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Li Daokui: China is expected to maintain steady growth in the next three years and enter the ranks of high-income countries in 2021

On January 20th, the China Economic Thought and Practice Research Institute of Tsinghua University released the 2018 China Macroeconomic Report – “Financial Adjustment, Entity Promotion, and High Income”, and Li Daokui gave a keynote speech.

Li Daokui said that in the economic development of 2018, overall, the financial contraction is too much, but China's economic growth is stable, manufacturing is picking up, and infrastructure investment potential is great.

He pointed out that the macro leverage of the Chinese economy is still not high and is controllable. The financial structure has not kept up with the needs of the development of the real economy. It must be adjusted to promote the upgrading of the real economy with financial adjustment. He called for the inclusion of non-performing assets, especially the withdrawal of “zombie companies”.

He also believes that real estate should change the extensive development and management model in the past and turn to intensive cultivation.

Finally, Li Daokui said: "As long as the Chinese economy can deepen adjustment and deepen reforms in the next three years, 2019, 2020 and 2021, thus maintaining a relatively stable growth rate, then by 2021 we are fully expected to reach the world. The threshold of high-income countries defined by banks can enter the ranks of high-income countries."

The following is a record of Li Daokui’s speech:

Thanks to the opening words of the young and promising Lek Obo, it is much better than what I said. My experience for so many years is to always believe in young people and always let go of young people. Therefore, I suggest that we once again express our gratitude to Li Kebo with warm applause!

Here, I once again represent our institute. On Sunday, at the end of the semester, we have reached the end of the semester. The exams have all been completed. At this time, we have not returned home. We also insisted on attending our forum at the school, expressing our heartfelt thanks and Warm welcome!

In this report, I remember that it should be our research center, the first macroeconomic report of Tsinghua University China and World Economic Research Center after upgrading to Tsinghua University China Economic Thought and Practice Research Institute. The title of this report is “Finance”. Great adjustments, entities promote upgrades, and move toward high income."

Our core point is that our macro economy is generally stable in 2018, but the financial transition contraction has brought downward pressure and brought investors' worries.

Then, the next step, the policy of our report is to make a fundamental and big change in the financial industry, which we call "big adjustment." Through the major adjustments in the financial industry, we will promote the upgrading of the real economy, including restructuring, mergers and upgrades. Through the development of the real economy of mergers, reorganizations and upgrades, we believe that as long as the Chinese economy maintains relatively stable growth in the next three years, the Chinese economy should be able to enter the ranks of “high-income countries” defined by the World Bank by 2021. So, this is what we mean by this topic.

So, let me gradually, take a little time to tell everyone why we are talking about this.

First of all, we believe that China's macro economy in 2018, including its trend today, is relatively stable, and the real economy is generally stable and stable. For example, if you look at this picture, the above line is the trend of retail sales. It is basically stable and slightly declining. If the factors affecting car sales are removed, it is basically very stable.

Then, look at fixed asset investment and eliminate the amount of infrastructure construction. This is our third line. Not only has it not dropped, but it has also rebounded slightly. It is the gray line and it has rebounded slightly. In other words, if we do not consider the huge decline in infrastructure, mainly the entire fixed asset investment brought by finance, it is one of our three troikas, which is steadily picking up. Exports are also very stable and very stable. The whole export is very stable. The growth rate of exports is above 6%. Despite the troublesome trade friction between China and the United States, our exports are stable. Therefore, the real economy is generally stable.

Looking at it in detail, let's take a closer look. This picture analyzes the bottoming out of private investment and manufacturing investment. In 2018, private investment was the highest in the past four or five years, reaching more than 8%, close to 9%. . For example, manufacturing investment is accumulated every month every month, and the cumulative completion is steadily rising compared with the same period last year. By November 2018, it has risen to over 9%. Manufacturing, this is the first time in the past four or five years in the past few years.

Then, the industrial added value has dropped slightly, between 6% and 7%, and it is relatively stable. From a little more than 7% at the beginning of the year to a little more than 6% at the end of the year, it cannot be said that it is a huge decline and basically stable.

Look at the investment, and then look closely, which economy is investing? Some people may say that this investment figure is not hydrated? This suspicion is very reasonable. Let's look at the case, not just the data, but also the case.

For example, Jiangsu Shagang is engaged in steel. Last year, investment growth increased by 235% compared with the previous year. For example, petrochemical, our example is Hengyi Petrochemical to do chemical fiber, last year was 160% investment growth, compared to the previous year. TCL is a household appliance, and its growth is 74%, leading companies. Zhejiang Hailiang is engaged in metal processing, machinery manufacturing, and investment growth of 67%. Midea's industrial robots and household appliances have grown by 55%, close to 56%. BYD, 23% of new energy vehicles, close to 24%. Haicang House, now doing retail, is not entirely for production, is at the retail end, mainly as a chain store, its investment growth of 23%, last year than the previous year. These are all leading companies.

