Ba Shusong delivered a speech in the Theme Forum of CHINA MINING 2012
Source: www.gtzyb.com Citation: www.gtzyb.com Date: Nov.4, 2012
(Photo from www.mlr.gov.cn. Photo:Ye Xingmao / Editor: Chen Hui)
The Theme Forum of CHINA MINING 2012 “Join hands to meet challenges and promote sustainable development” was held at Tianjin Meijiang Convention and Exhibition Center on the morning of Nov.4th, 2012. The photo reveals that Mr. Ba Shusong, Vice President of Institute of Finance, Development Research Center of the State Council, PRC, Chief Economist, China banking Association, d delivered a speech in CHINA MINING 2012.
Thank you. I’m so honored to have the opportunity to participate in this event, and make twenty minutes speech. Just now Mr. Roderick.G, Eggert mentioned that China`s macroeconomic situation, the adjustment of economic structure to the resource price influence whether demand end or supply end are various influence, and this is a fact.
Although China may not be a big country in many resources stock influence, but in the incremental effect, it is not allow to be ignored.
It also tells us that resources price and the whole macroeconomic policy, economic structure are closely related to the transformation. As researchers in the United States are concerned about China`s economy, in fact many Chinese investors are the same. In the next American election, if let gold investors choose , it is estimated that Mr Romney is eliminated, because Mr.Romney elected would tighten fiscal and promote the dollar which is not conducive to gold and is beneficial to the stock market. Behind this, we also see that the macroeconomic policy and resource price trend correlate.
At present, China`s economy are through with a complete economic cycle. After 2008, we achieved high in 2010 by 4 trillion leading. Then, we fell gradually, and see the bottom. This year`s economic situation trend has been made, and the fourth quarter is expected to return to 8%. So from this, in the next two years it doesn`t have big stimulus which drive the economy rebounded just like2008,2009, and more generally in sustainable, or to look for sustainable growth rate steady growth environment of the adjustment of economic structure. What are the effects of the economic structure adjustment to resource price?
Just now Minister Xu in his lecture has talked about green mineral and green mining. This is an aspect, what I see is another aspect.
From the aspect of the banking industry, the overall China`s banking bad assets rise in this year. In the economic decline period , it played very smooth, and overall growth is very mild in affordable range. But in the aspect of area, it is very concentrated, mainly concentrated in Zhejiang province. You check the Banks’ new bad assets in the economic downturn period, and it is often this kind of branch, like Hangzhou branch, Wenzhou branch, Ningbo branch, and so on. Behind this, actually it also reflects the ongoing economic structure adjustment.
Because I once worked in Zhejiang, I know why it appeared bad asset growth a little faster. In 2008 and 2009, in the economy as a whole and lever to expand liabilities process the speed is quick, Zhejiang is faster. Moreover, Wenzhou is faster than the whole Zhejiang. So in the economic downturn period, leverage process by nature is relatively large impact.
More worth thinking is where is the money. Because we can see the speed of Zhejiang new credit is faster than its GDP growth.
From the actual follow see, one is a real estate, and the other is a mineral resources investment field. So a large number of private capital from the original non mineral field rushing into will promote usually say super cycle inside the power that notes allow to ignore. Now economic downturn, resources and real estate prices fell in control, all of which lead to their large-scale raise debt capital for domestic investment more concentrated, and the impact is larger by nature.
I saw recently Zhejiang folk capital began to gradually withdraw from these funds, and began to turn to faster service. It is the same with the economic transformation direction. This also objectively to resources mineral resources shuffle puts forward the requirements.
In a word, I want to say is by analyzing macro economy and macro policy , we will grasp the whole industry.
I think from this year`s situation, through the continuous economic agent after the bottom fall, it is estimated that in the fourth quarter economic will be mild rebound, but on the whole it is difficult to appear large-scale quickly apparent reversal of the signal.
(PPT) From GDP growth trend fluctuation diagram, we can see this round of growth is low in the first quarter, 2009. By the promotion of 4 trillion, they have risen sharply in the first quarter of 2010, to reach a peak, and then experienced mild but longer back.
On the whole, from the trend and the macroscopic policy efforts , we will look for sustainable growth space in the next two years in the economic environment and new environment steady growth center of the process. It may be still around 8% growth, more emphasis is placed on keeping moderate growth and steady growth of the adjustment of economic structure.
From the four quarters of data , there are a series of economic signal shows that present a stabilizing signal, from the industrial added value year-on-year growth, fixed assets investment growth, and infrastructure investment is growing at a steady rate. At the same time, real estate sales continuous improving, year-on-year drop continues to collect small, it also makes the real estate developers funds have obvious improvement. We also see that many market research institutions are in comparison, and the correlation of a lot of resource price with China`s real estate regulation degree is high, it is also notable factors. The real estate market regulation and the related resources price influence.
