Article/Lian Ping, columnist of Sina Financial Opinion Leader (WeChat official account kopleader)
For some time to come, the direction of monetary policy adjustment is to control the total amount and adjust the structure, and it is unlikely to engage in a flood of funds. The optimization of capital flow structure under the condition of reasonable and sufficient liquidity is in essence a targeted hedge against the financing pressure of private and small and micro enterprises caused by the contraction of non credit financing.
1、 "Flood irrigation" is not advisable
The big water release policy of strong stimulus has brought some "sequelae" to our economy in the past, and even now it is still slowly digested and adjusted. It is an important tone set by the central government for monetary policy not to carry out flood irrigation. There is no basis for the view that the absence of mention in the monetary policy implementation report means that the central bank may return to the old path of "releasing water" and "strong stimulus" in the future.
The two rounds of policy easing adjustment in 2009 and 2015 both have their special economic background. In 2009, the US subprime mortgage crisis caused a global impact, and in 2015, the domestic stock market fell sharply. The policy easing adjustment may be the targeted choice at that time, but the side effects are not small.
In 2009, the response to the financial crisis, which has not happened in a hundred years, led to a sharp rise in house prices, but also brought three major problems: high production capacity of backward industries, high inventory of real estate and high debt of local governments. According to the average commercial housing price data of Wind Hundred Cities sample, the average price rose from 9000 yuan per square meter to 11000 yuan per square meter during 2010-2013. At the same time, the data of the Chinese Academy of Social Sciences also shows that the leverage ratio of the government, enterprises and residents increased significantly from 49.0%, 24.0% and 99.0% to 57.8%, 36.4% and 123.1% respectively during 2009-2014.
After the stock market crash in 2015, the benchmark interest rate of housing loans fell to 4.9%. It is also the average price data of Wind 100 cities sample. The average price of less than 11000 yuan per square meter in 2015 rose to 14000 yuan per square meter at the end of 2017, forming a stage of "property market fever", which has added tremendous pressure to the recent real estate regulation. So far, the relevant regulation is still in a stalemate.
In terms of leverage ratio, the leverage ratio of government departments has fallen since 2015 with the local debt audit and contingent debt stripping. However, the leverage ratio of the residential sector and the corporate sector has continued to rise, from 39.9% and 131.2% to 44.8% and 158.2% in 2016, respectively. The pressure on consumption caused by the rising leverage of the residential sector and the pressure on the financing costs of the real economy caused by the rising leverage of the enterprise sector have been reflected in the greater downward pressure on the economy.
With the start of deleveraging in the second half of 2016, the latest data shows that by the end of June 2018, China's total leverage ratio was 248.9%, which was the same as the level in 2017 and 0.3 percentage points lower than the same period in 2017; The leverage ratio of the enterprise sector was 162.4%, down 1.2 percentage points and 3.8 percentage points respectively from the end of 2017 and the same period in 2017; The leverage ratio of the public statistical caliber of government departments was 35.4%, down 0.9 percentage points from 2017, continuing the downward trend since 2015; The leverage ratio of the household sector was 51%, up 2 percentage points from the end of 2017, and the growth rate continued to slow.
It can be seen that the leverage ratio of the economy has stabilized. If we continue to go back to the old path of "flooding", a series of achievements made by the previous deleveraging policy will risk being burned. Therefore, the central government has clearly pointed out that it is not necessary to carry out flood irrigation, but requires to adopt precise drip irrigation to guide the flow of funds and realize the return of financial support to the real economy. In the third quarter's monetary policy implementation report, the central bank made it clear that "monetary policy should be neutral, moderately loose, keep the main gate of money supply, grasp the comprehensive balance in multiple objectives, and make timely and dynamic pre adjustment and fine adjustment according to the changes in the situation", which itself is to emphasize that we should not flood the country, but focus on optimizing the structure and improving the policy effect.
2、 Policies under the pressure of economic downturn
The Necessity of Moderate Reverse Regulation
The overall tone of current monetary policy is to be steady and maintain reasonable and sufficient liquidity. "Reasonable and abundant" itself means that the current policy is slightly looser than the previous period, which is obviously necessary.
From the current domestic economic operation, the latest growth rate of fixed asset investment is 5.7%. Although the growth rate slightly increased by 0.3 percentage points from January to September, it is still 1.6 percentage points lower than the same period last year. Among them, the growth rate of investment in infrastructure construction was 3.7%, which was 0.4 percentage points higher than that in January September, but 15.9 percentage points lower than that in the same period last year.
Although the recovery momentum of manufacturing investment has continued, the growth rate of real estate investment has continued to decline slightly to 9.7%, the contribution of real estate investment to economic growth may be further weakened.
