China's macroeconomic outlook in 2019

The "2018 (6th) International Thermal Coal Resources and Market Summit Forum" hosted by China Coal Resources Network was held in Beijing on November 14, 2018. On the morning of November 15, 2018, Fan Jianping, chief economist of the State Information Center, gave a speech at the summit forum and analyzed and predicted China's macroeconomic situation in 2019.

Fan Jianping, Chief Economist, National Information Center

He believes that China's economic development is stable and slow, and at this stage it is shifting from high-speed growth to high-quality development. Promoting high-quality development is an inevitable requirement for maintaining sustained and healthy economic development. It is an inevitable requirement for adapting to changes in the main contradictions of our society, for building a well-off society in an all-round way, and for building a modern socialist country in an all-round way. It is also an inevitable requirement for development in compliance with economic laws. my country is currently in a critical period of transforming its development mode, optimizing the economic structure, and transforming growth momentum. The economic performance is very remarkable during the period of rapid growth. From 1978 to 2011, China’s 32-year real GDP growth rate was 9.8%. In contrast, there are not many countries in the world where the world’s economic powers have achieved an average growth rate of over 8% for 20 consecutive years. China has created a period of continuous high economic growth. The world record for its length and speed.

In order to achieve the goal of building a moderately prosperous society in an all-round way in 2020, in accordance with the requirements of the 19th National Congress of the Communist Party of China, in the next three years, we must focus on the prevention and resolution of major risks, targeted poverty alleviation, and pollution prevention in the next three years. Fighting the battle to prevent and resolve major risks, focusing on preventing and controlling financial risks, and serving the main line of supply-side structural reform, promoting the formation of a virtuous circle within the financial and real economy, finance and real estate, and the financial system, and doing well in key areas of risk To prevent and deal with, resolutely crack down on illegal financial activities, and strengthen the construction of the weak link supervision system.

From a global perspective, the global financial added value accounts for about 4% of GDP. This proportion of my country has surpassed that of major economically developed countries such as the United States, Britain, Germany, and Japan. Using finance and leverage to pursue rapid growth has endless troubles. In the West, the high proportion of the financial industry often means the arrival of an economic crisis. For example, Japan reached a high of 6.9% in 1990, and then the economic crisis broke out and its balance sheet fell into a "lost twenty years." The United States reached a high of 7.7% in 2001, and then the Internet bubble burst and reached 7.6% in 2006, after which the subprime mortgage crisis occurred. In 2005, the proportion of my country's financial GDP was only 4%, and then it rose rapidly, reaching 8.4% and 7.9% in 2016 and 2017, respectively. At the end of 2016, my country's macro leverage ratio was higher than the international warning line. The macro leverage ratio has reached 247%, and the corporate leverage ratio has reached 165%.

The excessively high macro-leverage ratio of our country is related to the interference of the effective control of the money supply gate under the pressure of all aspects of the unilateral pursuit of high speed in the past. During the risk gestation period, the industry and local governments are highly motivated to pursue growth. Objectively, they hope to loosen their "money roots." Financial activities are generally active, and the rapid growth of monetary and social financing will easily cause market entities to generate false expectations and breed asset bubbles. The growth rate of broad money M2 fell from an average annual growth rate of about 16% in the previous 20 years to only 8.1% in 2017. At the end of August 2018, the growth rate was 8.2%, which was halved.

At the moment we need to stabilize currency, widen credit, and directional release. Maintain an appropriate scale of social financing and reasonable and sufficient liquidity, clear the monetary and credit policy transmission mechanism, and implement the various measures that have been introduced.

1. Through the implementation of ledger management, etc., a responsibility system has been established, and policies such as the exemption of value-added tax on loan interest for small and micro enterprises and individual industrial and commercial households have been implemented. Guide financial institutions to use RRR cut funds to support small and micro enterprises, market-based debt-to-equity swaps, etc.

2. Encourage commercial banks to issue financial bonds for small and micro enterprises, and exempt the issuer from continuous profitability requirements. Accelerate the completion of the state financing guarantee fund, and strive to achieve the goal of supporting 150,000 (sub) small and micro enterprises and 140 billion yuan in loans each year.

3. Rewards and subsidies will be given to places where the expansion of the financing guarantee scale of small and micro enterprises and the reduction of costs have achieved significant results. Resolutely clear out "zombie enterprises" and reduce the occupation of invalid funds. Continue to severely crack down on illegal financial institutions and activities, and maintain the bottom line of avoiding systemic risks.

4. Strengthen the connection of related parties, accelerate the issuance and use of local government special bonds of 1.35 trillion yuan this year, and achieve early results in promoting infrastructure projects under construction. Effectively guarantee the funding needs of projects under construction. Supervise and urge local governments to revitalize the fiscal stock funds, guide financial institutions to ensure the reasonable financing needs of financing platform companies in accordance with the principles of marketization, and avoid capital outages and unfinished projects for necessary projects under construction.

Fiscal policy should also be more active. The medium-term work requirements such as the prevention and control of financial risks and new asset management regulations and the current high leverage ratio in my country determine that there is not much room for adjustment of monetary policy in 2018, and the RRR should be appropriately reduced to maintain a moderate tightness of money. Fiscal policy has introduced a series of tax reduction policies and has been stepping up their implementation. It is necessary to appropriately increase the scale of local government special bond issuance to ensure the stability of infrastructure investment sources. 1.35 trillion yuan will be allocated for local special bonds this year, an increase of 550 billion yuan over last year.

In diplomatic relations, China and the United States should avoid the "Thucydides" trap. Sino-US trade disputes will continue to ferment, and subsequent disputes in various fields such as technical patent disputes, financial wars, and exchange rate wars will continue. However, as long as regional security disputes are well managed and China and the United States do not engage in military confrontation, they can avoid falling into the "Thucydides" trap. There is a high probability that China will exceed the total GDP of the United States around 2035, but China's per capita GDP is only the United States. About 25% of the per capita level, there is still potential for late-comer advantage before it approaches 75%. At the same time, the U.S. China strategy has completed the transition from engagement to containment. The new strategy is a product of the combination of political conservatism and diplomatic offensive realism. The central goal is to slow down China’s rapid economic growth through various means, slow down the decline in the relative strength and influence of the United States, and obtain a longer strategy. Preparation period and initiative. China needs to face up to this change in a rational and pragmatic manner. Faced with this strategic adjustment, China needs to adjust its own perceptions, based on its own advantages, and achieve good and fast growth through vigorous reforms, so as to force the United States to adjust its strategy, Seek opportunities for peace, cooperation and development between the two countries and the world. To

This article is transferred from China Coal Resources Network

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