Be alert to the economic risks of the “three wide” environment

In recent years, the central bank has been painstakingly creating liquidity. Various kinds of money-consuming tools, “powder” ink, are on the scene, what are hot and sour powder (SLF), spicy powder (MLF), and special grade spicy powder (TMLF), etc. China has already formed a “wide currency” environment.

In January of this year, both the scale of bank credit and the total amount of social financing have set a new amount in recent years. According to the January financial data released by the central bank, M2 increased by 8.4% year-on-year, with an expected 8.2% and a previous value of 8.1%. In January, the scale of social financing increased by 4.6 trillion yuan, a record high, expected to be 330.7 billion yuan, the former value of 159.8 billion yuan; January loans increased by 3.23 trillion yuan, an increase of 328.4 billion yuan, new yuan loans Create a new monthly high. These data may include a good start, but it can be seen that the pattern of wide credit is forming. However, the growth rate of M1 was unsatisfactory, with a year-on-year increase of 0.4%. It is estimated that the newly added social financing will basically be used to pay and repay the loan. According to this, it can be said that the situation of “wide credit” has been formed.

Although the fiscal revenue in 2018 is 1,835.52 billion yuan, the growth rate is far lower than the GDP growth rate. On the surface, the tax reduction space is limited, and China is already a deficit fiscal, but this fiscal revenue does not include the land transfer amount. The land transfer fee is included in the “national government fund budget revenue” – reaching 7.5405 trillion yuan in 2018, an increase of 22.6%. Among them, the land use right transfer income was 650.9 billion yuan, a year-on-year increase of 25%. In this way, China’s total fiscal revenue for the whole year of 2018 is close to 25.88 trillion yuan, which is about 28.74% of the GDP of 90.03 trillion yuan in the same period. Such a ratio of fiscal revenue to GDP cannot be said to be high, so the trend of “wide fiscal” is also coming out.

What are the risks to be vigilant in the “three-wide” environment?
According to Premier Li Keqiang’s report in the government work, this year, the current 16% VAT rate in the manufacturing industry and other industries will be reduced to 13%, and the current 10% VAT rate in the transportation industry will be reduced to 9%. The proportion of contributions paid by basic pension insurance units can be reduced to 16%. In the whole year, the burden of corporate tax and social security contributions was reduced by nearly 2 trillion yuan. It can be said that this year’s large-scale tax cuts and fees have been on the line.

This year’s economic growth in China will be significantly different from the previous broad currency, tight credit, and tight fiscal environment. It will be an economic growth under the conditions of “wide currency, wide credit, and wide fiscal”. It can also be said to be one. The economic growth in the “three-wide” environment is an economic growth environment that has not appeared in the past years. The major global economies have begun to loosen the monetary tightening orientation. The United States will not raise interest rates during the year. The Fed’s contraction will soon stop. The European Central Bank will take measures to buy bonds and cut interest rates. China’s trade with the United States. The tension in the war will undoubtedly slow down.

Although the Chinese economy will show a broad currency, wide credit, and wide fiscal and economic structure in the future, how to ensure high output, high quality and high efficiency is still the key to the overall economic development. We must be alert to the high risks and high development costs that may be brought about, so as to avoid the existing development pattern from being abandoned.

Generally speaking, in the case of relatively abundant financial resources and financial resources, it is not conducive to the formation of strict self-discipline capabilities, which is not conducive to the full play of the market survival of the fittest mechanism, which is not conducive to stimulating the social innovation drive, and is undoubtedly not conducive to promoting the economy. Transforming to high quality development. Therefore, in a relatively favorable environment, we must pay particular attention to the various economic risks brought about by the looseness of the policy scale. For example, we must be alert to the real and leverage risks brought about by the use of stable leverage, and be vigilant to support the risk of credit flooding demanded by private enterprises. Be wary of the risk of inefficient or even ineffective financial resources, be wary of the risk of skyrocketing asset prices, and so on.

What China needs to emphasize now is: to increase the favorable conditions and to solve the stubborn problems accumulated by the economic operation for many years, such as the high dependence of economic growth on money supply. In the current situation, we must not only emphasize structurally stable leverage, but also emphasize structural de-leverage. We must achieve quality growth by fundamentally solving the problem of easy rise and fall of monetary leverage.

