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　　　　Huawei’s new flagshipP8It was officially launched at the end of last month. According to the data given by Huawei, this onecell phoneThe response after listing was still good, and it was sold out within a short time after opening and sales.HUAWEI P8I have also experienced this phone for a while. It has a beautiful appearance and good internal experience. The biggest thing I feel is the improvement in photography, especially night photography. And this time around it andiPhone 6To expand the comparison, let’s start with the appearance.

Night shooting is even better, HuaweiP8Compare applesiPhone6

Product name	Apple iPhone 6 (full Netcom)	Huawei P8 (GRA-UL10/high-end version/dual 4G)
Home screen size	4.7 inches	5.2 inches
Home screen material	Multi Touch (IPS technology)	TFT material (IPS technology)
main screen resolution	1334X750 pixels	1920X1080 pixels
4G network	Mobile TD-LTE, China Unicom TD-LTE, Telecom TD-LTE, FDD-LTE	Mobile TD-LTE, China Unicom TD-LTE, China Unicom FDD-LTE
Operating System	iOS 8.0	Android OS 5.0
number of cores	dual core	true octa-core
CPU model	Apple A8 + M8 coprocessor	HiSilicon Kirin 935
CPU frequency	1.4 GHz	2.2 GHz (High Performance A53), 1.5 GHz (A53)
GPU model	Imagination PowerVR SGX6450	Mali-T628 MP4
processor bit	64 bit	64 bit
RAM capacity	1GB	3GB
ROM capacity	16GB/64GB/128GB	64GB
Battery capacity	1810mAh	2680mAh
Rear camera	8 million pixels	13 million pixels
Front-facing camera	1.20 million pixels	8 million pixels

Round and square, metal body with outstanding feel (1)

　　　　Compared to its predecessor, HuaweiP8The appearance material has obvious changes. The P7 uses metal and double-sided glass, whileP8It is an all-aluminum alloy integrated fuselage design.iPhone　6 is the same, and the screen size is increased to 4.Seven inches., and Huawei with a 5.2-inch 1080P displayP8Put together, iPhone 6 whole or slim on a circle.

HuaweiP8(Gold) Contrast with iPhone 6 front top

　　　　HuaweiP8The earpiece is slightly wider and longer than the iPhone 6, and its sensor and the 8 million pixel front lens on the right form a symmetrical design. iPhone 6 is to design the front lens on the left side of the earpiece, and the top of the earpiece is the sensor. Because this generation of iPhone is still equipped with a 1.20 million pixel front lens, so if you look closely, you will find that its front lens is better than Huawei’sP8Small.

bottom comparison

　　　　iPhone 6 still uses Apple’s classic physical home button design, with iOS unique interaction pattern, excellent operation experience, round home button surrounded by a circle of metal edge, which is used sinceiPhone 5sFrom the press-type fingerprint recognition function installed, andP8Does not support fingerprint recognition. HuaweiP8Or the Android three King Kong design in the phone screen, these three buttons are Android 5.0 advocated by the minimalist design, the triangular return key on the left, the round Home key in the middle, the far right is the square multi-task menu key.

Right border comparison

Left border comparison

　　　　HuaweiP8The power button and volume button are designed on the right border of the mobile phone. The power button is intimately treated with anti-skid lines, and is made of the same metal material as the fuselage, which has good button feedback.Apple iPhone 6The power button is designed on the right side of the mobile phone, the volume button and the one-button switch sound button are designed on the left side of the mobile phone, and the button feedback is also good.

Round and square, metal body with outstanding feel (2)

Slot comparison

　　　　The very business-minded Apple givesiPhoneThe design has always been that a single card does not support memory card expansion.iPhone 6No exception, it is estimated that the following 7 and 8 will not change much. (Just look at the new version of the MacBook, a mouth…) andHUAWEI P8It supports Unicom Mobile Dual SIM 4G, and also supports up to 128GB MicroSD card capacity expansion, which is also recognized by many people as Android.cell phonePlace. However, HuaweiP8The dual card and memory card expansion cannot have both, which means that if you insert a dual card, you can no longer insert a memory card, which is somewhat regrettable.

Rear lens comparison

　　　　HuaweiP8Rear 13 million pixel camera, equipped withSonyThe new generation of IMX278 sensor has a larger sensor area than the P7 IMX214; in addition, it also uses the RGBW sensor for the first time, and also supports optical image stabilization. The iPhone 6 is still 8 million pixel rear lens, and there is no optical image stabilization support, especially this generation of iPhone is not very particular, the camera is raised. And Huawei, which is thinner than the 6.9mm body thickness iPhone 6P8(6.4Mm) is very flat.

