Ha Jiming: China's Stock Market Will Not Be A Slow Cow.

Growth is still facing great challenges, because the official growth figures for the first half of the year are 7%, the first quarter and the two quarter are 7%, and the target of the whole year is exactly the same. But if you look carefully, a considerable part of the growth will come from the prosperity of the stock market, the rise in stamp duty, the increase in paction costs, the rise of commission in the securities business, the increase in GDP brought by the rise of the two stock market, and the further expansion of the two quarter to 1.6 percentage points, that is to say, 7% deducting 1.6%, and the real economy will not increase by about 5. We can see that the economic driving factors brought about by the stock market boom in the second half of this year are reduced, and the two financial industry has also dropped significantly. So the economic growth in the second half of this year is likely to face a big challenge. First of all, the second half of this year.

In addition, I want to talk about the relationship between GDP's 7% data and some other economic indicators. Compared with the historical indicators, there are great changes in the first half of this year. For example, the amount of electricity generated in the past is almost the same as that of the economic growth, but the first half is negative, the economic growth is 7%, and the railway's growth rate is GDP's 2/3. However, the first half of this year has dropped by more than 9%. The original national tax revenue growth is 2 times that of GDP, and now it is slower than the growth of GDP.

And the growth rate of industrial added value was faster than GDP, but in the first half of this year it was slower than GDP.

We can also see that the GDP deflator is -0.2 in the first quarter, and 0.1 in the two quarter. The actual GDP is minus the inflation through the nominal GDP data. Is it not that the nominal GDP in the first quarter is very low, minus one negative thing, the actual GDP reaches 7%, and there is no way to prove it.

In all respects, the data of GDP deserve further study.

In addition, short-term economic growth indicators, investment growth rate is declining, especially manufacturing and real estate, real estate investment growth is now down to 1%, followed by real estate is likely to be negative growth, in the past, real estate growth is 20% or even 30, exports are now negative growth.

The growth rate of retail sales is also dropping. Although it is still over 10%, with the decline of the whole GDP growth and the fall of the stock market, both the income and wealth effects will have a challenge to the growth of consumption.

Some people say that the next real estate investment will accelerate, I think the possibility of accelerating real estate investment is relatively small, although the first half of the real estate sales have increased, but the inventory is very large, the national built area is 5 times the sales area, from 1998 housing reform to the average 3.4 times now, now is 5 times, that is, developers see sales although up, but just digested its inventory, it still has no such a further development investment.

In addition, I would like to say that stimulating policies should be stable in the short term, and certain stimulus is necessary. But it should be complemented by reform. If stimulus is a narcotic drug, reform is surgery. You can not just use anesthetic and do not operate. From 2014 to now, the stimulus policy has been strong enough, such as 125 points to cut interest rates, the rate of interest reduction in 2009 is larger than this time, but this time is also quite large.

In addition, from the reserve requirement rate, 200 base points have been reduced, and the small and medium-sized banks have dropped 450 basis points, which is the same as that in 2008.

Why monetary policy has been so relaxed, but economic activity is still weakening, because there are many economic activities in China that require local governments to push forward. In the past, local governments responded very sensitively to macroeconomic policy variables. Now this sensitivity has been passivated. Although we have played a lot of anesthetics, we still have no effect.

So under such circumstances, it will have an impact on the reform, because the anesthetic effect is not good. Of course, when the anesthetic effect is good, the operation has not moved yet. Now the anesthetic effect is not good, and the operation is even more difficult.

The more than 300 plenary session of the Third Plenary Session of the Third Plenary Session of the Third Plenary Session of the Central Committee of the people's Republic of China launched a number of meaningful reforms two years ago. In the first place, we did some sorting out some of the more important ones, and found that in some areas, we have made considerable progress, for example, fighting corruption and building a clean government.

But there are still many areas or progress that is relatively slow, or step back in two steps.

