Measures to stimulate the economy and stimulate consumption have been introduced one after another, and the renovation of old houses and the transformation of urban villages in megacities are steadily advancing.
On the other hand, we can also see a change in thinking through some data.
In the first half of this year, the land revenue of local governments at all levels fell by 20% compared with the same period last year, but the expenditure on social security and employment increased by 79%, in addition, spending on health and health increased by 69%。
What does this mean?
Under the current economic situation, our thinking on economic development should indeed change.
Local economic development has certain measurement standards, and domestic development is measured according to the GDP data of various places.
However, due to the poor external economic environment, it is unlikely that GDP growth will be boosted through exports. If you want to spend money, you must first make sure that the people have more money in them.
In the past, in order to boost GDP, many places mainly invested through investment, most of which were through public infrastructure and real estate construction, which drove local economic growth.
However, these investments require a lot of money, so what about these funds
Except for a part of the funds that were borrowed, the rest was the sale of the right to use the land in exchange for funds.
The formation of the initiative of land finance has also made certain achievements in the development of various regions, but it is obvious that it is still dependent on this, and it is even more difficult.
In 2022, the land fiscal revenue has been greatly reduced, but it is unthinkable that it will shrink further by 20 in 20239%。
This is forcing transformation everywhere.
And local debt is also a problem, and if the transition is not carried out, this debt is likely to grow.
Treasury bonds are used to repay debts and interest with ** financial funds, so there will be no danger of default, and they are particularly safe, but the amount is limited, and you have to rob if you want to buy them.
Bonds issued by local governments are called local bonds, and they are repaid with local financial funds. The return of local government bonds is called explicit debt, and there are also hidden liabilities, such as urban investment bonds.
Explicit liabilities can be known by listening to the name, the money borrowed is publicly displayed, and the total amount of money borrowed by each region cannot exceed 50% of the local GDP, and the risk is not great.
Hidden liabilities are the opposite of disclosure, and detailed borrowing data is not disclosed, such as typical urban investment bonds, the detailed amount will not be posted online, and people can only check the outstanding balance of urban investment bonds at most.
Moreover, the supervision of hidden liabilities is not strict, and the steps of borrowing money are few, and the scale of borrowing money is easy to roll over, and the risk of default is large.
In the past, the main repayment of these liabilities came from land revenue, but in the past two years, land revenue has not been able to do so, and the risk of liabilities has become prominent.
Under such circumstances, it is all the more necessary for us to change the way we think about stimulating the economy.
Now we're seeing a change in that thinking.
Recently, even cities like Shenzhen, which is less dependent on land revenue, have reduced the construction plan of two subways, which is a voluntary reduction in dependence on infrastructure.
At the same time, we are pleased to find in the official data that spending on social security and employment, as well as spending on health and health, has been at the top of the list of expenditures.
In fact, we have discussed many times before this, why the bank issued so much money, why it is only reflected in the increase in the deposits of the household sector, the reason is that this money cannot enter the consumption field.
And the more important reason is the lack of confidence.
At present, we continue to increase the expenditure on social security and employment, and improve the expenditure on health and health, which is to reassure the people and slowly form the confidence to dare to spend money and dare to consume.