Back bottom comparison

　　　　Do you want a thin or raised camera? It is estimated that many people will choose such asP8That is, the body is thin, and the rear lens is not raised! Mobile phones with integrated metal bodies, mobile phone antennas are a big problem, so we see that the upper and lower ends of the iPhone 6 back seriously affect the appearance of "leucorrhea". HuaweiP8It can’t avoid this problem, but it uses a "black belt", so the back has the beauty of a panda, and its antenna is polished very flat.　

Bottom interface comparison

top interface comparison

　　　　HuaweiP8The iPhone data cable interface and external speaker are designed at the bottom of the mobile phone, which adopts a neat symmetrical design. However, iPhone 6 also designed the 3.5mm earphone interface to the bottom of the mobile phone, and HuaweiP8It is on the top of the phone.

　　　　In general, these two products have exquisite shape design, the use of 2.5D curved screen iPhone 6 start round, feel comparedHUAWEI P6The square shape design is better. Of course, this does not mean thatP8It just hurts my hand, and it doesn’t feel good. In factP8The polishing of the details is also relatively fine, but it is possibleP8It is more suitable for men, while iPhone 6 is suitable for both men and women.

Open and seal the fate of Android and iOS

　　　　Google’s Android system and Apple’s iOS are two very different platforms, not only reflected in an open and a closed, but also in many interaction patterns.HUAWEI P8It uses Huawei EMUI 3.1, which is deeply customized based on the Android 5.0 operating system, andiPhone 6It is iOS 8 interface.

　　　　Let’s start with Huawei.P8EMUI 3.1 has been further upgraded on the previous 3.0 version. The overall interface has not changed much, but several more practical functions have been added, such as knuckle screenshots. It cancels the 2-level interface like the current mainstream form in China, and finds applications by swiping left and right. And the Yuedao application on the leftmost screen of the desktop helps users quickly provide all kinds of information they are interested in, and the experience is good.

Drop-down menu and multitasking background

　　　　For ordinary users, Android system compared to iOS the most attractive may be that you can change the theme (iOS need to jailbreak), especially domesticcell phoneWe have done even better in this regard, providing users with a wealth of online resources, including free and paid ones, from lock screen styles to lock screenswallpaperWait, you can do it yourselfdownloadResources for DIY, whileiPhoneThere are many limitations.

Theme/Sports/Mobile Life

　　　　HuaweiP8It also includes Keyword Spotting and a smart profile that can act as a travel assistant. In addition to this, it also adds some special gesture operation experiences: knuckle screenshots, and one-handed mode.

One-handed mode

　　　　Let’s talk about the one-handed mode first. This mode is very simple to switch. Just swipe horizontally on the virtual button bar at the bottom, you can quickly switch to the one-handed mode, and then swipe in the opposite direction to switch back to the full screen. Whether it is left-handed or right-handed, you can easily switch back and forth.

Various gesture controls and knuckle screenshots

　　　　Knuckle screenshots are more interesting, HuaweiP8You can identify the knuckles, and you can easily take a screenshot of part of the screen by circling on the screen. After that, you can adjust the size of the screenshot area arbitrarily, which is different from the traditional way of taking full-screen screenshots such as power supply + Home button, which is very innovative. And it is said that Huawei will develop more functions for the knuckles in the future.

　　　　The features mentioned above are unlikely to be seen on iPhone in the short term, after all, even support for third partiesinput methodAlso in this editioniOS systemIn order to achieve, that is to say, if you are an Android user to iOS user, you need to get used to and adapt to a lot. Because I have seen with my own eyes that my friends have just changed to the first day of iPhone 6. The various operations are not used to it. Of course, if you are an old iOS user like me, you will think that this closed operating system is actually very useful.

iOS 8 Support for third-party input methods

　　　　The new version of the iOS 8 compared with the previous generation also has a lot of improvements, such as iMessage can send pictures and voice, more like a no MomentsWeChatBut in China, which is almost ruled by WeChat, it is vulgar to say "but this is useless". Because the current social apps are so developed, ordinary users rarely even send text messages, let alone iMessage, but it is good to have changes.

　　　　Now people are paying more and more attention to sports health, iOS 8 is also a timely launch of health applications, and Apple later launched Apple Watch. If you are a person who likes sports, even if you don’t buy Apple Watch, it is also good to match another wearable device that supports iOS.