I think reform in the final analysis is a policy of two aspects, one is to find new economic growth points, the other is to improve the quality and efficiency of growth at the current economic growth point.

Finding a new economic growth point is actually a measure to realize the urbanization of the people, which is very important, including the reform of household registration system, even the reform of the land system, and the reform of social welfare system. But in these areas, we see that the pace of reform is relatively slow now. As for raising the efficiency of growth, the most important point is to let social resources flow into the highest productive field or ownership enterprise through signals, which is a very important reform of state-owned enterprises.

Recently, there are programmatic documents in the reform of state-owned enterprises. We feel that there are positive contents here, such as letting the board decide the use of personnel, opening up some areas to private enterprises, and promoting the reform of state-owned enterprises through means of marketization, including the stock market.

Of course, there are also some contents here. The effect of future execution may be uncertain, and the leadership of the party should be strengthened. If the interests of the state-owned enterprises and the party's guidelines are consistent for a long time, but in the short run, some places are not completely consistent. At this time, the decisive role of the enterprises or the leadership of the party plays a decisive role. These uncertainties need to be further observed.

In addition, the stock market will still play a role in the long run, but the stock market is now very difficult to really push forward with the help of the stock market.

The other is the limitation of the salary system. Generally speaking, if the salary system is rigid, it will often lead to the loss of talents. This brain drain may bring some negative effects on the long-term development of enterprises.

In addition to privatization, an important part of the reform of state-owned enterprises is not privatization. If it is only to make the state-owned enterprises stronger, bigger and better, it is not possible to become stronger and better.

Next, let's talk about the stock market and the exchange rate.

It is because we need to create a new financing channel, because other traditional financing channels, such as credit, shadow banking and land finance, are getting narrower and narrower. So this stock market can pick up the stock market, but China's stock market can't be a slow cow or a mad cow, so you boost it up to be mad cow, and finally become mad, and become a dead cow. So now we see that the P / E ratio has improved in June, for example, the gem price earnings ratio has reached 155 times, and now it has dropped to 65 times, but it is still relatively high. For example, the price earnings ratio of developed countries in America, Europe and Japan is basically 15 to 20 times. China's stock market rose in the past year before June. The role played by the government in the latter part is relatively large, including the promotion of the media. In fact, the real economy is obviously down.

In addition, whether the Chinese stock market can play a role as a substitute for other channels in financing, I think the effect is very small. In fact, when the stock market came up, the financing available was very limited. We reckon that since 2014, the funds collected from the stock market have almost been added up to 1 trillion, but the money you spent on the bailout market is more than 1 trillion.

The RMB exchange rate has been very strong for a period of time. For example, since last autumn, the official exchange rate was consistent with the market exchange rate, but then the market exchange rate has depreciated, but the official exchange rate is relatively stable. It does not follow the market exchange rate to change. I believe it also wants to give an impression to the outside world. The renminbi is relatively stable. It is meaningful for the RMB to join the special drawing right.

But why did it come to August 11th and suddenly depreciated 2% a day? The purpose is to join the special drawing rights. Because in August 3rd, the International Monetary Fund had a report warning China that your official exchange rate was 2% out of line with the market exchange rate, hoping that the two exchange rates would be consistent, so we could immediately devalue 2% in 8 days to achieve this unification.

Therefore, I think the purpose of the former devaluation and subsequent devaluation is to add RMB special drawing rights to the internationalization of RMB.

However, judging from the current situation, it should be said that the depreciation of the exchange rate market caused the turbulence of the exchange rate market. Since the Chinese government has adopted a series of measures, including economic means and non economic means, or administrative means, the short-term exchange rate is stabilizing.

But in the medium to long term, the renminbi is likely to continue to depreciate.

For a country's exchange rate may not be based on the will of the government in the long run, but rather determined by market rules.

There are two aspects that we can see. One is that the purchasing power of RMB in China is gradually decreasing. There are many things in China that are much more expensive than foreign countries. We have made a McDonald's Big Mac index here, giving China's per capita GDP. China's Big Mac index is higher than the global average level, indicating that China has no long-term appreciation base from the purchasing power perspective.