Where is the border of the policy?
In 2018, China’s macro leverage ratio fell for the first time. This was mainly the result of the decline in corporate leverage. Private enterprises made great contributions, but the proportion of state-owned enterprises’ debt to the corporate sector’s debt is still rising, from 57% in 2015 to 2018. 67% of the year. In 2018, the total leverage ratio of China’s real economy sector was 243.7%. Among them, 53.2% were residents, 153.6% were enterprises, and 37% were government. The leverage ratio of state-owned enterprises in the enterprise leverage ratio has reached 103%, and half of them are financing platform debts, which should be included in local government liabilities. The causes of the leverage risk of state-owned enterprises and local governments are the drawbacks of traditional systems such as soft budget constraints, non-discrimination between government and enterprises, central government and risk appetite in the financial system. It is not difficult to see the key points and difficulties of China’s deleveraging in the coming period.

For more than 40 years, the Chinese economy has not experienced a complete cycle of baptism, but the cost of economic growth is not light. What kind of growth efficiency an economy can show depends on the degree to which the market decides on the distribution of factors, and on the timeliness and pertinence of the government’s formulation of policies, and on China’s large-scale transformation on the path of growth. This is especially true for economies. Needless to say, China’s extensive economic growth has not been fundamentally changed so far. In the face of increasingly complex internal and external situations and challenges, the significance of the government’s policy of precision, system and synergy is undoubtedly heavier. Over the past. In the course of the entire economic activity, some departments of the government have to abandon the idea of ​​increasing or decreasing the size of the industry they are in charge of as the department’s performance, especially in the financial supervision department.

Today, with the increasing pressure of economic transformation, China must not only guard against the risks brought about by the policy reversal, but also guard against the risks caused by the superposition of loose policies. Therefore, the government should be more cautious in grasping the changes in the political and economic situation at home and abroad, more accurately judge the choice of economic activity subjects, and more accurately grasp the timing, intensity and direction of policy formulation and introduction, and introduce policies that require more systematic From quantitative to qualitative analysis, there must be more comprehensive efficiency and risk effect judgment. Under the “three-wide” economic growth environment, we must pay special attention to the control of the radiation boundary and the alternative boundary of various economic policies, so as to avoid the emergence of extensive release caused by the superposition of loose policies.

What problems in the capital market must be solved?
For a long time, one of the important problems that plagued China’s economic development is that the financial industry cannot fully and efficiently meet the development and asset management needs of various departments and private sectors in both direct financing and indirect financing. Indirect financing for service areas The service object has always been distorted and distorted. The direct financing system has always been characterized by structural and functional imbalances, and cannot play the efficiency incentive function of the capital market.

The emergence of the “three-wide” environment is undoubtedly conducive to the development of the capital market. However, in this case, the regulatory authorities should not engage in oiling and can no longer suffer from the market fluctuations. Instead, they must “build a standard, transparent, open, Under the goal of a dynamic and resilient capital market, we have taken the opportunity to solve the problems that have plagued the healthy development of the capital market for many years, such as the issue of credit fidelity and value growth of listed entities, how to avoid arbitrary misconduct or regulatory orientation by certain interest groups. The issue of kidnapping is more important to systematically solve the problem of protecting the interests of investors, including further strengthening the information disclosure system, the delisting system of listed companies, the rigidity of the disciplinary system of financial fraud, and improving the class litigation system that protects the rights and interests of investors. The system of proof of inversion and the system of damages, “putting good market entry and market export”, instead of stimulating the market to rise, such as issuing calls not to fear A shares to rise. To be honest, investors generally don’t fear the stock market to rise, unless they are unilateral short-selling speculators; and the market fluctuations that are motivated by market trading logic should never be a matter for regulators to worry about. Judging responsibility is originally a game market that wants to put other people’s money into their pockets. The regulators must control the fairness of trading rules and the transparency of transactions. Others are entirely investors’ own business.

As far as overall financial supervision is concerned, relying on the so-called “one size fits all” and scraping the regulatory storm to solve the development problems of the industry itself indicates that the supervision is not mature and not in place. Regulators can neither easily follow the trend nor wind easily. The so-called strengthening of supervision is not a temporary intent, and indiscriminately curbs the occurrence and development of certain market phenomena. Strengthening regulation can only focus on bridging regulatory loopholes, rather than keeping the market at a low level of development or losing the market’s vitality. All aspects of the financial industry are industries that deal with risks. Liquidity allocation risks and benefits are common features of the entire industry, so it is also unlikely to eliminate risks by strengthening supervision.

The solution to the real economic problem depends on China to form an institutional environment and market environment conducive to the survival and development of the entity, and then how the financial industry can serve its development.