　　　　In order to optimize the one-handed operation experience, iPhone 6 support gently double touch the Home button twice, and the screen display is reduced by half to facilitate the operation of users with small hands.4.7 inchesiPhone 6 may not be significant, but5.5 inchesofiPhone 6 PlusStill usable.

iMessage and Handoff

　　　　　In addition to the above-mentioned functions, iOS 8 also connects the iPad with the Mac, allowing mobile phones, tablets and computers to connect. This function called Handoff is also relatively tasteless in China, because it means that it is not enough for you to sell a "kidney". Besides, from my previous experience of this function, its convenience is that you can continue to send unfinished emails on the Mac or continue to watch videos when you squat on the toilet, but its practical use is not as convenient as the AirDrop sharing function.

　　　　　　Can not complain iOS, in fact, the long-term fluency of this system is stronger than the Android system, and it does not eat configuration, iPhone now 1GB random access memory still runs smoothly, and Google’s Android currently 3GB has become the flagship standard.

　　　　　HuaweiP8The two different platforms that iPhone 6 belong to are very different, but to be honest, the two products are not very comparable, because the current domestic mobile phones have many unique optimizations for the Android system. EMUI’s development in recent years is good, the interface is more refreshing, and there are more and more practical functions, such as yellow pages, family care, gesture operation, etc. The two systems are not the best or the worst, and the experience has its own advantages and disadvantages. See which one you prefer.　　

Take pictures　HUAWEI P8Imaging is better and more fun

　　　　In terms of photography, it is actually this generationHUAWEI P7The biggest improvement, its 13 million pixel camera usesSonyThe new generation IMX278 sensor also uses the RGBW sensor for the first time, which is stronger in light input than the current mainstream RGBG sensor. In addition, it is also equipped with an independent ISP and has a large aperture of F/2.0. Support time-lapse photography, streamer shutter and other creative shooting.

HuaweiP8Screenshot of the camera interface

　　　　whileiPhone 6Or 8 million pixel iSight lens, single pixel size 1.5 microns, F/2.2 aperture, mixed infrared filter, sapphire glass mirror. The photo mode is still simple Apple style, adding time-lapse photography, slow video and other shooting. For details, we can take a look at these twocell phoneThe actual photo sample.

HuaweiP8(Click to enlarge)

Apple iPhone 6(Click to enlarge)

HuaweiP8(Click to enlarge)

appleiPhone　6 (Click to see larger image)

HuaweiP8(Click to enlarge)

Apple iPhone 6 (click to enlarge)

　　　　For the daytime part of the sample, the difference between the two products is not too obvious, only the indoor part, HuaweiP8The glare control is better, and the light basically does not overflow. And we can see Huawei in this set of samples of goldfish.P8The color is stronger, the details are more in place, and the whole is slightly better than iPhone 6.

　　　　Next, let’s take a look at the night part.

HuaweiP8(Click to enlarge)

Apple iPhone 6 (click to enlarge)

HuaweiP8(Click to enlarge)

Apple iPhone 6 (click to enlarge)

HuaweiP8(Click to enlarge)

Apple iPhone 6 (click to enlarge)

　　　　Through these three sets of samples should be able to clearly see the difference between the two mobile phone night shot. iPhone 6 night shot is good, but HuaweiP8Better, first of all, the overall picture is brighter than iPhone 6, and secondly, its glare control is better than iPhone 6, HuaweiP8The edge image quality and noise control are also good, for a mobile phone, this performance is enough to praise.

No points, the apple is still the same apple

　　　　According to the previous comparison evaluation, we will compare the scoring results of the two products in the performance test section, butHUAWEI P8andiPhone 6Belonging to two different platforms, the results are not comparable. and we knowiPhoneIt doesn’t depend on the hardware configuration itself, so this part is skipped.

　　　　I can give you a brief introduction to Huawei.P8And the processor carried by the iPhone.P8The eight-core HiSilicon Kirin 935 uses four 2.2GHz A53 cores + four 1.5GHz A53 cores, big. LITTLE large and small core design. Unlike ARM Cortex-A53, which cannot run on high frequency, Huawei solved this problem and independently developed Library on the basis of Cortex-A53, forming a new A53 architecture, which enables the processor to run stably on 2.0GHz. At the same time, the new A53 core has become the main big core.

