The Ten Big Conjectures Of China'S Economy In 2016 Have Attracted Much Attention.

China is undoubtedly in an uncertain era.

Looking back at 2015, a lot of unanimous expectations have been proved to be unanimous: A shares did not wait for 6124, but there was an unprecedented stock market crash. Central enterprises did not wait for radical changes, but they came to a merger. The local governments did not wait for the financial power to wait for them, but they waited for a pile of debt to replace them.

It is not that we do not understand, but that the world changes quickly.

Any shift in the political, economic, demographic and external environment that is currently facing is enough to change China, let alone all shocks overlap.

We can only learn from history and constantly adjust our logic.

We make the following judgement on 2016:

1, the economic growth target has been lowered to 6.5%, and the actual growth rate is slightly higher than the target.

2015 it is basically impossible to guarantee 7 in the whole year.

The prediction of GDP can not only look at three major needs, because China does not have accurate statistics of three major needs. Fixed asset investment is not equal to capital formation. Net exports are not equal to current account surplus, and social consumer goods retail is not equal to final consumption.

A more accurate way is to analyze the growth of GDP in various industries from the perspective of production.

Compared to this year and 2015, all sectors except industry and finance fluctuated less than 0.1 percentage points.

So basically, just analyze the industry and finance industry.

Industry can see the industrial added value, which is still down in October, and there is no turning point.

The financial industry can see several indicators.

First, the growth rate of deposits and loans has almost shrunk by half in October, and increased by two times in the three quarter. The two is the volume of securities pactions. The volume of growth in two cities has dropped from 10 times and 3.4 times to 2.5 times in the two or three quarter; three is related to the finance industry, and October sales tax has dropped from 19.3% to 9.7%.

On the whole, the four quarter was the most consistent with the three quarter.

According to past experience, the target may be set at 6.5%, but the actual real growth rate may be slightly higher than 6.5%.

In 2015, there was no change in the primary industry, the second industry was less than 0.9 percentage points, and the third industry was more than 0.6 percentage points.

First look at the trend, there will be no obvious fluctuations in the primary industry in 2016, the contribution rate of the second industry will decline, and the contribution of the third industry will rise.

The estimated period of 2016 should be between 2015 and 2014. According to the average of 2014 and 2015, we assume that the second industry will be less than 0.6 and the third industry will be more than 0.3, so that the growth rate in 2016 should be around 6.7%, slightly higher than the expected target.

2, CPI continued to "1" to the front, PPI fell for more than 50 months, inflation is dangerous.

In 2016, CPI was expected to rise by 1.6% over the same period last year, a slight rebound compared with 2015.

First, the tail factor in 2016 is slightly higher than that in 2015.

Assuming that CPI is 1.42% this year, the 2016 factor is 0.55%, slightly higher than 0.44% this year.

Second, pork prices rose 8.2% in 2015, leading to a 0.33% rise in CPI's new price increase.

Taking into account the rise in pork prices and the demand for next year's total demand is still weak, there is little probability that the price of pork will continue to be strong next year, assuming that the average pork price in 2016 is 22 yuan / kg, which will drag CPI's new price rise by 0.38%.

Finally, the average price of Brent crude oil in 2015 was about 53.83 US dollars / barrel, a 45.6% decline over 2014, and a 0.91% drag on CPI's new price increase (the correlation coefficient between crude oil price and CPI's new price increase is 0.02).

Taking into account the impact of low oil prices on shale oil industry, some enterprises went to capacity. In the latest report, EIA raised the price of crude oil in 2016 to $56.24 / barrel, up 4.5% from 2015, and contributed 0.09% of its price.

Fourth, under the basic judgment of the economic downturn, the contribution of other price factors should be slightly lower than this year's 1.56%, assuming the same decline as last year's 1.38%.

On the whole, CPI was about 1.64% in 2016 (tail factor 0.55%- pork price factor 0.38%+ oil price factor 0.09%+ other factors 1.38%).

