GF Securities Shen Minggao: Proposal to relax fiscal deficit ceiling to 6%
Shen Minggao, chief economist of GF Securities: Proposed a large-scale relaxation of the fiscal deficit ceiling of 6%. Xu Tianxiao: Today we are also very honored to welcome Dr. Shen Minggao, chief economist of GF Securities, to bring you a speech that brings development.
Shen Minggao: Thank you Securities Daily for your invitation to participate in today’s event. This section is about directional development. The focus is not on discussing economic growth next year. From the perspective of the economic trend next year, it will face greater pressure in the first half of next year.As long as the economy is likely to stabilize at a low level in the second half of next year, the stock market next year will have more certainty than this year.
There will be four relative certainties in the market next year. The first certainty is that China-US trade negotiations may achieve phased results by the end of February. This phased results will help to avoid the deterioration of Sino-US trade frictions, even in the short term.There is a reduction in it. I don’t think the Sino-US trade friction will end, but it will not worsen in the short term.
Secondly, the Fed may raise interest rates next year. We expect the Fed to raise interest rates twice more next year. The market has begun to adjust. The market expects to raise interest rates two to four times in two months, and now it can only do so once or twice.
Therefore, the Fed will end the rate hike cycle next year, and the dollar may weaken from deep. Usually when the dollar weakens, emerging markets may benefit.
Third, the Sino-US economy is staggered. For the fourth time since 1997, staggered peaks have occurred. Whenever staggered peaks occur, the Chinese economy will be better than the United States, and the Chinese economy will be at a low level.Stabilizing, and the decline of the US economy from a high level, has brought stock market dividends of erratic peaks between China and the United States.
Fourth, how aggressive and prioritized fiscal policies are next year actually determines the impact on China’s economic transformation and market. If fiscal priorities are next year, supplemented by monetary policy, I think it is good for the stock market. If monetary policy, fiscal policy isSupplementary, may be a positive bond market.
Today ‘s discussion is a challenge and opportunity that will be faced from the perspective of previous development. First, the Chinese economy, the 16th National Congress of the Communist Party of China, made it very clear that the transition from high-speed growth to expected development means that the traditional economic growth momentum is weakening.
The horizontal axis is GDP per capita, and China is close to 1 in terms of purchasing power parity.
According to the nominal exchange rate, this year is more than 9,000 US dollars. Red is China, blue is Japan, and gray is South Korea. Basically, the per capita GDP pressure has reached 1.
At 40,000 USD, the growth rate of Japan and South Korea ‘s GDP dropped from about 10% to 4-7%. If the Chinese economy really enters the transformation and development in the future, it is likely that our GDP growth rate will continue to increase.Slow, between 4-7 percent, I think is an acceptable growth rate.
If the quality of growth improves at the same time, this is good news for the market.
We are now communicating with many investors. Investors don’t care much about the growth rate of GDP. The importance of GDP growth rate is to affect the profitability of the company. If the profitability of the company can be improved, the economic growth rate is slower, which is not a problem in itself.
Therefore, from the perspective of the expected development process, first of all, it means that the growth rate has slowed down. From the high-speed growth to the expected development, we have seen a transition period. My personal opinion of this transition period is not completed in one year.Now, there is an illusion, it seems that it has already entered a period of expected development. I don’t think so. It is now in a period of high-speed growth and gradual development. This transition period may take three years or five years.This year determines the direction of our policy.
Under the current circumstances, we can see the growth momentum of the past. The growth momentum during the period of rapid growth is mainly two categories, one is investment and the other is export.
One is the growth rate of real estate, and the other is the growth rate of manufacturing capacity investment. All the way down, the shorter one is infrastructure. This year, the growth rate is also very fast. This year, infrastructure may rebound, and the rebound of infrastructure is really significant.In addition to the preliminary buffer effect, in addition to the real estate industry has greatly eased.
How to relax the real estate policy next year, cancel the purchase restrictions and price limits, I think these should have been cancelled long ago, and should not be limited.
