SMM4, April 28, 2019, the fourth Ni-Co-Li-mn Industry chain Summit was held in Yibin, the first city of the Yangtze River in Wanli. At the meeting, Lian Ping, chief economist of the Bank of Communications, delivered a keynote speech on the theme "China's Macro-Economic and Financial Outlook 2019." He pointed out that with the slowdown of US economic growth, Sino-US trade negotiations basically lock in a certain goal, that is, a certain agreement is finally reached, and Sino-US trade frictions are gradually easing. China's economy is steadily accelerating in infrastructure investment and steady in consumption. In 2019, the general tone of macro policy will remain unchanged, the fiscal will continue to make great efforts to reduce taxes and fees, and monetary policy will be relaxed and moderately tight. The RMB exchange rate has risen steadily, and house prices will not rise and fall sharply.
Economic growth slows in the United States
Due to weakening growth momentum, trade protectionism, lower commodity prices and the normalization of monetary policy in advanced economies, global economic growth slowed synchronously in 2019.
In advanced economies, the economies of China, the United States and Europe have hit an inflection point in recovery, and the differentiation of economic growth in emerging economies has intensified.
Global economic growth in 2019 faces more uncertainties and requires special vigilance against the risks of reform of the international trading system, various political risks, high debt risks and the risk of market volatility.
The Fed has reached the end of its interest rate hike cycle and is on hold for a short period of time.
The federal funds target rate has reached the lower end of the neutral level, and the pace of Fed rate increases is expected to slow significantly in 2019, which may not raise interest rates again, and does not rule out a small rate cut. Policy spillovers in advanced economies have weakened, partly weakening the pressure on domestic liquidity from cross-border capital flows. The dollar index will be difficult to rise, and the pressure on the devaluation of the renminbi will be reduced.
EU economic growth stumbles
Eurozone GDP rose 1.2 per cent in the fourth quarter of 2018 from a year earlier, down 1.3 percentage points from the same period in 2017, down more than in the UK (- 0.28 percentage points) and the United States (+ 0.61 percentage points) over the same period. International forecasts for the European economy have also fallen sharply, with the IMF forecast for eurozone GDP growth for 2019 of 1.60 per cent in January 2019, 0.3 percentage points lower than the October 2018 forecast. The OECD in March 2019 was 0.8 percentage points lower than the November 2018 forecast.
The prospect of Brexit remains uncertain
Round 1: the Brexit agreement was rejected. On January 15, 2019, the House of Commons voted against the "Brexit" agreement reached between the British government and the European Union. The result of the vote made the prospect of Brexit even more dubious.
Round 2: the Brexit agreement was again rejected, and the "no agreement" Brexit was rejected. On March 12, 2019, the British Parliament voted on the second Brexit agreement and finally rejected the revised Brexit agreement between Britain and the European Union by 391-242 votes.
Round 3: Brexit extends to Halloween, and the prospect of Brexit is dubious. European Council President Tusk said on April 11 that the leaders of the 27 EU countries and British Prime Minister Theresa May have agreed to postpone the date of Brexit to October 31.
Trade friction between China and the United States is easing
The reasons why the United States launched the trade war: advocating the protectionist policy and protecting the American industry; the great power competition and friction under the "Thucydides trap"; positioning China as "the main strategic competitor".
After the G20, China and the United States agreed on a postponement of the negotiations, and the negotiations between the two countries are sending a positive signal. As the trade war deeply affected the interests of US businesses and consumers, resulting in a slowdown in US economic growth, there was a marked increase in the willingness of the United States to reconcile. Trade frictions between China and the United States are likely to ease in 2019. Even if the trade friction between China and the United States appears to ease in stages, the strategic game between China and the United States will still be a medium-and long-term process.
The main causes of the easing of Trade friction between China and the United States
From an economic point of view, the main reasons for the mitigation between China and the United States are as follows:
1. Us economic growth expected to slow
2. The fiscal deficit hit a new high
3. The trade deficit continues to widen
4. Significant reduction in direct investment inflows
5. The stock market plummeted in a short period of time
6. Weak employment phase
Politically, there are several reasons:
1. With the loss of a majority in the House of Representatives in the mid-term elections, the Trump administration is bound to be constrained by governance (fiscal deficit and infrastructure)
2. Trump's approval rating has fallen sharply, seeking to ease trade frictions in the short term
3. The heyday of Trump's administration is over, and there will be two new hands to the outside world: from politics and economics to politics is still a little soft.
