Wu Xiaoling: Why Is Financing Difficult And Expensive In China?

On March 2nd, Wu Xiaoling, vice chairman of the finance and Economic Commission of the National People's Congress and deputy governor of the Central Bank of the central bank, said that interest rate cuts could not explain that monetary policy had become loose. China's financing difficulties and high costs, mainly because of the rigid payment of the state has increased the risk-free rate of return, in addition, the lack of financing channels, the concept of backward is also an important reason. In addition, Wu Xiaoling also said that Internet finance played a great role in promoting financial reform and development, and the government would not have any special legislative provisions.

Wu Xiaoling's speech is for central bank observation.

The proportion of China's money supply in countries with indirect financing is high. We use the world bank's data to make statistics on the proportion of M2 to GDP in some countries. Take 2013, M2 accounted for more than 150% of GDP, Japan was 248%, Holland 212%, China 194%, Spain 178%, Germany 158%, France 151%, Britain 150%, these countries are mainly banking countries, the United States is a direct financial country, the United States M2 accounted for GDP share is 88%.

I do not think that the proportion of money can be fully explained. It should be noted that the amount of money is actually reflected in prices. If the inflation of a country can be kept at a reasonable level, the money supply will not be very large, and the biggest problem in our country's currency is that the proportion of time deposits in our country's deposits is relatively high, which makes it relatively large for us to finance through banks, but the currency formed after the completion of the financing becomes a potential currency and the deposit of time deposits exists in banks.

The distribution of financial resources in China is dominated by banks. This high proportion of time deposits shows that our direct financing potential is relatively large. In 2014, we accounted for 60% of the time deposits in our deposits. If we could develop direct financing well, we would allow people to deposit their time deposits through direct financing to the third party under the existing stock of money, and when the third party got funds, then they would become demand deposits in banks. At that time, the structure changed, so the problem of our country's monetary aggregates is not the biggest problem, but the efficiency and the way of money utilization.

In terms of total money, we have 60% of time deposits, nearly 71 trillion, savings deposits plus time deposits and deposits, and 60 trillion of time deposits. If people invest in investment, the volume is still very large. Why not? The most important thing is that the investment channels are not smooth, and the next step is to increase the intensity of direct financing to change the situation of indirect finance.

Why can't we achieve such a potential money investment capability? Why is financing difficult and expensive? It should be said that more capital and higher capital are contradictory phenomena. Since more money should be spent, it should not be expensive. Since it is expensive, it should not be difficult. This is a contradictory phenomenon.

Two reasons:

First, we have a clear or dark rigid payment which raises the risk-free rate of return. The foundation of the entire social capital is more expensive. The risk return rate of every country is the yield of treasury bonds. The yield of treasury bonds is the lowest price for a society to obtain funds. The risk-free rate of return determines the bottom line of a society's financing, and now our country is afraid of risks. Therefore, some financial products and some trust schemes, including corporate bonds, dare not expose their risks. The interest rate of these high interest rate products becomes a risk-free rate of return. When they compare, they do not compare with the national debt, and the risks are all covered by the government. Our practice of this kind of explicit or dark rigid payment can not expose the risks of the society, and the level of risk pricing can not be shown, and the level of capital is high.

Second, there is financial repression. Many financial products can not be directly sold to the public. For example, collective trust schemes and bond stocks are all direct financing tools, because our different financial institutions have the same legal relationship as financial products, trust schemes, investment linked insurance and information management schemes, but our regulatory standards are different. If we want to use these tools, we often use roundabout ways. We often hear the word "access road" and "access".

Third, the concept of the problem. In fact, the clients of commercial banks are mainly medium-sized enterprises. A very good customer is a customer in the capital market. The bad business is the customers in the OTC market, the standardized bank products are given to the medium sized enterprises in operation, and the small and micro enterprises are mostly the customers in the OTC market and the clients in the policy finance. It is necessary to establish a multi-level capital market to facilitate the financing of small and micro enterprises in the OTC market. P2P, which is developed online, is a financing channel for small and micro enterprises. The financing cost of small and micro enterprises is higher than that of medium enterprises and good enterprises. It is not expected that the interest rate of small and micro enterprises is higher than that of good enterprises. Because interest rates cover risks, high risks must pay higher interest rates, but if the channels are smooth, the convenience of obtaining funds is much higher than the price of funds. Although the price is high, the opportunity for entrepreneurial production will be provided with the opportunity of financing, giving convenience to the small and micro enterprises, rather than the price level. If the government wants to solve the problem, it should give the policy subsidies or risk sharing.

"I don't think our country's monetary policy is developing in a relaxed direction".

I don't think our country's monetary policy is developing in a relaxed direction. The central bank has been saying that we are implementing a neutral monetary policy. What is a neutral monetary policy? Basically, the money supply is equal to the growth of GDP, plus the estimated amount of inflation. For example, last year we were 3.5% CPI last year, our economic growth rate plus CPI's projected growth rate, and then there is an uncertainty of 2% and 3%, because the velocity of money circulation is uncertain, so long as the money supply is controlled according to this standard, it is neutral.

There is always a misunderstanding in the market. monetary policy Operation means, as the change of monetary policy orientation, the monetary policy orientation of our M2 will grow by 13%. If this figure remains unchanged, the monetary policy orientation has not changed. Some western countries, according to the monetary policy target interest rate, such as the federal funds interest rate, the monetary policy target profit rate invariable represents the monetary policy orientation unchanged. Every time, we pay attention to the Fed meeting and focus on the interest rate unchanged. In fact, we are concerned about the federal funds rate. Now it is 0-0.25.

　　 Intermediate target The confirmation shows the orientation of monetary policy. When foreign exchange enters a lot, the central bank needs to raise the deposit reserve ratio, and now the foreign exchange reserves are reduced. At this point, the central bank's means of spitting out the basic currency will change from a single foreign exchange account to an open market to buy and sell bonds, refinance and rediscount. The central bank will spit out basic currencies through various means to meet the needs of interbank liquidity.

We should pay more attention to interbank interest rates, especially the interest rate of the central bank in the open market operation, in order to better display the tightness of monetary policy. The differential deposit reserve ratio of the central bank is a structural means. It is also a supplement to the structural adjustment of fiscal policy which is not enough. The central bank's monetary policy should be the aggregate policy in general, and the structural policy is only a phased auxiliary hand.

　　 Wu Xiaoling In his speech, he also mentioned the contents of Internet finance. She said that the development of Internet finance has played a very important role in promoting the development of financial reform in the past year. Although modern information technology has been adopted, it has not changed the nature of finance, and the government will not have any special legislative provisions. She suggested that Internet companies can only intervene in finance, information intermediaries, and the essence of financial business is Internet finance, and the function of credit intermediaries must be obtained by the state and acted according to the rules.

"Information intermediaries should fully disclose the information of both sides of the financing, and make the choice of the two party. The most important thing is to have credit and credit evaluation, and observe the bottom line of supervision." Wu Xiaoling said that for Internet companies that do information intermediaries, they do not issue regulatory licences. They only issue ordinary corporate licences, which is good for customers to be responsible for capital behavior and learn risks. Credit intermediaries should issue financial licences.