The key is how much the loan restriction policy can be relaxed next year. The blue line is the rate of medium and long-term supplementary loans for residents. The red line is the alternating change of 70 second-hand housing prices. The blue line is 6-12 ahead of the red line.Months.
How much the house price rises next year has a lot to do with policy relaxation, but it is particularly highly related to the credit policy. If there is a big credit discharge next year, of course, house prices will certainly skyrocket, but I think the aftermath is very obvious and the risk of the real estate bubble bursting is intensified.
If credit is controlled next year, house prices will rise, which is relatively limited, and regional relaxation will be more obvious.
The stimulus policies that worked well during the period of rapid growth have actually gotten worse and worse, especially the marginal effects. You try a stimulus plan and infrastructure again. These past traditionalThe stimulus policy, I think the marginal effect is declining.
The best way is to try to avoid these traditional stimulus policies, but tolerate economic growth alternatives appropriately.
Capacity investment is facing overcapacity, infrastructure investment is facing pressure from high leverage of local governments, and export growth is also facing the impact of Sino-US trade frictions.
Speaking of exports, the chart on the left is to calculate the growth of China ‘s exports to the United States. There are three lines. The lower blue is the first batch of 25% tariffs on the United States. This year, it is a negative growth of 29%.
The above line is the second batch of goods with a tariff of 200 billion U.S. dollars, which was levied a 10% tariff. It increased by 23% in September. Everyone is rushing to export. No tariff is levied. By September, the increase was about 9%.
If the Sino-US trade friction continues to worsen, it is clear that China’s exports next year will face greater downward pressure.
My prediction is that there will be a gradual relaxation next year, which will be beneficial to exports.
The growth rate of the traditional kinetic energy that China’s economy faces has slowed down initially.
There is also a more important routine, the US GDP structure, industry, agriculture, and service industries. Since 1840, the United States as a large country has certain comparability with China. In 1840, the United States economy experienced three transformations. The first was industrialization.From agriculture to industry, the second is that the industrial share has not risen, but the industrial growth has been upgraded from the low end to the middle and high end, and the third is the society from industry to service.
In the early 1980s, Japan ‘s manufacturing costs accounted for 45% of staff costs. In the early 1980s, Japan ‘s low-end manufacturing industry began to shift to China. In 2016, we also found that labor costs accounted for 45% of China ‘s manufacturing costs.%, So from this graph, we can tell us that from a national level, China’s low-end manufacturing scale advantage is gradually being lost, and China’s low-end manufacturing has started to shift overseas.
Let ‘s look at the graph on the right. The dark blue line is our calculation of the proportion of China ‘s labor-intensive exports to G20. In the early 1990s, labor-intensive exports accounted for only 10% of G20. From 2013 to 35%, 2016The year began to decline, and China began to shift to other countries.
China’s transition from high-speed growth to expected development occurred at the threshold of low-end manufacturing transfer.
Then, in superimposing trade frictions, we need some similar policies at such junctures to serve alternative development. This is the second point I want to make.
Generally speaking, the transition from high-speed growth to the expected development may require a transformation period of restructuring. In this transition period, I personally think that the most important policy is fiscal policy, which should be prioritized by fiscal policy and supplemented by monetary policy.
This is a policy-policy map. Structured policies go up to reform, and step-down policies go down to monetary policy.
The implementation of the policy is difficult. The policy on the left is very difficult. It requires strong men to break their wrists. The policy to the right is relatively easy to implement. It can be solved by issuing a document.
In such a space, you can see that there are actually two main types of policies, upper left and lower right, including lowering and reducing interest rates, relaxing real estate investment, and promoting infrastructure investment. These are the old methods of the past.It ‘s easy to cut interest rates. It ‘s easy to send a notice, but the policy at the bottom left is easy, but if it has a negative effect, it is likely to continue to increase leverage. It is likely that the asset bubble is higher, so we hope that the policy at the bottom right is less.use.
The top left is reform-oriented. I think the government is downsizing. It is the most difficult for the government to cut staff. This may be something to do in the future.We have found a policy that is expected to be a tax cut, which is part of fiscal policy.