Two. signs of better economic operation
Seasonal factors receded and export growth picked up
Export growth in 2018 was characterized by an obvious stress "snatching of exports", with an increase of 9.9% for the whole year. In the first quarter of 2019, the trade surplus expanded by 75.2% over the same period last year, and net exports contributed 22.8% to economic growth, compared with-0.6% last year. The trade friction between China and the United States is expected to ease, which is conducive to the growth of China's import and export trade. But global economic growth is slowing, external demand is likely to weaken, and the future trade surplus is under contractionary pressure.
The steady acceleration of infrastructure investment will contribute to the improvement of investment
Affected by weaker demand, the growth rate of manufacturing investment will slow. The willingness of private investment has declined, and it is very cautious to expand investment in production. The growth rate of investment in the manufacturing industry is expected to decline, but investment in the high-tech manufacturing industry is expected to grow rapidly. Real estate regulation and control policy is difficult to relax significantly, with the reduction of land purchase expenditure, real estate development investment growth will be difficult to continue to accelerate.
Investment grew by 5.9% in 2018, while infrastructure investment grew by only 3.8%. Macro policy tends to be positive, focusing on promoting infrastructure investment, which rose to 4.4 per cent in the first quarter of this year. We will speed up the allocation and expenditure of financial funds, strengthen financial support, and ensure the capital needs of financing platform companies and key investment projects. We will promote PPP projects in a standardized and orderly manner and play a greater role in making up for shortcomings. Multi-site UHV, rail transit and other projects approved to reopen the gate. Infrastructure investment will continue to accelerate, but strict control of debt leverage, prevention of local government debt risk, the source of funds will still restrict the recovery of infrastructure investment.
Downward pressure on manufacturing investment
Manufacturing investment gradually picked up in 2018, growing by 9.5% in the whole year, showing strong resilience, with a greater contribution from the upstream manufacturing industry and a slower growth in the middle and lower reaches of the manufacturing industry. It fell to 4.6% in the first quarter of 2019.
Continue to limit production and remove production capacity for many years, is currently in the stage of restorative growth. With the support of the policy of reducing the tax rate of key manufacturing industries, increasing the proportion of R & D expenses plus deductions, and building a manufacturing power, investment in high-tech manufacturing, high-end equipment manufacturing, new energy and new materials manufacturing will accelerate.
The improvement in exports, the rebound in investment and the steady growth in consumption may lead to a steady recovery in manufacturing investment after the second quarter.
Investment in real estate development may slow down
Investment in real estate development increased by 9.5% in 2018, with a good growth momentum, accelerating to 11.8% in the first quarter of this year. The substantial increase in land purchase fees is an important factor to support real estate development investment. As the impact of the slowdown in commercial housing sales on development investment gradually appears, and the growth of land purchase fees slows down, it may be difficult to continue to accelerate real estate investment in the future. The rising trend of house prices has been curbed, real estate regulation and control policies have not been significantly relaxed, but some local policy margins have been loosened, and the improvement of the real estate financial environment will help real estate investment to maintain the growth trend.
Consumption runs smoothly as a whole
In 2019, macro policy will continue to vigorously expand domestic demand growth, and the important work is to promote consumption growth. The release effect of consumption promotion policy, the improvement of the degree of openness of the service industry, the reduction and abolition of import tariffs on some consumer goods, and the steady progress of personal tax reform will provide conditions for consumption growth. Automobile consumption negative growth, real estate-related areas of consumption may weaken, is an important factor affecting consumption growth.
Negative impact: the slowdown in commercial housing sales, on the subsequent decoration, furniture, household appliances and other consumption impact. Car retail continued to negative growth year on year, a drag on the growth rate of consumption. The leverage level of the household sector is rising, and housing loans are growing rapidly, which has a crowding out effect on consumer expenditure and affects the growth of consumption in the future.
Positive factors: the frequent introduction and release of policies to promote openness, increase imports and improve consumer welfare will boost consumption. Lowering and abolishing import tariffs on some consumer goods and keeping the consumer side at home by expanding imports will promote consumption growth. Consumption upgrading brings about an increase in high-end consumer demand and has a strong growth momentum.