It is estimated that the cumulative negative growth of PPI will exceed 50 months next year, but the year-on-year decline will narrow.

Taking into account this period of production capacity, macroeconomic policy emphasizes bottom line thinking and strictly follows the bottom line of systemic financial risk. The overall intensity of production capacity is moderate in the past 98 years. The excess capacity of the upstream raw material industry has not been significantly changed, and PPI is still going on.

But next year, the PPI year-on-year decline is expected to narrow down under the combined force of various factors. First, the policy of steady growth will shift to fiscal policy, and the total demand shock will be eased; two, the central government will first provide the side reform to the side, and the production capacity is expected to increase. Three, next year, the credit risk will be accelerated, and the bankrupt of enterprises will be forced to go out of production. Four, the depreciation of the RMB may bring some import inflationary pressure.

Five, the commodity price stabilizes and the drag on PPI weakens during the period of the appreciation of the dollar, especially oil prices. This year it is down by 45.6%. Assuming that oil prices will rise 4.5% next year and other factors remain unchanged, the decline of PPI may be narrowed by about 2.5-3 percentage points.

3, the Federal Reserve raised interest rate boots to land, capital accelerated "going out", and RMB reproduced once and for all.

The Fed's conditions for raising interest rates are already available, and now is only the time to pull the trigger.

At present, the probability of raising interest rates in December has reached 70%. Even if it did not increase in December, it will increase interest rates at least once next year.

For the renminbi, the Fed's interest rate increase and its accession to the SDR are all more symbolic than the real meaning.

(1) the expectation of US dollar appreciation has already come into being. There will only be rhythm changes and there will be no directional change.

On the one hand, the fundamentals are worse than the bad times (the unemployment rate is even lower than the registered unemployment rate we processed). On the other hand, the competition is relatively tight in the era of water diversion, especially in Europe, where the euro accounts for 60% of the US dollar index, and the European Central Bank is likely to be Japanese in the future.

(2) China's current account surplus tends to narrow, or even to a deficit.

In the long run, the narrowing of the savings investment gap caused by the aging of the population will inevitably lead to deficit. In the short term, the declining surplus of commodities is not sustainable, and the trade deficit in services has been constantly increasing. The negative returns on investment can not be reversed in the short term.

(3) China's capital account deficit will accelerate to expand its current account surplus.

In the three quarter of this year, the capital account deficit had reached a record $223 billion 900 million, completely eating the current account's 63 billion 400 million US dollar surplus, resulting in a 160 billion 600 million shrinkage of foreign exchange reserves.

This trend is irreversible: one is the diversification of personal asset allocation, the two is to accelerate the pace of going out, and the three is the narrowing of the interest rate between China and the United States. The unilateral appreciation of the renminbi is expected to be broken, and arbitrage funds are reversed. In the past, the US dollar, which had borrowed interest rates and depreciated dollars, invested in high interest rates and appreciated in value. It may gradually become a US dollar with low interest rates and devalued RMB investing in high interest rates and appreciation.

To sum up, although the short-term central bank can intervene in stability through volume and price, and escort for entry into the SDR, the devaluation pressure will only be postponed, will not disappear, and finally reach a critical point. The central bank may have to allow the RMB to depreciate once again.

From the point of view of preventing capital flight, one-off devaluation is also more effective than gradual devaluation.

But the risk is that the first market is accidental, and the second market will be a trend.

4, monetary policy changes from the protagonist to the supporting role, the rate of interest reduction space narrowed significantly, the number of times is no less than this year.

Monetary policy is the absolute leading role in 2015, and may become a minor role in 2016.

The direction of monetary easing will not change, but there will be some adjustment in thinking. From active to passive hedging, the policy focus will gradually shift to fiscal policy and supply side reform.

First, the contradiction between financing costs has been greatly alleviated.

The lending weighted interest rate dropped by 107 BP, of which the general lending rate dropped by 91 BP, and the housing loans dropped by 123 BP. For those still struggling to finance, the problem was risk appetite, not monetary easing.

