Post on 25-Dec-2015
transcript
Chief Economist of Guotai Junan Securities
Lin Caiyi
May 2015
2015 China’s Macro Economic
Situation and
Policy Expectation
Aggregate growth is slowing down, the structure carries out a
continuous improvement.
End of the era of investment-led growth
Growth driver has changed, consumption has become the engine
Monetary policy has been steadily loosened, the management system
of budget has been reformed
Macro-economy:
Policy Expectation:
The reform of investment and financing system
Marketization of factor price breaks the monopoly
The reforms of social security, household registration and land transfer system
Domestic macroscopic view: Aggregate growth is slowing down
Since the fourth quarter of 2011 the growth rate of the tertiary industry has been higher
than that of the secondary industry
Since the fourth quarter of 2011, the effects of "four trillion" stimulus policy has subsided, the economic growth rate has declined
In 2012, the growth rate of the tertiary industry has exceeded that of the secondary industryIn 2013, the proportion of the tertiary industry has exceeded that of the manufacturing industryIn 2014, the added value of the tertiary industry accounts for 48.2 % of GDP
2009-12 2010-12 2011-12 2012-12 2013-12 2014-12
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
12.20
12.10
10.30 9.70
9.50
9.80
9.60
9.30
8.70 7.90
7.40
7.30
7.90
7.70
7.50
7.80
7.70 7.40
7.50
7.30
7.30
GDP当季同比 GDP in the same quarter YoY
The growth of GDP is slowing down
2009-12 2010-12 2011-12 2012-12 2013-12 2014-12
0
2
4
6
8
10
12
14
16
第一产业增速 第二产业增速 第三产业增速
Tertiary industry growth
Primary industry growth
Secondary industry growth
Domestic macroscopic view: The structure carries out a continuous improvement
44.3%The tertiary industry
48%The sec-ondary in-dustry
2011
48.2%
The tertiary industry
42.6%
The secondary industry
2014
Energy consumption per unit of GDP falls by 4.8%
The tertiary industry accounts for half of the national economy
Domestic macroscopic view: The structure carries out a continuous improvement
Generating capacity declines synchronously with GDPEnergy consumptionper unit of GDPdeclines
With the changes in the industrial structure, energy consumption per unit of GDP keeps declining
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
0.60
0.70
0.80
0.90
1.00
1.10
1.20
0.94 0.91
0.95
1.01 1.00 0.97
0.92 0.88
0.84 0.81 0.79 0.77
0.74 0.70
每万元 GDP所消耗标准煤(吨)
2009-12 2010-12 2011-12 2012-12 2013-12 2014-12
4
6
8
10
12
14
0
5
10
15
20
25
GDP累计同比 发电量累计同比
The coal consumption per ten thousand yuan GDP (ton)
Accumulative GDP YoY
Accumulative generating capacity YoY
Domestic macroscopic view: End of the era of investment-led growth
11
26.6%The proportion of real estate in fixed assets in-
vestment
The manufacturing industry accounts for 34.7%
Capital construction accounts for 20.4%
The service industry accounts for 12.6%
2012/12 2013/3 2013/7 2013/10 2014/1 2014/4 2014/7 2014/10-20
0
20
40
60
80
100
10.00
14.00
18.00
22.00
26.00
30.00
房地产销售额 房地产开发投资
Real estate sales volume and development investment continue to decline
The real estate market reaches an inflection pointSales are fallingReal estate investment growth rate slows down
The decline of real estate market drags down the investment growth rate
Real estate sales Real estate investment
Domestic macroscopic view:End of the era of investment-led growth
26.6%The proportion of real estate in fixed assets in-
vestment
The manufacturing industry accounts for 34.7%
Capital construction accounts for 20.4%
The service industry accounts for 12.6%
Real estate sales volume and development investment continue to decline
The real estate market reaches an inflection pointSales are fallingReal estate investment growth rate slows down
The decline of real estate marketdrags down the investment growth rate
2012-12 2013-06 2013-12 2014-06 2014-12
10.00
14.00
18.00
22.00
26.00
30.00
-20.00
0.00
20.00
40.00
60.00
80.00
100.00
房地产开发投资累计同比 房地产销售额累计同比Accumulative real estate sales YoYAccumulative investment in
real estate YoY
Growth driver has changed consumption has become the engine
2013-12 2014-03 2014-06 2014-09
0.0
2.5
5.0
7.5
10.0
2,500
2,550
2,600
2,650
2,700
2,750
2,800
2,850
全国居民人均可支配收入增速
The demand for labor market exceeds the supply Per capita disposable income growth and the average monthly income of migrant workers
Demographic changes andthe tertiary industry booming result in a flourishing job market
In 2014a survey of unemployment in 31major cities and townsacross the country
unemployment rate is 5.1%
In 2014 10.82 million urban dwellers have found employment, the annual goal of 10
million people is achievedinadvance