The price level is rising steadily
CPI rose 2.3 per cent in March from a year earlier, up 0.8 percentage points from the previous month; swine fever and the pig cycle will drive pork prices higher, pushing up CPI, but not macroeconomic regulation. PPI rebounded for the first time since June 2018, the risk of deflation in the industrial sector will weaken, and PPI is expected to rise in the second quarter.
Major economic objectives for 2019
Important policy measures that have been introduced in 2019
The economic growth rate for the whole year is expected to fall within the upper limit of the target range.
From the first to the fourth quarter of 2018, the economic growth rate was 6.8 per cent, 6.7 per cent, 6.5 per cent and 6.4 per cent, respectively, with an annual growth rate of 6.6 per cent, with the total economy reaching 90 trillion yuan. The role of macro-policy on the economy has changed from regulation and restraint in 2018 to support and support in 2019, promoting an improvement in economic operation, with an economic growth rate of 6.4% in the first quarter. The effectiveness of counter-cyclical regulation policies will continue to be released, the external environment is likely to continue to improve, and full-year economic growth is expected to fall within the upper limit of the target range of 6% to 6.5%.
III. The overall tone of macro policy remains unchanged
1. The situation at home and abroad is still complex, the macro policy is actively responding to it, and the overall framework remains unchanged.
2. Fiscal policy to increase efficiency, continue to make greater efforts to reduce taxes and fees;
3. Monetary policy emphasizes managing the general gate of money supply, loosening and moderation, persisting in counter-cyclical adjustment and maintaining reasonable and abundant liquidity.
4. Politburo meetings no longer mention counter-cyclical regulation and ample liquidity
5. The possibility of further increase in the counter-cyclical adjustment of macro policy is reduced, but it will not be tightened quickly, and it is more likely to keep the overall pattern unchanged in the short term.
Monetary policy should aim at stabilizing growth and effectively supporting the real economy, at the same time, it should cooperate with more active fiscal policies and take into account many related needs.
1. It is necessary for the monetary authorities to strike a balance between stabilizing growth and easing external pressure
2. Grasp the direction, intensity and rhythm of the loose adjustment of monetary policy, and control the flow of credit resources in order to stabilize the leverage ratio.
3. Monetary policy should also pay close attention to the risk of linkage between the foreign exchange market and the stock market in the course of adjustment, and take corresponding measures to effectively control it.
Although there is some room for operation, it is necessary to reduce the standard in an all-round way.
At present, the required deposit ratios for large banks and small and medium-sized banks are 13.5 per cent and 11.5 per cent, respectively. Historically, it has remained below 8% for a long time. The reduction will help commercial banks to increase credit support for small and micro enterprises. We will step up efforts to lower the standard for small and medium-sized banks, and all the funds released will be used for loans to private and small and micro enterprises. (government work report) the marketization of interest rates needs to maintain a relatively loose financial environment. If liquidity is tight, it will inevitably lead to an upward rise in loan interest rates and a rise in the cost of financing in the real economy. At present, liquidity has been reasonably abundant, the level of interest rates has continued to decline, and the need for an overall reduction in interest rates has been reduced.
The debt gap of financial institutions increases, and the possibility of directional reduction still exists.
Deposit growth in financial institutions has slowed from 19 per cent at the end of 2015 to 7.8 per cent at the end of 2018, continuing to be significantly lower than loan growth, with small and medium-sized banks falling even more. The expansion of the growth rate of deposits and loans increases the difficulty of bank asset and liability management and restricts the ability of bank asset expansion to a certain extent. At the same time, it is not conducive to the decline of social financing costs because of the upward pressure on loan interest rates. If the reserve requirement ratio remains high, there will be gap pressure on the liquidity of the debt side of banks, and the pressure on small and medium-sized banks will be relatively greater. In order to better support small and micro enterprises, structural reduction is still necessary.
Interest rate cuts will be more cautious
The benchmark interest rates for one-year deposits and loans are 1.5 per cent and 4.35 per cent, respectively, the lowest in history.
At present, the financing cost of some enterprises is difficult to reduce, its essence is not the reason for the high benchmark interest rate, but its own credit risk is higher, financing needs a higher risk premium.
Interest rate differentials between China and the United States have gradually narrowed, interest rates on one-year Treasuries have been hung upside down, and interest rate cuts could put pressure on exchange rates and capital flows.
The benchmark deposit and loan interest rate and money market interest rate will be "two tracks and one track", gradually downplaying the concept of benchmark interest rate.