Second, inflation will restrain monetary easing.

Judging from this year, the central bank is still confident about the exchange rate. The main constraint is inflation. The longest period of money in the whole year is directly related to the rise of CPI.

According to our forecast, 2016 inflation will be higher than this year.

(1) the number of 2016 interest rates will be significantly reduced.

First, the interest rate of savings and loans has been completely marketization, and the marginal effect of interest rate reduction is decreasing.

The significance of the interest rate reduction is more reflected in reducing the interest rate and housing loan interest rate of the strong bargaining entities such as state-owned enterprises. However, the interest rate of housing loans has dropped to 5% from 6.97% at the highest level. It seems that the interest rate of housing provident fund has remained unchanged since the interest rate cut in October, which seems to have reached the desirable level of the central bank.

Two, both CPI and PPI should be higher than this year. The downward pressure on real interest rates caused by the decline of the notice will ease the pressure and will in turn reduce the real interest rate.

Three, interest rate cuts will have more impact on loan interest rates than deposit interest rates, which will further squeeze interest rates on banks.

(2) the number of 2016 drops is no less than this year.

First, the trend of the central bank's foreign exchange holdings has declined. This year, the central bank's foreign exchange holdings have dropped by 1 trillion and 200 billion, while 2013 and 2014 have increased by 2 trillion and 800 billion and 641 billion 100 million respectively. The gap between the two sides has been nearly 2 trillion per year.

In 2016, the pressure of RMB depreciation will not be reduced. In order to maintain stability, the decline of the central bank's foreign exchange quota is expected to be no less than this year.

Two, the steady growth of capital needs also need to be reduced to meet.

In 1998, in order to cooperate with the Ministry of finance to issue special treasury bonds, the central bank once reduced 5% to four lines of powder.

In 2016, special financial bonds and other public financing tools will continue to expand. This is actually an alternative special treasury bond. If we only take money from the stock pool, it may make the effect of steady growth greatly discounted.

5, the fiscal deficit has increased to at least 2.5%, the issue of debt issuance plus structural tax cuts has been expanded, and the policy finance +PPP has substantially increased leverage with the government.

Will gradually replace monetary policy as the protagonist, the deficit rate will at least extend to 2.5%.

In 2014, the deficit rate was only 2.1%. In 2015, the target of fiscal deficit increased to 2.3%. However, there was a big gap between the 3.2% and 3.3% of the United States and 4.1% of India, and there was room for improvement in comparison with 2.6%, 2.4% and 2.6% from 2000 to 2002.

Recently, Zhu Guangyao, Vice Minister of finance, said that he had to reflect on fiscal policy. He specifically referred to whether "3% deficit rate is absolutely scientific and worth exploring", implying that the central government has begun to reflect on the problem of positive financial inactivity.

There are two main points in fiscal policy: expanding the scale of government bonds and structural tax cuts.

First, expand the scale of government debt issuance.

Although the traditional local government bonds are the trend of the times, the current budget management and financial pparency system are not yet sound, and the expansion will not be too obvious.

The main replacement is debt, which will be much larger than this year's 3 trillion.

Second, increase structural tax cuts.

The measures to be taken include accelerating the depreciation of fixed assets, increasing the starting point of personal tax collection, and increasing the tax reduction efforts of small and micro enterprises.

Next year, what is more important is the supporting policy of fiscal policy, mainly through the issuance of policy finance and promotion of PPP and government plus leverage.

The first big starting point is policy finance.

Although the central level has not yet issued special treasury bonds for a time, the special financial bonds, which are mainly based on policy banks, are actually an alternative special treasury bond.

The 600 billion special financial bonds issued this year will be discounted by CDB and Nong Kong and the central government for urban infrastructure construction. Next year, in order to solve the financing problem of incremental projects, it will expand to 1 trillion at least.

The second starting point is PPP. This year is the project bidding year. Next year is the signing year. The contract size of the 3 trillion and 400 billion stock PPP project will exceed 1 trillion.