The industrial added value also fell by 0.3 percentage points over the same period last year. Although the growth rate of industrial added value is relatively stable on the whole, considering the weak prosperity of real enterprises and the adjustment of the caliber of industrial enterprises above designated size, the economic performance shown in the industrial added value statistics may be slightly optimistic than the actual situation.
Consumption is still slightly weak, and the slowdown in the sales of downstream home decoration products caused by the weakness of automobile consumption and the slowdown in real estate sales shows the pressure on the consumer side. The current optimistic export data may also be due to the fact that some enterprises "scrambled for exports" before the implementation of a series of targeted measures in the Sino US trade war. To sum up, the downward pressure on the current economic operation is still large. It is necessary for monetary policy to adjust moderately to the loose direction to support the stability of the real economy, but this is not a flood.
3、 Moderate adverse adjustment of current monetary policy
Helps to improve the financial environment
Generally, when the economy is in a downward trend or under great pressure, the reverse and loose adjustment of monetary policy plays an important role in stabilizing the economy. At present, while the economy is under downward pressure, the rapid decline in the growth of social financing scale has brought considerable pressure to the financing of the real sector after the implementation of the previous "financial deleveraging" and other related policies.
Up to now, financial deleveraging has achieved remarkable results, with banks' off balance sheet business and interbank business shrinking significantly. Social finance data shows that since March this year, off balance sheet financing has maintained a negative growth for eight months, of which the negative growth of 691.4 billion yuan in June is the largest contraction of off balance sheet business in a single month this year. From January to October, off balance sheet financing decreased by 2.57 trillion yuan in total, while off balance sheet financing increased by 3.04 trillion yuan in the same period last year. Even without considering the static comparison of the growth rate of off balance sheet financing, the financing gap of about 5.6 trillion yuan will certainly bring considerable financing pressure to the real sector.
Off balance sheet financing demand has not been fully undertaken by on balance sheet financing, and the credit growth rate has remained relatively stable at about 13%. Although the credit growth rate since this year is higher than that of the same period last year, the credit growth in the first three quarters of this year is not as much as that of last year if the scale of 2 trillion yuan transferred from off balance sheet to on balance sheet is excluded. The result of off balance sheet contraction and on balance sheet stability reflects that in terms of money supply, M2 growth slowed down slowly, while M1 growth slowed down rapidly. The latest data shows that M2 growth rate is 8.0%, while M1 growth rate is 2.7%, which is the lowest level since January 2014.
It can be seen from the above series of data that from last year to the first half of this year, the financial environment was relatively tight. However, this tightening effect is mainly reflected in the field of non credit financing, that is, non credit social financing includes off balance sheet business, which used to focus on two important aspects of entity enterprise financing. One is the relatively overheated real estate enterprises, and the other is the enterprises with greater operating pressure. The contraction of financing in this field will directly affect some high-risk enterprises with high financing costs, which may increase their short-term repayment pressure, or even lead to capital chain rupture or even bankruptcy.
In view of the fact that most of the non credit financing is obtained by private enterprises, a sharp decline in this part of financing will inevitably lead to financing difficulties for private enterprises, especially for small and micro enterprises. At this time, a moderately loose reverse adjustment of monetary policy will be beneficial to hedge the pressure of off balance sheet financing contraction on the financing of relevant corporate sectors.
Although the stage of financial deleveraging and regulatory strengthening with strong policy effects has passed, we can see that monetary policy pays more attention to the reasonable sufficiency and comprehensive balance of market liquidity, but at the same time, it is still necessary to moderate reverse adjustment to hedge the negative effects of non credit financing contraction. If the central bank does not put liquidity into the market in time to maintain the overall balance of market liquidity and drive the market interest rate to a lower level, finance is likely to slide into the tightening cycle, which will bring greater pressure on economic operation.
Although the third quarter monetary policy implementation report did not mention that we should not carry out flood irrigation, it has clearly conveyed the policy guidance of not strengthening stimulus to the market through controlling the main gate, comprehensive balance and other words. In fact, there have been many statements about the policy of not engaging in strong stimulus and flooding irrigation. The more important content in the report is that the focus of monetary policy in the next stage is to enhance financial support for private enterprises. It includes the implementation of targeted RRR reduction, including the inclusion of bonds and loans of small and micro enterprises and private enterprises in the scope of qualified collateral of the Central Bank, the addition of temporary special indicators in the MPA, the establishment of private enterprise bond financing support tools, and the possible subsequent establishment of private enterprise equity financing support tools.
This indicates that the direction of monetary policy adjustment is to control the total amount and adjust the structure for a period of time in the future, and it is unlikely to engage in flood like capital investment. The optimization of capital flow structure under the condition of reasonable and sufficient liquidity is in essence a targeted hedge against the financing pressure of private and small and micro enterprises caused by the contraction of non credit financing.
(The author of this article introduces: Chief Economist of Bank of Communications, member and director of China Finance 40 People Forum.)