Control the flow of credit resources to stabilize the level of leverage in all sectors
Deleveraging has achieved phased results, with the leverage ratio of the government sector falling from 56.9 per cent at the end of 2015 to 36.2 per cent at the end of 2017. Leverage levels for both financial institutions and non-financial companies have declined to varying degrees. At the end of 2018, the overall level of macro leverage ratio in China was 249.4%, down 1.5 percentage points from the same period last year. The policy direction has changed to stable leverage.
Under the condition of great downward pressure on the economy, the policy actively guides the increase of credit release to real enterprises, which is likely to bring about a rebound in the overall level of leverage. Especially under the condition that the financial transmission mechanism is not smooth, if the increased liquidity does not flow into the real enterprises as expected, but more into the property market, it is disadvantageous to the economic operation.
four。 Asset price volatility differentiates upward
RMB exchange rate operates in a reasonable range
Since 2016, the IMF's assessment report has consistently concluded that the RMB exchange rate is broadly in line with the fundamentals of the Chinese economy. The CFETS index is basically stable and has appreciated since 2019. At present, the supply and demand of the foreign exchange market is basically balanced, and the main body of the market expects the RMB exchange rate to be stable.
RMB exchange rate will fluctuate: internal factors
Negative RMB factors:
Downward pressure on China's economy continues, manufacturing PMI has been below the boom-bust line for three months in a row, and profit growth for industrial companies has slowed.
Short-term economic data from the United States and Europe have declined, export pressure has increased, and the trade surplus may narrow, putting some pressure on the RMB exchange rate.
Positive RMB factors:
Positive progress has been made in the Sino-US trade negotiations and support for the basic stability of the RMB.
The supply and demand of the foreign exchange market is basically balanced, and the main body of the market expects the RMB exchange rate to be stable.
RMB exchange rate will fluctuate: external factors
The dollar index will not fall sharply and is likely to remain volatile
Drag on the dollar:
As the Fed neared the end of its rate hike, its driving effect on the dollar index weakened significantly.
Short-term data for the US economy weakened, with the manufacturing PMI index of 54.2 in February, the lowest in more than two years, and economic fundamentals dragging down the dollar.
Supporting US dollar factors:
The eurozone manufacturing PMI index fell below the boom-bust line in February and delayed raising interest rates until 2020. Europe's economy is weaker to support the dollar.
In the second half of the year, as China's economy stabilizes, it will lead to a recovery in emerging markets and constrain the rise of the dollar.
Real estate: moderate structural adjustment of policy, house prices will not rise and fall sharply
The policy structure is moderately loose and fine-tuned from the bottom up.
Focusing on ensuring rigid demand and replacement improvement demand, first-and second-tier cities may appropriately loosen overly tight purchase restrictions, loan restrictions, price restrictions and sales restrictions, so as to promote the relaxation of talent housing projects and residence restrictions.
The third and fourth lines of urban areas do not treat the relocation of sheds, cancel or reduce the monetization of sheds in areas that have been removed from inventory.
Marginal improvement in the capital environment
Mortgage interest rates are peaking back, and the regulation of mortgage quota growth may be relaxed, which is conducive to rigid demand entering the market.
For housing enterprises that mainly provide rigid demand, the capital situation may be improved to a certain extent.
Volume and Price can not be separated from the theme of Regional differentiation
Under the relaxation of the policy environment in the first-and second-tier cities, the activity of market transactions has increased, rigid demand and replacement demand have been released, sales may increase slightly compared with the same period last year, and there is a potential driving force for house prices to rise in the central region.
Due to the basic tone of urban policy, the demand side of most third-and fourth-tier cities has not been suppressed, but the fundamentals of third-and fourth-tier cities, which have obviously benefited from the monetization of shed reform in the early stage, may go down.
Equity assets: price trend upward
Ten dimensions to look at the trend of equity asset prices
The economic operation has stabilized beyond expectations, and the trend is for the better.
Positive fiscal and investment policy effects appear
The effect of counter-cyclical Adjustment of Monetary Policy
Increased market risk appetite and expected improvement
The price level tends to rise
Enterprise profits hit bottom and improve
Reasonable liquidity and falling interest rates
The external pressure in the early stage is being watered down.
The exchange rate of RMB has risen steadily
Foreign capital may increase its inflow into the domestic market
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