6, registration system promotes stock supply and volume, and there will not be any crazy bull in the stock market.

The IPO registration system was launched in 2016.

From the recent IPO restart signal released, regulators may next year to speed up the supply as the core work.

First of all, the phenomenon of dammed lake will continue to be strengthened in 2016 with more money and less assets. Registration system is equivalent to expanding the stock market flood discharge.

Second, it helps to reduce the distortion of the hidden "shell" value to the market and promote the market to return to value investment.

Third, accelerating supply will also help to make more capital flow to the real economy and raise the proportion of direct financing.

Finally, the market heat has obviously recovered and provided conditions for accelerating supply.

At present, it is more likely to implement registration system next year.

First, the revision of the securities law has been put on the agenda. The first reading has been completed, and the two and three readings will be completed next year.

The two is to restart the IPO while improving the IPO system, adjusting the way of issuing supervision and strengthening information disclosure, which can be regarded as one of the preparations for launching the registration system.

Registration system is good for a long time, but it may aggravate market volatility in the short term.

First, a large number of assets to the market will directly divert the stock of funds, especially some stocks that have no investment value may be hit hard. Two, registration system is a complex systematic project. We must do a good job in supporting reforms in information disclosure, regulatory system, delisting system and so on. If there is a super expected volatility after the launch, the policy may be repeated (similar to the previous IPO Policy), which will fight the market's confidence in reform.

Taking Taiwan as an example, Taiwan has implemented a 23 year approval and registration system in parallel before the complete registration system. It was only in 2006 that it moved to a full registration system. In the same year, the Taiwan stock index showed a W trend of ups and downs.

Overall, in 2016, the stock market could not repeat this year's mad cow.

Most of the stock market boom in recent two years has been driven by a desire to raise valuations through the pformation expected from the downside and reform of risk-free interest rates.

In 2016, corporate profits still do not support mad cows. First, the cost may slow down. Two, the demand side has not yet been stabilized. Three, the supply side capacity has not yet begun to digest.

Therefore, supporting the market can only rely on valuation, and such a market must be sensitive and repetitive.

Although the bull market driven by risk-free interest rates will continue, the market in 2016 may be more volatile under the impact of the following risks: first, the depreciation of the Renminbi; the two is the registration system and the overall listing of state-owned enterprises, resulting in supply volume, three is physical credit risk, and the four is no wind risk.

The market may fluctuate frequently around these factors throughout the year.

7.

Accelerate blasting, state-owned enterprises breach of contract becomes normal, risk-free rate of return continues downward.

The leverage ratio of China's non-financial enterprises is about 123%, the highest among the major economies.

There are five ways to deleverage in the future: first, to rely on economic recovery and corporate income to accelerate debt service; the two is to rely on the downside of financing costs; the same income can repay more debt; three is government blood pfusion, financial disclosure; four is market based blood pfusion, and is annexed; five is debt reduction; six is credit default.

At present, the first way can not see hope; the second way can solve some of the problems of state-owned enterprises, but for most of the high-risk private enterprises, banks are unwilling to lower interest rates; the third way is only applicable to state-owned enterprises; the four or five way is extravagant for excess industries; in the end, most traditional industries have to choose the last way.

Based on this logic, credit risk in 2016 will be more frequent than in 2015.

In 2012, the first case of state owned bond defaults (11 Hailong CP01), the first case of P2P breach in 2013 (Eastern venture capital P2P platform), the first trust case in 2014 (the 1 trust scheme), the first private debt (13 Sen Sen debt), the first private enterprise bond (11 super day debt) default, and 2015 spread to the central enterprises bond (11 Print-Rite MTN2).

As long as there is no economic recovery or massive debt write downs, credit default incidents will spread further in 2016.

In order to keep the bottom line of financial risk, the government will still maintain a part of the stock debt, but the scope of the loss of protection will become more and more large, and the default of state-owned enterprises will become a normal condition.

The release of credit risk helps to push the riskless interest rate down.