　　　　Huawei chose such an A53 design to better balance power consumption and performance, which not only improves the performance of the large core, but also controls the power consumption within an acceptable range. At the same time, in the Kirin 935 chip, Huawei also added a coprocessor, which is based on the ARM TrustZone hardware security technology implementation, with Huawei’s EMUI 3.1 operating system, built-in encryption algorithm, support for secure boot, can effectively protect user information and payment security. This function is similar to Huawei’s previousMate 7The coprocessor of the fingerprint recognition technology is the same.　　

iPhone 6 A8 chip (from Apple’s official website)

　　　　iPhone 6 uses a new A8 processor + M8 coprocessor combination, the A8 chip is 13% smaller and 25% faster than the A7, which uses 2 billiontransistor(Compared to the A7 1 billion doubled), 20 nm process (A7 is 28 nm), graphics processing unit performance improved by 50%. M8 motion coprocessor, in addition to collecting information from gyroscopes, accelerometers, direction sensors, etc., will also collect information from the newly added air pressure sensor.

Evaluation summary:

　　　　Apple is still the apple, iPhone 6 still the same, a year to sharpen a sword, its overall performance is still in the current intelligentcell phoneAnd Huawei is no longer that Huawei, from P6 to nowP8Although the incubation cycle of the product was not as long as that of Apple, it was better than the next generation, and the next generation made great progress. Especially this generationP8EMUI 3.1 also adds Huawei’s own innovative features on the basis of the native Android 5.0 operating system. With the rise of domestic mobile phones, it is impossible not to like them.

Lynk & Co in the early launch of the three models (01/02/03) in addition to the design is more avant-garde, in fact, the essence of the shape positioning is very traditional (compact, sedan), even if it is bold, it is only in the sedan on the basis of the performance car 03 +. So this seemingly very leather brand, in fact, the pace is very stable.

As bystanders, after looking at its brand product line, most of us would think that it is time for Lynk & Co to pull out one, and preferably a sedan to complement its lineup. However, after entering 2020, Lynk & Co has once again skinned it and pulled out a compact and niche coupe.

Design is difficult to appreciate both elegant and vulgar

Over the years, coupe design has been rampant, from high-end to close to the people to old man music. This design, which should have been exclusive to cars, has appeared by mistake, largely due to the crooked head of the year. From another perspective, why people don’t like this style is mainly because the high visual center of gravity is matched with this oblique streamline slip, which can easily create a "hunchback feeling". This destroys the streamline aesthetics of the vehicle to a certain extent, and the essence, qi and spirit of the whole vehicle will become declining.

So that the design of this kind of design is often separated by a line, and the design skills are very exquisite. The design of Lynk & Co is definitely higher than that of those car companies that only outsource to Binfa design, so when you look at it from the side of the Lynk & Co 05 car, its hunchback is not obvious, and the whole is still very smooth.

For most people, at least the first time you see the Lynk & Co 05, you won’t have obvious disgust, but it’s also hard to fall in love with it all at once. That is to say, the 05 model is a classic example of "I like it very much, I don’t like it if I hate it". Since the birth of the Lynk & Co 05, it has been decided that it needs a Bole who can appreciate it. I don’t know what you think of this horse in front of the screen?

As for another point, although the front of the Lynk & Co 05 is a familiar layered design, the overall design language has clearly entered the "2.0 era". Like the front middle grid grille, daytime running lights, etc., there are obvious variants compared to the past, and the overall style has changed from round to sharp.

Although you can still recognize the car at a glance when you look at it from a distance, many changes in the details will make your brain tell you that "this is not the old Lynk".

Luxurious interior

And the entire interior of the 05 can be regarded as earth-shaking. If you get into the car, touch the fur that feels great, look at the imported aluminum trim like a mural, and there is a natural feeling at the intersection of the former two, then you will suddenly flash the word "advanced" in your mind at a certain moment. After all, the interior of the 05 is a level higher than previous models in terms of design and materials. This kind of car material also proves that Lynk & Co is trying to create a more advanced atmosphere than previous cars.

As an old car owner, I basically have nothing but praise for this interior, especially the new central control system, which not only has a clear screen and smooth picture, but also has quite complete functions. And the new fingerprint recognition, glove box password lock and other small functions are also very interesting and useful. Of course, this set of cars with good experience is largely due to the use of Qualcomm Snapdragon 820A chips (the standard level of Android phones around 2016). I used my own 03 central control system after shooting, as if I had returned from the Iphone 4 to the Nokia era. I don’t know when Lynk & Co officials will be able to consider replacing the cars of early users, even if it is at their own expense. I believe most people are willing.