From the perspective of China's financing structure, stock market financing accounts for only 4.8% of total financing.

What do you think of the 1 trillion concept? Bank loans can be more than 1 trillion in one month, and 1 trillion in the stock market in more than 20 months.

In addition, if the stock market comes down, will it cause serious damage to the real economy? I think the impact is not big, because from the wealth structure of the Chinese people, the 26% is bank deposits, and the stock market directly and indirectly adds up to 14%. However, the direct and indirect increase of the US stock market is 40%, so the impact on the US is very great, and the impact on China is not great. Why is it necessary to save the market when the stock market is not falling much? How did it go up at that time? If it goes up, the government has a certain responsibility. When it falls, it will be anxious.

But the fact shows that the impact of the words on wealth is not great.

Next, let's talk about short-term policies.

If the IMF has a final decision on whether China's RMB can join the SDR, China will further relax its monetary policy, including lowering interest rates and lowering the accuracy of the RMB exchange rate, and giving more exchange rates to the market. I believe the exchange rate will be devalued.

The currency depreciation caused by loosening monetary policy is superior to the instantaneous depreciation of the currency by human beings. The instant compilation is actually putting the cart before the horse. When other countries depreciate in exchange rate, asset prices are rising, and Chinese asset prices are falling, as a result of greater depreciation expectations, which makes the people's Bank have to tighten the renminbi, reduce market liquidity and inhibit asset prices.

The correct approach should be to reduce interest rates, reduce the accuracy, ease monetary policy, quantify easing in other countries, and finally devalue the renminbi, and it is necessary for China to cut interest rates.

At present, many industries in China are

Very high, and facing deflation, there is a lot of pressure on Ben Ben, so devaluation is beneficial.

Next, let's talk about the medium and long term problems.

How fast can we grow? If we pour out everything in the toolbox, it will be possible to increase it by 8% next year, but this is not a scientific growth.

The growth of China's economy must be observed with the risks arising from the growth process. We should first see that the marginal output of capital in China has been declining in recent years, and the rate of debt increase is faster than that of investment, because investment requires money, but some debts are generated not only for investment, but also for paying wages.

This will make our investment efficiency lower and lower. China's problem is that the investment rate is too high. We see that investment accounts for 46% of GDP. Last year, it was only 42.8% when the great leap forward occurred in 1958. When Japan was the highest, it was only 40%, so 46% was an extremely high proportion and needed to be lowered.

We made two simulation analyses. If the current government decided to reduce the debt rate to 40% before the end of the term in 2022, 40% would be a relatively high level. Let's assume 40%. Our simulation results show that the average growth rate of GDP should be 5% in the next seven years.

It is relatively slow, and may not be able to achieve the so-called two doubling, but in another case, if I really want to achieve two doubling, is it possible to do so? I think theoretically, it is possible that the so-called rebalancing of the economy will reduce the investment rate from 46% to 40%, not to let it be realized in 2022, but to spend more than five years, so that economic growth can be averaging 5.8% in the next 12 years, and 6% in the next five years, so that it can achieve an average of two times. However, there is a cost in this case. In the first case, the debt rate of China is now 250% of GDP, and will reach five by 2019. This will be a relatively stable soft landing. In this case, the speed of economic growth is possible.

Another situation is to postpone economic rebalancing and to maintain a short-term high growth rate, so that our debt rate will probably be close to 400%. This situation may lead to greater risk, because the savings rate in China will decline in the future, household savings rate will decline after the arrival of aging, the profitability of enterprises will be relatively low, the savings rate of enterprises will also decline, the government's financial situation is tight, and the government's savings rate will also decline. So when the savings rate falls and the debt rate rises, it will be difficult for you to re extend the maturity of debt as it is today. At that time, the financial systemic risk will expose the economy to a hard landing.