One is that with the breaking of rigid cash payment, the zombie enterprises in the industry of overcapacity, such as steel, cement and other industries have taken up the credit resources to reduce the demand for dissimilation of funds.

Two, money supply continues to be loose, steady growth and deleveraging need to be supported by low interest rates. Monetary easing is the general trend.

The three is debt replacement, although it may impact interest rates in the short term, but in the long term, it solves the problem of time mismatch and rolling financing, which is conducive to the downside of risk free interest rates. Four, capital demand is systematically downward in the process of economic growth from heavy assets industry to light asset service industry; five, although RMB has depreciated trend, overall, China's capital account is still in a state of control, and will not end the trend of interest rate downtrend due to large-scale capital flight.

8. In 13th Five-Year, the opening year of planning accelerated landing, and beautiful China became the biggest bright spot.

2016 is the opening year of the 13th Five-Year plan, and beautiful China is undoubtedly the most promising bright spot.

In 13th Five-Year, green development was included in the five development concepts, and the concept of "the most stringent environmental protection system" and "beautiful China" were put forward for the first time.

As an industry, ecological environmental protection has been on the larger outlet.

First, the regulatory system subordinated to the management of vertical management, breaking the local protectionism.

The 13th Five-Year plan for the first time put forward the "vertical management of monitoring and supervision of environmental protection agencies under the provincial level", which means that from the environmental monitoring Corps to the county level supervision agencies, they will be divorced from the jurisdiction of local governments and directly managed by provincial environmental protection agencies, including the right to appoint personnel and the right to manage funds.

This helps to break the local protectionism brought by the past localization management, and let the environmental monitoring data tell the truth, so that environmental protection law enforcement can be implemented.

Second, stimulate the enthusiasm of local governments and social capital through market-oriented pactions, financing and management mechanisms.

In 13th Five-Year, the plan put forward for the first time that "establishing and improving the initial allocation system of energy consumption, water rights, emission permits and carbon emissions" and "nurturing and developing the trading market" are a major innovation in the environmental protection system.

In the past, environmental protection basically depended on the ecological compensation of the government. This way increased the burden on local governments on the one hand, and on the other hand, it did not attract social capital.

In 13th Five-Year, we will focus on stimulating local governments through trading mechanisms, that is, local governments can get their emission rights to market pactions.

The establishment of the initial allocation system and the delineation of ecological space will create conditions for this.

For the financing problem of environmental protection in the past, we can attract more social capital through the "green finance" and "PPP mode" on the basis of the overall development of ecological space.

9.

The 1+N program has gradually landed, and the overall listing of state-owned enterprises has accelerated.

2015 is the top-level design year for the reform of state-owned enterprises. The "guiding opinions" and a series of supporting reform programs have been introduced. The top-level design of 1+N has been gradually formed and will enter the year of landing in 2016.

(1) the central enterprises level is mainly based on the overall listing, and the pace of merger will be lower than expected.

The guiding opinions of the state-owned enterprise reform clearly put forward that we should promote the overall listing of the group. First, it is relatively fair and rapid to raise the rate of securitization of state assets, avoid the loss of state assets, and the pricing way of marketization is easy to be accepted by all parties.

The two is to alleviate the barrier lake effect of the market, and at the same time increase the equity financing of state-owned enterprises and reduce the occupation of credit funds.

Three, registration system and market supply will be one of the key points of the capital market in 2016, creating conditions for the overall listing of state-owned enterprises.

From the perspective of local state-owned enterprises, with the IPO restart and registration system reform, the listing threshold will be lowered, and the process of securitisation of state assets will continue to accelerate.

From the perspective of central enterprises, a big wave of assets is approaching.

Many central enterprises have huge space for securitisation. Even though 800 billion of assets of China aviation industry group, which has a relatively high asset securitization rate, only about 60% have been listed, and there is still 320 billion space to achieve the overall listing.

The pace of merger of central enterprises will be lower than market expectations.

The merger of the most popular central enterprises in 2015 may be lower than expected in 2016.