Another point is that this time the Lynk & Co 05 has finally adjusted the driving mode selection to the front and rear push type, which is much more reasonable than the previous knob type + determined operation mode. Of course, it should also be pointed out inside the car that there is still a lot of room for improvement in the utilization rate of Lynk & Co’s storage space. Second, the manual mode of the Lynk & Co car series (the shift handle swings left and right to perform manual lift and drop gears), the high-end car with steering wheel shift paddles is fine. If it is a low-end car, it really has to pay a certain learning cost. Is this "bad" tradition really necessary to be preserved?

As for the rear space of the 05, I think the 32cm legroom can definitely meet the needs of most people. Secondly, the back-sliding indenter that everyone is worried about has also been specially treated for stealing air on the 05, and the wide and thick seats with good wrapping make it comfortable to sit up. However, due to the center of the four-wheel drive model, the middle position of the Lynk & Co 05 is not suitable for adults to ride for a long time.

In addition, it should be noted that a good sense of body does not mean a good look. Even if the front bucket chairs used by the entire Lynk & Co series are commendable in both appearance and practicality, the wide bucket chairs and the upwardly narrowed window line of the back door will create a sense of sight suppression in the rear row of the 05, and it will feel dark in front of you when closed (opening the panoramic canopy will be greatly improved). Of course, with the original rear privacy glass, you can also think that the back row of the Lynk & Co 05 has a strong sense of privacy.

Compared with the riding space, the back of the car often has a greater impact on the trunk space. From the data, it can be seen that the trunk of the Lynk & Co 05 is indeed slightly worse than the traditional shape (mainly due to the height of the trunk and the opening of the trunk off the ground). However, in terms of practicality, the 05 has been targeted for floor sinking. If you compare other models of the same design (such as the Changan CS85), you will see that the trunk space utilization rate is quite good.

Same powertrain.

The Lynk & Co 05’s powertrain can complete the overview in three words: "2.0T for T5", "Aisin 8AT", "50:50". It sounds familiar because everything is exactly the same as + except for the plastic cover above that doesn’t say "Performance" and the lack of a track mode on the driving mode.

Only from the objective data point of view, the 2.0T of 254 horses is just right; and from the subjective experience point of view, in the comfort mode, the front section of the throttle is still very linear, and occasionally there is a feeling of laziness, but after deeply stepping on the throttle, the acceleration of the middle and rear sections is very sufficient, and the turbine pressure will give you a feeling of continuous power.

If you want to be restless, the whole powertrain in sport mode will be much more aggressive, the throttle response will be timely and sensitive, and the willingness to step down deeply on the throttle will become more active. If you want extreme sports, then you may have to forgive me, because the split and extremely restless track mode does not appear in the 05 driving mode selection list.

Since it is mentioned, then I have to mention this set of Aisin 8AT, the shift rhythm may not be too crisp, but the victory is smooth. With its assistance, the whole 2.0T is very smooth. After all, this set of 2.0T + 8AT has been matched with high-end models on the Internet for many years, and it is transplanted to the CMA platform intact, which will not be difficult for Lynk & Co. With the group’s many years of cooperation experience with Aisin, making this high-quality powertrain is purely a routine operation.

In addition, after a long time of contact with a variety of models of Lynk & Co, I finally came to an unspoken rule that is not a secret. That is, the steering feel of Lynk & Co cars is often distinguished according to. From 1.5T, 2.0T low public rate, to 2.0T high, their steering feel is gradually increased from light to heavy. So if you love driving, then you will definitely prefer the steering feel of 03 + and 05. Although their feel is relatively light and flexible compared to similar models, they still belong to the category.

As for the Lynk & Co 05, I was a little surprised. Generally speaking, the models with the CMA architecture are relatively similar, with a strong sense of advanced and sufficient toughness. They are also very calm in the face of road shattering. Like the 01, 02, and 03 that are casually pulled out can overwhelm them in terms of comfort compared to competitors in the same price. However, Lynk & Co is a little too comfortable in the adjustment, which often causes the vehicle to roll more obviously when cornering (even the ordinary 03). Compared with previous models, the Lynk & Co 05 can still maintain a high level of comfort. There is also a roll, but it is obvious that the support when cornering is very good. It can filter the vibration of the road surface while transmitting a non-disturbing road feeling. The whole has a strong sense of firmness.