My personal suggestion is that if from now to the next three to five years, China’s transition from rapid growth to transformation and development, fiscal policy should be given higher priority.
Monetary policy can be used to support the promotion of fiscal policy. The key point for everyone now is the government’s tax reduction. How strong is the tax reduction?
What is our market expectation?
In my personal judgment, the market expects that the scale of tax cuts next year will be about one trillion yuan, and some people say that the future five trillion yuan will be a trillion yuan a year.
From the entire high-speed growth to the expected development, I think one trillion is not enough. It is necessary to exceed market expectations to change market behavior. If the next five years or three to five years, the scale of annual tax reduction fees can exceed two.Trillion yuan, exceeding market expectations, may make us better from high-speed growth to alternative development, and the opportunity for the stock market is even greater.
Where does the space for government tax cuts come from?
This is a very important issue. There are three channels. The first channel is to increase the fiscal deficit rate, which is 2 this year.
5%, to 2 next year.
5, that’s 2.
With the increase of five exceptions, the government has a principle that it cannot exceed 3%, and it is understandable that it does not exceed 3% during normal times.
Our transition from high-speed growth to 重庆耍耍网 the expected transformation is a special thing, so I think we should expand the upper limit of the fiscal deficit. 6% is acceptable.
However, in the short term, it is more difficult for us to judge. It is possible that the fiscal deficit rate announced by the two sessions will still be 3%, and there is limited space for raising the fiscal deficit rate alone.
The second channel is to reduce expenditures and income. The proportion of fiscal expenditure to GDP and the proportion of fiscal revenue to GDP is very obvious. The V shape in the 1980s is about 22% of GDP.It fell to about 11% in 1994, a halving.
After 1994, all the way up, up to nearly 26%. In the process, GDP has increased many times, and the proportion of fiscal expenditure has increased. Therefore, our expenditure is indeed a heavy burden.No reduction.
Can 南京夜生活网 the government slim down or take other paths? I think there should be room, but there is no mention of the agenda now.
The third is state-owned assets. According to the annual census of state-owned assets, the total size of China’s state-owned assets in 2017 was 454 trillion yuan. I think there is a lot of room for tax reduction.
Before the gradual development in the future, during this transition period, fiscal policy will be more active and help us achieve this smooth transition. I think this is the most important market expectation.
This process will not meet the market’s expectations all at once, this is a gradual process and takes time.
Finally, from the financial point of view, we see some changes in the end. There are three points worthy of attention. The first point is that in such a transformation period, we are particularly eager to see the certainty of long-term policies, and thus the uncertainty of this transformation.Among them, our future direction should be more certain, giving the market and giving investors direction.
Secondly, in the future, the proportion of direct financing will increase. I believe that in the past, when investment and exports increased, indirect financing can meet our development needs. However, in the future, consumption and innovation will be the main focus.Pricing has become more important, so I think the opportunity for direct financing should be greater. In other words, banks will face different pressures. Large banks and small banks will experience greater differentiation. This is the firsttwo points.
Thirdly, I think that in the future expected development period, the role of long-term funds will become larger and larger. There are several reasons for this, which have caused our per capita income to the current level, and there is a need for some long-term investment.
In another part, the expected development is a slow economy. This slow economy requires more long-term funding. This long-term funding includes pensions and insurance, as well as the people’s own needs for long-term investment in asset allocation, such as education and future funds.demand.
In general, from a financial perspective, how to better serve the expected development, we look forward to more fiscal power in the short term.
From the perspective of the next three to five years, we see three aspects. First, the expectations of the policy are becoming more and more obvious, and the possibility of the market is becoming more and more clear. The second and third aspects are the above.
Xu Tianxiao: Thank you Dr. Shen.
The next guest who appeared in the industry is not large, but it is an out-of-the-box star enterprise. We talk about how the real economy can empower transformation and development, and even all sectors of society have paid much attention to SMEs and private enterprisesAnd sound.