Residents’ disposable personal income grows faster than GDP growth
The demand for job market exceeds the supply, the opening rate
continues to rise
Job market is booming
Rise in wages
2008-12 2009-12 2010-12 2011-12 2012-12 2013-12 2014-12
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
0.80
0.85
0.90
0.95
1.00
1.05
1.10
1.15
1.20
需求人数 求职人数 求人倍率Opening rate
Number of employees needed
Number of job seekers
Growth rate of residents’ per capita disposable income
Domestic macroscopic view:Growth driver has changed consumption has become the engine
Consumption
Investment
Consumption has replaced investment as the main engine of economic growth
Employment boom and residential income increases constitute a solid foundation for consumption growth
Demographic changes, the proportion of the population aged 40-50 rises and brings power to consumption
Government increases spending on people’s livelihood to reduce residents' precautionary savings and boost consumption
2009-12 2010-12 2011-12 2012-12 2013-12
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
消费 投资 净出口Net export
0-4岁
10-14岁
20-24岁
30-34岁
40-44岁
50-54岁
60-64岁
70-74岁
80-84岁
90-94岁
0 1 2 3 4 5 6 7 8 9 10
2013 2003
The proportion of the population aged 40-50 rises significantlyIn 2014 the rate of the stimulation of consumption on GDP growth
consumption
investment
Domestic macroscopic view:The monetary policy has been steadily loosened
14
Monetary policy enters the lowering RRR cycle
Increase of funds outstanding for foreign exchange and bi-
directional volatility are no longer the major driving forces for
basic money supply
With the reversal of RMB appreciation trend, monetary policy
enters the lowering RRR cycle, since February 2015 RRR has
been lowered twice, sharper than market expectations
Cutting interest rates
Since Novemberthe central bank has cut interest ratesfor the second time,
indicating the tendency to loosen monetary policy
Cutting interest rates and lowering the reserve requirement
ratio (RRR) simultaneously will be the basic trend of the
future monetary policy
Raising the floating upper limit of deposit and introducing the
description of deposit insurance system interest rate liberalization is
the key point of the next reform of the central bank
2013-1 2013-4 2013-7 2013-10 2014-1 2014-4 2014-7 2014-10
3
4
5
6
7
8
一般贷款加权平均利率 信托业加权平均利率 10年期国债收益率
The financing cost for the real economy is still high
It remains to be seen whether the liquidity released by cutting interest
rates can enter the real economy
The weighted average interest rate of General loan
The weighted average interest rate of Trust Industry
10 year bond yields
Domestic macroscopic view:Positive fiscal policy is characterized by restructuring expenses
20072008
20092010
20112012
2013
2014年...
27%
28%
29%
30%
31%
32%
33%
29.25%29.67%
28.88%
29.47%
31.16%
32.61%
31.93%
32.61%
教育医疗社保支出占比
2010 2011 2012 2013 2014年前 10月
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
住房保障支出(亿元)
The proportions of Education, Health Care, Social Security in national fiscal expenditure are rising
Housing security expenditure
Positive fiscal policy is characterized by restructuring expenses
Increasing the investment in the construction of social
security housing
Increasing the spending on people's livelihood in the context of budget reform
Stimulating consumption and promoting the development of related industries simultaneously
The percentages of the expenditures in education health care and social security
2007 2008 2009 2010 2 011 2012 2013 1st 10 months of 2014
Housing security expenditure (billion)
2010 2011 2012 2013 1 st 10 months of 2014
Policy expectation:Reform of the budget management system
16
Fiscal and tax reform
Social Equality
Power Constraint
Rights and responsibilities are clearly defined
Improving the budget management system
Full-caliber budget, promoting a more transparent government
budget
The reform of the tax system
Reducing the proportion of indirect taxes and increasing
the proportion of direct taxes
Adjusting the financial relationship between the central and local governments
The central authorities centralize powers; extend general transfer payments, reduce special transfer
payments; issue local government bonds
Policy expectation:The reform of investment and financing system
17
Capital Market
Registration System Reform
The transition of capital
market supervision model will
promote direct financing
market and the business
development of investment
bank, release the vitality of
capital market;
registration system is the
system guarantee of financial
products innovation;
shares, bonds, options, and
other multi-level capital
markets will enter a new
period of development.