If the range of 0-100 is used to describe the change of the Lynk & Co car series from comfort to hardcore, then the previous 01, 02, and 03 may be around 60 points, which is obviously more comfortable, like + is 100 points, the road feeling is very clear, and the Lynk & Co 05 is just in the range of 80 points. In other words, the Lynk & Co 05 is the most balanced one in the current Lynk & Co car series.

It is also the most expensive Lynk & Co in terms of sound insulation.

The Lynk & Co 05 is currently the only Lynk & Co car equipped with double-glazing in the rear, so it has a good environmental sound insulation, and there is even a slight ear pressure when closed. And even if it is limited by the higher shape, there is no obvious wind noise during high-speed driving, and the sound insulation level of the whole car is compared with that of luxury brands, and it will never fall behind.

There were two main sources of noise. Firstly, the Eagle, a performance tire with a hard wall, would be more challenging, and the tire noise was still more obvious. Secondly, the ancestral T5, which had a strong grainy feel at medium and low speeds and was not very pleasant to the ear when transmitted to the carriage.

I became weirder and stronger

The comprehensive strength of the Lynk & Co 05 is beyond doubt. The complete powertrain, the rich configuration level, the top NVH and so on all mean that Lynk & Co really goes to great lengths to build a higher-end Lynk & Co. In the 18-220,000 range, it is difficult to find a model as unique and cost-effective as it. From a recommendation point of view, it is definitely worth buying.

The premise is that you can accept its unique appearance.

[Lingke 05 First Test Impression]

Outstanding advantages: perfect powertrain; high configuration level; easy to use; chassis for comfort and control, cost-effective.

Main shortcomings: general storage space and low universality of design.

At present, the most crucial thing is to stop the bleeding of Hengda, stop allowing its risks to accumulate and spread, and at the same time, we should preserve good evidence to lay a good foundation for future accountability through the rule of law.

Author | Li Wei

Source | Caixin

Li Wei

Professor of Economics, Cheung Kong Graduate School of Business

Director of the Case Study Center of Cheung Kong Graduate School of Business

Director of the Big Data Economics Research Center of Cheung Kong Graduate School of Business

Vice President of Asian Markets

On September 24, 2023, China Evergrande Group (referred to as Evergrande) issued an announcement saying that "in view of the ongoing investigation of Evergrande Real Estate Group Co., Ltd. (the main subsidiary of the company), the current situation of the group cannot meet the eligibility for the issuance of new notes".

Public information shows that Hengda is in a serious insolvent situation. At the end of 2021, the end of 2022 and the end of June 2023, the company’s insolvent gap is 473.10 billion yuan, 599.10 billion yuan and 644.20 billion yuan respectively.

Judging from this set of data, Evergrande has not "stopped the bleeding". What should be done for such a large real estate company that is in crisis and the situation is rapidly deteriorating?

Market-oriented solutions

The current situation of Evergrande is not optimistic. If the government does not intervene in this crisis and the market comes up with a solution, then there are only two outcomes. One is that Evergrande goes bankrupt, and the other is that market-oriented institutions acquire and integrate Evergrande without the help of the government.

Let’s look at the first outcome. Logically, this is the most likely outcome if Evergrande’s crisis continues to worsen. If Evergrande does go bankrupt, what consequences will we face?

In principle, companies, like people, no matter how big or small they are, will die one day without much fuss. However, the reality may be much more complex than we think, especially for large companies with a wide range of implications.

A classic example of this is the impact of the collapse of Lehman Brothers Holdings Inc. during the 2008 financial crisis.

In 2007, the pressure on financial marekts caused by falling house prices became increasingly obvious, and a series of Financial Institution Groups began to experience insolvent problems, but the overall situation was still under control.

After entering 2008, the situation took a sharp turn for the worse. Lehman, the fourth largest investment bank on Wall Street, began to thunder continuously, and the problem of insolvent gradually appeared. At that time, there was a huge disagreement in the whole society on whether the government should rescue Lehman.

In fact, the government also wanted to raise resources to rescue Lehman, because Lehman was one of the core nodes of the US financial network, but it was ultimately concerned about moral hazard (moral hazard refers to the fact that under the condition of asymmetric information, the responsible economic actors do not bear the full consequences of their actions. For example, Lehman took excessive risks in the course of its operation, making money for himself, and losing money can be required for government rescue based on its importance), and gave up the rescue.

