The four major banks in China are state -owned banks.The Beijing government is very easy to command them to prevent systemic risks.The government also has a huge influence on the main borrowers.No one can shout "fire", which caused chaos that caused the catastrophic panic in 2008 and eager to escape the market.Because of this, China is unlikely to experience Lehman's time.
China's economic growth has been weak since April 2023.However, preliminary signs began to recover in August, including actual imports and car sales.China's new economic development model is more tolerant, and gradually get rid of the excessive expansion of real estate and dragging the excessive expansion of infrastructure.In the deleveraging period of three to five years, the annual growth rate may be slow, maintaining at 3.5%to 4.5%. HoweverMore sustainable speed.
1. Structural problems of excess real estate and infrastructure
World Bank data shows that China is one of the countries with the highest savings rate in the world, accounting for 46%of the GDP (GDP).The multinational data of the Organization of Economic Cooperation and Development and the International Monetary Fund shows that the family savings rate accounts for about 35%of the disposable income, which is much higher than 15%of the United States, 13%of the European Union, and 10%of Japan.
These huge savings need to be transformed into investment.However, strict capital control, low bank deposit returns, and stock market fluctuations mainly based on retail investors have made Chinese families' investment choices very limited, and they have also exacerbated their excessive investment in real estate.
The huge national savings have also promoted the large -scale investment of local government officials for infrastructure. They are eager to please the central government with outstanding economic performance.
Since 2008, this over -investment has further expanded, leading to a reduction in asset return and full -factor productivity.As China continues to advance deleveraging in the next five years, the annual growth rate of GDP may decrease one to two percentage points from the original situation.
The current policies of the central government seem to focus on the premise that it will not cause serious economic collapse or financial crisis, and properly manage the process of deleveraging.Based on the huge supervision and administrative control of the real estate and financial sector, the crisis can still be avoided.
If economic growth has deteriorated further this year, it is expected that the Chinese government will take more powerful stimulus measures.Different from local governments, the proportion of the central government's debt accounts for GDP is only 22%, so it still has a large ability of expenditure.In addition, as of July 2023, China's foreign exchange reserves announced 3.2 trillion (USD, the same below, about S $ 4.36 trillion), and a large number of unreasonable foreign exchange reserves in the state -owned banking system.
2. Consumers and private entrepreneurs have declined
After three years of rigorous crown disease prevention and control, China is like a car that has been put in the garage for too long -the battery is out of power. The government needs to continue to promote this car.Restart.It is necessary to boost the level of consumer confidence at lower consumer confidence during the Asian financial crisis, the Shatz epidemic, and the global financial crisis, and the government is urgently needed to take decisive measures.
The regular investigation of 20,000 households in 50,000 cities in 50 cities showed that the employment experience index in the second quarter of 2023 fell from 39.9%in the first quarter to 37.6%.To 47.8%, below 50%.Due to weak employment prospects and downturn in income, 58%of interviewees tend to increase savings. This ratio is the same as the first quarter, but it is much higher than the level of 45%before the crown disease epidemic.
It confirms this fact: the growth rate of private fixed asset investment with more than half of the total investment in fixed assets, from 23.1%in 2013 to 10.1%in 2015, further decreased to 4.7%in 2019, 2023 in 2023In the first half of the year, it even fell into negative growth, a year -on -year decrease of 0.2%.
Although the base was low in the same period last year, the year -on -year growth rate of GDP reached 6.3%in the second quarter, and according to the month of the month, it only increased by less than 1%in the second quarter.The main reason is that household consumption increased annual, from 33%in the first quarter to 15%.The surge in the first quarter was due to the government blocking the crown disease at the end of 2022.
However, in August, it showed that the economic recovery had germinated, and the decline in imports was wrongly interpreted.In the first seven months of 2023, China's imports decreased by 7.6%because the price of energy and other raw materials declined, not weakened demand.The import volume has been steadily picked up.In June, the number of imports increased by nearly 5.9%.From the perspective of quantity, the import volume in 2023 rose steadily, and the actual increase in the first 7 months was 1.0%, while the same period last year fell by 6.4%.
Logistics continued to improve. The car freight traffic index of the car was increased from 1%in July to 14%year -on -year in the first 24 days of August.Railway passenger turnover remained at 71 million, and the year -on -year growth rate of the 24 days before August was basically stabilized at 36%.
Although consumer confidence is still fragile, it seems to have rebounded in August, maintaining a trend since January 2023.However, it is too early to predict that consumers' confidence will maintain the upward trend.
Internet platform industry recovery
The government's targets for Internet platform companies in the past few years have shaken the confidence of private enterprises.
"Looking forward" -This is the information conveyed to the Internet platform enterprise at a symposium hosted by Prime Minister Li Qiang in July 2023.According to CCTV reports, the heads of Meituan, Xiaohongshu, Haizhi Online, Cashi Lala, Alibaba Cloud, Xugong Hanyun, Douyin, Zhilian Recruitment and other enterprises have spoke at the symposium.
This is a strong signal issued by the State Council's Prime Minister, indicating that the government's rectification of these enterprises has ended.After the strict rectification of the technology industry, the Chinese government now needs the support of the industry to deal with the increasingly fierce scientific and technological competition in the United States.The new idea is: "In this case, why not let them work well?"
