asia.

Today, large-scale Japanese manufacturing companies are basically multinational corporations. 40% of the revenue of Japanese listed companies comes from overseas markets, and 80% of the revenue of the top ten listed companies by market value comes from overseas markets.

They have a super strong capability for the integration of their global industrial chain, with a proficiency in integrating European and American technology, Japanese capital, land resources and affordable labor force from China and emerging countries. They also realize globalized, multicurrency risk hedging.

Typically, large enterprises are the first to feel the ceiling in an economy, including growth and non-economic factors; they are also the first to seek change, expanding to overseas markets and shifting production capacity to emerging economies, and looking to mature economies for hedging.

Large manufacturing companies such as Midea were among the first group of enterprises to go overseas, and they began investing in emerging countries as early as 2008.

In recent years, the impetus for large enterprises to expand overseas has become increasingly strong, gradually expanding from manufacturing to retail, software and Internet industries. For example, the cross-border e-commerce boom has helped many small and medium-sized enterprises to expand overseas.

Some software, games and internet companies are quickly occupying emerging markets and the European and American markets.

The other reason is that under pressure from the downturn in Sino-US relations and the tightening of international trade conditions, factories are moving overseas to obtain steady foreign trade orders.

The Biden administration is promoting friend-shoring, near-shoring, and supply chain diversification with an intent to guide industrial relocation to the Indo-Pacific and North America.

Some large multinational companies require their suppliers to set up an alternative factory overseas, and the suppliers have to follow their multinational orders to relocate.

Only by shifting part of the industry offshore can a stable trade relationship be maintained and orders and advanced technologies be obtained from an active strategy perspective. Some state-owned enterprises are also quietly making arrangements overseas.

Currently, the main destinations for Chinese companies investing overseas are emerging Asian countries such as Vietnam, Thailand, Malaysia and India, as well as Mexico. These countries have benefited from the huge bonus of the shift in Sino-US relations and are currently showing strong momentum of development.

However, considering these countries are not mature economies, companies will need to conduct field inspections when expanding overseas. They must carefully analyze the local business environment, policy support, infrastructure, industrial landscape, land rents, labor wages, labor efficiency, strike levels, and tax costs.

Two key tools for Chinese companies going global:

One is the mature "involution" rule; the other is the developed consumer application. However, these two weapons are also vulnerable to local policies.

The U.S. government is also watching the trends of Chinese companies going overseas. Trump has already said that if he is elected this year, he will impose a 100% tariff on cars produced in Mexico by Chinese companies, making it "impossible for China to sell such cars in the United States."

New energy vehicles, artificial intelligence, and quantum computing may be sanctioned, but most of the industries going overseas will not encounter the "encirclement and suppression" of the United States.

Capital going abroad is similar in logic to enterprises going abroad. As the macroeconomy is saying goodbye to high growth, coupled with low inflation caused by high debt, the central bank will continue to cut interest rates to reduce debt. China is entering an era of asset scarcity.

Returns on major asset classes rarely exceed 3%; real estate and stock investments face losses; returns on deposits and national debt continue to decline; the returns on insurance, funds, and bank wealth management based on such benchmarks will also continue to decline.

Currently, the annual yields of the three major stable assets, US dollar savings, 10-year US bonds, and US dollar savings insurance, are all between 4% and 7%. The difference in yields at home and abroad naturally drives funds to go abroad.

China is currently in a critical window period for families to adjust their asset allocation. Family asset allocation will shift towards safe, liquid, and hedging assets, with global allocation and multi-currency hedging being major trends.

Mass consumer market, silver economy, non-performing asset disposal, and overseas expansion of corporate funds are the four rare tracks in China in the next decade.

Large companies need to turn prudently and lay out their industries overseas; small companies need to take small steps and quickly grasp structural opportunities.