Opening up to the world
RMB internationalization Domestic capital elements go
abroad, foreign investors and
financiers come in, the degree
of capital market
internationalizationis
improved, the marketization
of interest rates and exchange
rate is accelerated.
From the competitive industry
in conformity with
international standards to the
further integration of financial
system and the international
market.
The construction of infrastructure
PPP model, asset securitizationProject revenue bonds
With the standardization of
local debt financing
mechanisms, local government
financing platform will be
stripped of government
financing functions, new
means of financing future
construction of infrastructure
shortfall will be project
revenue bonds, PPP model
and asset securitization
projects
Through the reform of investment and financing system, gradually lifting financial repression: opening up both internationally and domestically(breaks the monopoly)
Policy expectation: State-owned enterprises take capital management as the core of their reform
18
Establishing companies run by state-owned capital
Restructuring qualified state-owned enterprises into state-owned capital investment company
By "mixed ownership" starting the privatization of state-
owned enterprises
Managing state-owned assets with the market approach
The core of the SOE reform Since 2014 22 provinces have published the
program of state-owned enterprises reform
July 2014 four contents of State-owned Assets Supervision and Administration Commission (SASAC) pilot reform Six state-owned key enterprises enter the list of pilot reform
The pilot of restructuring state-owned key enterprises into state-owned capital investment companies
The pilot of state-owned key enterprises developing the mixed ownership economy
The pilot of the corporate boards of SOE adopting the personnel selection of senior executives, performance appraisal and
remuneration management authority
The pilot of sending discipline inspection group to state-owned key enterprises
Policy expectation:The marketization of factor price breaks the monopoly
19
Administrative power fades out of the distribution field of factors
Terminating the dual pricing system of factor price
The essential elements of the factor market reform:
Breaking the monopoly, gradually realizing fair competition
By means of SOE reform to achieve progressively "the country steps back while the people step forward"
Petroleum Natural gasElectric power
TransportationTelecommuni
cation
Policy expectation: Social security system, household registration system and land transfer reform
20
Social Security System Reform
Getting rid of the
existing social security
management system
①Impeding
migration endangeri②ng the fairness of
system
Two major drawbacks,
achieving actuarial
balance on the basis of
national co-ordination
Land transfer system reform
Achieving "the separation
of three rights"of
ownership, contract
authority and franchise
Introducing large - scale
management in agricultureThe household registration system reform
No more distinction between
"Agriculture accounts" and "non-
agricultural accounts"
Migrant workers and urban
residents enjoy the same social
welfare
Urbanization
Urbanization is the urbanization of population,so we must first solve
the social security problem of farmers after they've gone into town,
then the problem of property disposal after farmers have left the land
Policy Expectation:Objectives of the reform
21
Chinese model 1.0 Chinese model 2.0
Low quality high-speed
Low quality low-speed
High quality high-speed
Government-leading Market-leading
Prophase Anaphase
The Third Plenary Session of the Eleventh Central Committee
The Third Plenary Session of the Eighteenth Central Committee
Market Economy
A country under the rule of law
Culturally diverse
Reform
The final objective of this reform: to establish the basic
framework for modern country
The risks that macro economy are likely to encounter in 2015 22
Domestic dimension:
Credit risk detonated by market clearing
International dimension:
Dollar asset strength causes liquidity fluctuation
The effective prescription for digesting risk is economic transition and a successful structural adjustment
CB A
Thanks for your attention!
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