The collapse of Lehman Brothers brought the financial crisis to a climax, causing the largest crisis in the US economy since the Great Depression.

The government’s abandonment of the Lehman bailout quickly escalated the financial crisis, but if Lehman is bailed out, it is likely to exacerbate moral hazard in the financial system in the future. As moral hazard builds, it will only be a matter of time before a larger financial crisis erupts.

The failure of Lehman’s self-rescue brought an unexpected result, which was the successful self-rescue of Merrill Lynch (Merrill Lynch for short).

Merrill Lynch is the third largest investment bank on Wall Street. As the parties discussed how to rescue Lehman, John Thain, the last Chief Executive Officer of Merrill Lynch (CEO), who participated in the discussion, immediately realized that Merrill Lynch had a similar problem. If it did not act immediately, then Merrill Lynch would be the next Lehman.

In order to save himself, Thain contacted Bank of America and sold himself to the latter for $50 billion, thus avoiding the end of Lehman.

In fact, from the perspective of game theory, the decision of the US government not to rescue Lehman, a Financial Institution Group that was so large that it had systemic risks, was somewhat random.

This means that the government will eventually rescue the vast majority of Financial Institution Groups that may cause systemic risks, but it should not let the market know the government’s trump card when choosing to give up a Financial Institution Group that can detonate systemic risks to curb moral hazard.

After all, there is a huge social cost to detonating systemic risk.

Government intervention solutions

The above describes the situation of relying on the market to solve the crisis, but in fact, when a major crisis occurs, the government will intervene more or less. Here are three examples according to the degree of government intervention.

First, the government only plays a coordinating role, and it is mainly handled by market forces.

The most typical example of this is the crisis resolution of Long-Term Capital Management (LTCM).

Founded in 1994, LTCM is a hedge fund specializing in highly leveraged carry trades.

LTCM became famous for its outstanding performance once it was established, but in 1998 LTCM suffered a huge loss. Due to LTCM’s highly leveraged trading strategy, its counterparties included many Wall Street Financial Institution Groups, so the crisis of LTCM once led to a possible systemic crisis in financial marekt. To avoid this dangerous situation, the Federal Reserve Bank of New York convened many Wall Street Financial Institution Groups to discuss ways to rescue LTCM. Finally, many Wall Street Financial Institution Groups raised $3.625 billion to rescue LTCM. The Wall Street Financial Institution Group’s investment not only saved the LTCM from the verge of collapse, but also eliminated its threat to the entire financial system.

During the entire incident, the Federal Reserve Bank of New York played a convening and coordinating role, but it did not provide capital or guarantee, and its intervention in the market was limited. It mainly relied on market forces to solve problems.

Second, the government provides some funds for rescue, but the main transactions are still completed by market institutions. A more typical example of this is the handling of Bear Stearns by the Federal Reserve Bank of New York in 2008.

Bear Stearns is the fifth largest investment bank on Wall Street and a very important Financial Institutions Group in the US financial system.

In order to prevent the collapse of Bear Stearns from hitting the entire financial system, the Federal Reserve Bank of New York coordinated JPMorgan Chase’s acquisition of Bear Stearns. In the process, the Federal Reserve Bank of New York funded the purchase of Bear Stearns’ assets for $30 billion, which helped to complete the entire acquisition.

In this deal, the government offered real money to rescue the problem company, but the amount was relatively small and only played a supporting role. The big problems were still solved by the market itself.

Third, the government fully intervened to take over the companies at risk, a classic example of which was the handling of Silicon Valley Bank by US regulators in March 2023.

Silicon Valley Bank, a bank whose main customers are high-tech companies, experienced a severe run in March 2023 because it did not do a good job of risk management. Fearing that panic would spread and trigger a chain reaction, the US Treasury, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) acted together and quickly intervened in the crisis.

After regulators took over Silicon Valley Bank, the FDIC announced an unlimited guarantee on all deposits, breaking the previous limit of $250,000. For Silicon Valley Bank, the regulator ousted all its executives and zeroed out the equity value.

From this series of actions, it can be seen that the government took a comprehensive intervention approach in response to the crisis of Silicon Valley Bank, taking complete control of the company, which is the deepest form of government intervention.

How can we resolve the Hengda crisis as soon as possible?

The above discusses different ways to resolve the crisis from the perspective of the market and the government. What is the significance of this for us to deal with Evergrande’s problems?