The central government really intends to support the reorganization and reorganization of the central enterprises, and the central enterprises in various industries have reported many merger plans. However, from the existing cases including the north and South cars, the effect of the merger of the central enterprises is not satisfactory.

The main problems are irregularities, some of which are not complementarity. For example, the long run merger of Sinop, which was led by the administration, resulted in the long oil shipping delisting, and some of the differences in operational capacity and culture. For example, the South car was far superior to the north car in terms of its management capacity and asset quality.

(2) the reform of local state-owned enterprises should focus on mixed reform, mainly in developed areas with high quality assets.

Through the shareholding system reform and listing, central enterprises have completed most of the work of mixed reform, focusing on local state-owned enterprises, especially those developed in Guangdong, Shanghai and Chongqing.

First, the number of local state-owned enterprises is huge, more than 10, and most enterprises are difficult to go public. It is a feasible reform plan to introduce mixed strategies such as strategic investors, ESOP and PPP.

Two, local governments should actively promote them.

The pace of mixed reform of local state-owned enterprises is faster than that of central enterprises. Before the release of top-level documents on state-owned enterprises, more than 20 provinces and municipalities announced reform plans and announced positive targets for mixed reform.

Many assets can not be used in the hands of local governments, and the market will help to revitalize the existing assets and reduce the burden of local governments.

10, the real estate sales ended with a return to light. The first negative growth of real estate investment occurred. The National Housing Bank put on the agenda.

Real estate sales will return to light in 2015 and return to reality in 2016.

The high frequency sales data of 30 large and medium-sized cities began to fall in September, and the sales of commercial housing in the whole country also fell for the first time in October. The short-term effects of policy easing are gradually dissipating, and the shackles of real estate have never disappeared.

In the short term, the marginal intensity of policy easing will weaken. Last year, the credit and interest rate factors restricting real estate sales have basically been eliminated. Mortgage interest rates have dropped 123 BP from the high point, and there is little room for further reduction. When interest rates cut in October, special interest rates on provident fund loans were not adjusted.

In the medium to long term, population pressure has just begun.

According to our estimate, the number of the rigid demand population (20-29 years old) increased by 65 million in the 2005 to 2014 years and 50 million in the next 5 years. This trend will further accelerate in 2016.

With more than 1 households per capita and more than 33 square meters per capita, the demand for improved demand is also limited.

Real estate investment is worse than sales.

In 2014, the new construction area increased negatively, and the construction area increased negatively in 2015. In 2016, real estate development investment may have negative growth throughout the whole year.

In fact, from the data of that month, negative growth has occurred since August.

The popularity of sales has not ignited the enthusiasm of developers to invest, and the main keynote is still digesting inventory.

The area for sale has risen from 620 million square meters at the end of last year to 670 million square meters, while the ratio of sale area to sales in recent years has increased from 6.3 at the end of last year to 6.3. The inventory has not only been digested but also continues to deteriorate along with the completion of the new project.

If we take into account the construction area of nearly 5 billion square meters, there is no reason to be optimistic about real estate investment.

But then, the downside of real estate investment is good. If real estate investment picks up next year, it will only intensify the contradiction between supply and demand of real estate.

The core of real estate policy is to digest inventory.

Measures to expand supply will gradually weaken, for example, measures to ensure housing construction and expand demand will continue to be strengthened, such as credit policy, provident fund policy and further adjustment of paction tax.

In addition, as the key to stimulating reasonable demand and building housing financing system, the State Housing Bank is expected to accelerate its agenda.

2015 at least tell us three points of experience: first, when all people form consistent expectations, they are likely to be unanimous mistakes. Opportunities and risks are often hidden in places that we all overlook, such as the allocation of funds in the stock market.

Second, policy shocks will only change the pace of the economy and will not change direction.

For example, growth has broken 7, inflation 1 times, liquidity is loose, fundamentals are not unexpected.

Third, although the market sometimes deviates from the fundamentals, it will eventually return. The more deviations, the more serious the way of return, such as the stock market crash.