Compared to the crisis in 2008and 2009, our theme is "to deal with hand in hand”. What we need to deal with is the 2008 financial crisis. China’s financial crisis policy is different from the one in 2008. It no longer sells massive stimulus policy which has a very important reason. If we use economic data contrast words, the gray histogram on the left reflects the situation in 2008 , and the right one is the present situation. Whether from the volume of car sales, power generation or export amount and quantity, this time we suffered less economic impact than in 2008. Now after 4 trillion gradually normalization, the volume of car sales and power generation experienced obvious drop. After rapid decline, it began to gradually stabilize. It provides a good environment to create the conditions.
Macroscopic indicators will gradually become better off in the next quarters, but the micro profit can’t be improved. Or macro and micro cold pattern may last a few quarters, such as the fourth quarter.
In the fourth quarter, it will return to 8% , but it is difficult to improve corporate earnings. We see there are a lot of enterprises facing financial crisis in this round of financial crisis just like in 2008 difficulties, because usually we think that 2008 is the big crisis, and this crisis is relatively small. The feelings of our enterprise have its reasons. We compared two indicators, one is the loss of the enterprise, and the other is the loss of the amount of the enterprise. we found that the number of whole enterprise losses in 2008 and at present are almost all high, and there is no apparent trend, but the amount of loss in peak is less than in 2008 . we estimate that the macro and micro data without apparent synchronous improve may continue for a period of time, the enterprise profit is decreasing, but will drop slightly better.
The VAT tax, related to industry, enterprise production activities , have an obvious picks up from August to September. we still have to wait and see whether it will be sustainable. if after back to stabilize, it will be a signal for the real economy.
Let’s look at the right side of the map (PPT), August is pink index, it is as low as 8.5%; In September, it rises to 10.4%, if we can stand at this level , industrial production index are highly related, and it may stand back.
Compared with 2008, the policy is more gentle. We pay more attention to the structure adjustment, and are more aware of the scale of the stimulus. It is possible to bring the cost of the policy
At the same time, compared with 2008, internal and external environment are not so serious, so this time economic strategy is not so important as market expectations. Here compare to the other indicators, such as manufacturing and non-manufacturing sectors TMI index, fixed assets investment and monthly growth rate, the total volume of retail sales fluctuations, they are better than in 2008. Real estate investment growth rate has been restored.
So if comparing, the stimulus policy in 2008 is actually difficult to launch, this round of economic growth is gradually slow down, rather than the one at the end of 2008, including the global economy is greatly reduced, and at the same time, in no apparent relaxation policy situation, real estate sales rapid thaw, and house prices rebounded signs. Now look at the amount of real estate sales. Real estate sales area is basically back to the starting point of the period and two years ago, all of which makes the real estate market more alert, so we pay more attention in stimulus policy.
Third, some industry are overcapacity, which also makes the decision maker launches a massive new stimulus policy more prudent. The China iron and steel association of business makes statistics of the iron and steel industry sales profit since this year. The profit of per ton is 1.68 Yuan, and this is also the pattern of overcapacity formation.
The fourth is the pressure of inflation. In 2008 and 2009, the price was once a negative and stimulus policies don`t have to consider inflationary pressure. This round of CPI is just 6.5 from highs, with prices constantly return to 2%. We see the pork prices fall sharply, which is the main power of the two months CPI down. With pork prices gradually sole, pork prices and feed price comparison reversal. With early economic recovery, such as before and after the Spring Festival GDP growth back to 8%. At that time we worry about inflation and whether inflation will continue after tightening, therefore it also makes the policy more carefully.
The fifth factor is the official statement with the policies of the small room for maneuver than in 2008. In 2008, whether local governments, businesses or financial institutions, their leverage ratio is in a low level. After 2008, 2009, the scale of the credit availability, especially the main body of 4 trillion start, push up the local government`s leverage ratio. In 2008 , we cannot say that there is no a 4 trillion. Development and reform commission (NDRC) issues large projects, such as subway, put together also have the 45 trillion three or four quarter this year, but reflected in fixed asset growth is very gentle.
The reality is that the corresponding supporting fund raise very quickly, bank credit support, and land income also is higher in 2008. This time, project approval doesn’t necessarily have the ability to raise funds, and this is the formation of bottleneck and restriction.
So this is what we see from the first three quarters of this year . In the economic rebound strength weak conditions, the content of the policy to relax and strength also have no significant change.
Personally, such as in December, the central economic working conference, in the warm growth condition, it can properly have stable investment and positive fiscal policy to increase the use of national debt scale, and to promote the economy back to potential growth rate of around here, but won`t be like 2008, 2009 years of magnitude, but is more moderate speed. So we can make more time and energy out of the economic structure adjustment.
If you want to have a description, is it V type, L or U? I generally considered economic down the left side of the U. This is what I want to discuss with you: One is the relevance of resource price trend and macroeconomic relevance, and the other one is economic situation and policy focus in the next two years.
Thank you!
（translated by TLRHVC）
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