Here is the first thing to say, some people may say that the examples mentioned above are all Financial Institution Group, Evergrande is a real estate developer, not Financial Institution Group, there are substantial differences between the two.

Indeed, Financial Institution Groups, especially those large Financial Institution Groups that are at the heart of the financial system, often have a direct and huge impact on the entire system, even the macroeconomy, so once these institutions are in crisis, they are often prone to systemic crises. This is the case we saw in the Lehman bankruptcy.

Institutions with systemic risk are often large Financial Institution Groups, but systemic risk is not the patent of large Financial Institution Groups. All institutions that have a direct and huge impact on the economy and finance as a whole are institutions with systemic risk. Evergrande is one of them.

There are three reasons for this.

First of all, the real estate itself in China belongs to the giant industry, and its upstream and downstream implication is very wide, from steel and cement to home appliance decoration, some studies believe that these industries together ** the country’s gross domestic product (GDP) ratio may be close to 30%;

Second, real estate is closely linked to the financial system. When real estate goes wrong, the land market will soon follow. A large amount of financing in China is based on land and real estate as collateral. Once the value of these collateral shrinks, the risk will immediately spread from real estate to the financial sector;

Finally, Evergrande is a typical leader in the real estate industry, and its survival has a significant impact on people’s views on the entire real estate industry, and even on China’s economy.

Evergrande is so important, so how should we handle the current crisis?

First, Evergrande’s self-rescue seems to be very difficult to succeed. Evergrande has been in danger for two years. If self-rescue can work, we don’t need to discuss whether to rescue Evergrande today.

Second, use a market-oriented approach to solve Evergrande’s problems.

First, let Evergrande go out of business. This is difficult because Evergrande is a company with systemic risk. Second, let other companies in the industry merge and acquire Evergrande. This is a better approach because real estate is a sector with a certain technical threshold, and companies in other industries do not easily learn how to run a developer efficiently in a short period of time.

But there are two difficulties here, one is that Hengda’s scale is too large, in 2020 before Hengda’s accident, Hengda’s housing sales area was as high as 80.86 million square meters, ranking first in the country; the other is that Hengda has been suffering for a long time, and no one knows how big a hole there is. The resources required to acquire such a giant company may not be what a developer can have.

Third, the government intervened to rescue Evergrande.

First, the government only plays a coordinating role, allowing companies in the industry to acquire Evergrande, or establish a consortium, with money, such as the Financial Institution Group, and powerful contributions, such as developers. However, as mentioned above, this path is currently not feasible.

The second is that the government provides a small amount of funds, and then joins social funds to jointly acquire Hengda. This method is better, but the coordination cost is higher.

The third is for the government to directly take over Evergrande. This approach is the simplest and most straightforward, and can control the spread of risk in a short period of time. But the biggest problem is that the government does not know how to run a real estate developer well, and it is still such a huge and opaque developer.

From the current situation, each plan has advantages and disadvantages. Rescuing Evergrande, no matter what method, will create a certain moral hazard, but because Evergrande is a company with systemic risk, this forces us to compromise.

Rescuing Evergrande requires two resources, one is technology and the other is funding.

The government and some large companies outside the industry have capital but no technology, and companies in the industry have technology but no capital. Therefore, the best way is to form a consortium and give full play to their respective strengths.

But the drawback of this is also obvious. How to assemble a suitable team is very difficult, which takes time, but whether Evergrande’s crisis has left us enough time is something we don’t know. A direct government takeover can immediately stop Evergrande’s bleeding, but subsequent operations are beyond the government’s ability.

But this approach is not completely impossible. In this regard, we can still learn from the treatment of Silicon Valley Bank by US regulators. On March 10, 2023, US regulators took over Silicon Valley Bank. Just 16 days later, the regulatory bank found the next home for Silicon Valley Bank – First Citizens Bank (First Citizens BancShares).

Many people now have an understandable sense of anger towards Evergrande, especially those who paid for a house but couldn’t get it.

In the future, even if we rescue Evergrande, it will not be all bailouts. We should rescue homebuyers who cannot get houses and suppliers who do not get the money, but we should let Evergrande’s equity go to zero, most of its debt is impaired, and all executives are dismissed, just like the way US regulators handled Silicon Valley Bank.

But the most important thing at the moment is to stop the bleeding of Evergrande and stop allowing its risks to accumulate and spread. At the same time, we should preserve good evidence to lay a good foundation for future accountability in a rule of law manner. Looking at the overall situation, the government should find a way to take over Evergrande as soon as possible.