No surprise, Tencent's revenue in the first half of this year achieved double -digit growth.
Signs of deflation without deflation
Some Western media have been promoting China to be in crisis, and the tightening tightening in July is the beginning of China's economic tendency to "Japan."
The consumer price index (CPI), which received widespread attention in July, decreased by 0.3%year -on -year, mainly due to the rise in food prices in the same period last year.In particular, pork, an important part of the consumer price index of residents, was the same as the July price in July, which was the same as June, but due to the high base of the same period last year, it fell by 26%year -on -year.Excluding the price of food and energy with large fluctuations, the core inflation in July actually rose 0.8%, higher than 0.4%in June.
Preliminary data in August shows that economic recovery may have begun, but it is still very fragile.The government must also work harder to boost confidence.Actions need to be taken to prevent the confidence of weak consumers and private enterprises that affect each other and lead to a vicious circle.
The current government policy under Li Qiang is trying to boost consumers and private enterprise confidence.If a more serious economic recession occurs, in addition to the stable balance sheet of the central government, the state -owned banking system will be the last line of defense in China.
Unlike the bank giants of Wall Street, London, Zurich, and Frankfurt, the four major banks in China are state -owned banks.The Beijing government is very easy to command them to prevent systemic risks.The government is also to the LordTo borrowers, whether it is private, state -owned real estate companies, trust funds, or participants in large shadow banking systems, they have huge influence.No one can shout "fire", which caused chaos that caused the catastrophic panic in 2008 and eager to escape the market.
Because of this, plus mortgage loans with a down payment of up to 20%to 40%and fully pursuing power (similar to many EU countries, but unlike the US mortgage loan), China's current situation is from the 2008 global financial crisis in 2008At that time, the US over -leverage mortgage and strategic defaults were completely different.China is unlikely to experience Lehman's time.
Three, new development strategy
China has changed the development path of excessive investment in real estate and infrastructure in the past, and has turned into investment in the fields of hard technology, electric vehicles, advanced manufacturing, new energy and materials, medical care and medical equipment, and life sciences.
The future growth model will continue to flow savings, and the new model will be diverted from the field of excessive investment in real estate and infrastructure.Taking the automobile manufacturing industry as an example, China replaced Japan in the first quarter of 2023 to become the world's largest car exporter.Economist data shows that in 2015, China exported less than 375,000 vehicles each year, less than India, which was roughly equivalent to the export volume of Germany and Japan in just one month.
The bad debts of the real estate industry and infrastructure projects must be treated, either become a bad debt on the bank's balance sheet, or peeling to non -performing asset management companies.The bad debt nuclear sales will eventually indirectly digest through low bank deposits.
As the policy emphasizes "common prosperity", policy measures have also clearly focused on income re -distribution and improved family benefits.In terms of policy, this means that through measures such as strengthening the social welfare system, improving the pension system, expanding the scope of unemployment insurance, increasing medical subsidies, and deepening medical insurance, the problem of high family savings rate is fundamentally solved.Since 2000, government medical expenditure shares have increased from about 10%to nearly 30%after 10 years. The burden of self -payment for the public has decreased from 60%in 2000 to 36%in 2018.The rest are borne by society and commercial insurance.
However, World Bank data shows that compared with China's Argentina, Brazil, Mexico, and Turkey, the Chinese government's health expenditure in 2020 accounted for a small proportion of GDP.Therefore, China still has a lot of space to increase medical subsidies, allowing families to be more secure, reducing savings and stimulating domestic consumption.
These improvements in the Chinese social security system can raise funds through more effective taxes.Due to the general existence of income income and tax avoidance, China's personal income tax accounts for only about 1%of GDP, while more than 10%of Italy, 7%in Spain, 4%in Mexico, more than 3%of Turkey, 1.6%in Costa Rica, and 1.3%Colombia.
The social security system after the reform will effectively send more money to the middle and lower class that is more likely to consume.This will be effective and sustainable re -distribution to reduce China's savings rate and stimulate long -term consumer demand.
The old growth model has benefited from corrupt local officials and their relatives, private real estate developers, foreign private equity investors, rich cities and upper classes, and some private business owners.These people have multiple real estate but have not paid the corresponding income tax and wealth tax.
This change will be arduous and risky, especially in the context of facing global geopolitical challenges.It is necessary to handle the confidence of consumers and private enterprises and ensure the stability of the financial sector.As these excessive and distortions are gradually eliminated, confidence will resume steadily, and economic growth will also return to about 5%of more sustainable speeds.
For 30 years, I have traveled to 31 provinces in China and visited hundreds of cities and villages. I have a deep understanding of the Chinese people and society.
For about 75%of the Chinese people, especially young people who are currently squeezed out of the real estate market, the middle and lower class of the coast and the central and western regions, and the majority of farmers.That distorted and imbalanced development model.This will not only strengthen the legitimacy of the mainland government, but also create a more stable and fair society.
The author is a professor of economics at Nanyang University of Technology
Founding and Vice Chairman of Bisheng Asset Management Co., Ltd. (APS)