Therefore, we have come to a basic conclusion from this, large enterprises, leading enterprises are still investing, but it may be that some small and medium enterprises feel bad. This reflects the merger, restructuring and upgrading of our industry as we will talk about below. In this process, the voice of this complaint is asymmetric. Investors, I don't believe in the voice of Shagang and Midea, at least not in the media. However, some small and medium-sized enterprises that may be considering exiting are not complaining about the mismanagement. This is probably caused by the asymmetry of the signal. This is a basic finding of ours.

For example, if retail is to eliminate the factor of the car, if the factor of the car is removed, the orange line above is quite stable, stable at 9.5%, and has been above 9.5%. The car was a very surprising industry last year, and sales in this industry were basically zero. Among them, October and November were -10% growth. The reason is that the consumption and purchase of automobiles has now become a quasi-investment behavior for future expectations. Buying a car is a bit like buying a stock, because you know whether the future car price will rise or fall. You expect that the car price may fall next year or the next year, because the tariff is adjusting, the share ratio of overseas car manufacturers is increasing, and the purchase tax may be adjusted. . Therefore, we believe that the volatility of car sales should be calculated separately. It has its own unique rules and cannot be put together with retail sales. This also shows that the overall real economy is still stable.

Another example is the impact of Sino-US trade. Despite the impact of trade friction between China and the United States, of course, last year was to grab exports. These three lines, the total number of exports, the total number of imports, and the cumulative total of imports and exports are very stable, and they are all fluctuating around 10%. In fact, it is better than the past few years, and we have experienced negative growth in the past few years. Therefore, at least in the short term last year, Sino-US trade has not yet formed a blow to the real economy. The future may have an impact, we will talk about it below.

Therefore, these conclusions may have been relatively clear. The real economy is probably more stable in 2018 than the signals we get in the media, than what we feel, or the level of public opinion we hear. It feels a lot better. This is our first conclusion.

The second conclusion, why do you feel bad? Why are there downward pressures? This is not undeniable. We believe that the main reason is the excessive contraction of finance.

How do you see excessive financial contraction? We look at such a picture, it is relatively clear. In this picture, we take a number of indicators that measure financial support for the development of the real economy, in three years, each indicator for three years. 2016, 2017 and 2018, we look at three years.

The far left is the total amount of new social financing. The new amount is relatively obvious. It was 15.9 trillion in 2018, which is significantly lower than the 17.8 trillion yuan in 2016, which is obviously higher than the 19 trillion in 2017. low. This number may not be fully reflected. why? Because the increase in social financing should correspond to your GDP, because an important component of GDP is fixed asset investment, and an important source of financing for fixed asset investment is external financing, which is the total amount of social financing, not the enterprise. Residual funds. Therefore, this figure should be proportional to GDP.

We use GDP as the denominator to remove the second table. The total amount of new social financing divided by GDP is too obvious. 2016, 2017, 2018 dropped significantly, from 23.5% in 2017 to 17.6% last year. A full 6 percentage points drop. This is the ratio of total social financing to GDP, which is down by 6 percentage points. Certainly reflected in the real economy, certainly not feeling good.

Ask again, what are the weights, and which component of the total social financing has increased the total amount of social financing? It is not a bank loan, because RMB bank loans are relatively stable. From 2017's 13.8 trillion yuan, it also rose to 15.7 trillion last year. In 2016, it was 12.4, 12.4, 13.8, and 15.7, which were steadily rising, so there was no large-scale contraction in commercial banks' formal loans. Mainly commissioned with trust loans, as the saying goes to the shadow bank. In the past 2016 and 2017, entrusted and trust loans were a normal growth of 3 trillion. Last year, 2018 was a negative 2.3. Therefore, it should have been positive growth, last year was negative growth, and the total social financing of 5 trillion yuan was lost in this place. Therefore, this reflects the fact that the real economy must have difficulties. How difficult is it? Let's take a look.

At the same time, look at the sources of financing before, and what is another that is not good for the real economy? It was the debt issued by the local government approved by the Ministry of Finance. The issuance of construction bonds and general debt was postponed last year. Before May of last year, zero-issuance bonds were issued in January-May, local governments, local governments at all levels, county-level governments, and prefecture-level municipal governments. They needed to go to the provincial government to apply for this debt. The debts already formed need to be issued. New debts go to old debts. Therefore, there was no debt issue at all in the first five months of last year. However, the old debts are still due. It was only in May that the gradual issuance of bonds, the gray pillar was reflected. Therefore, this of course brings the tension of the entire financial market.

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