As we all know, the most important problems of China's economy at present are:
Debt issues.
From a macro perspective, the debt of the real economy is divided into:Resident debt, non-financial enterprises, ** debtThese three pieces, of which the ** debt, can be further dividedLocal ** debtwithDebtThese two pieces.
At the current stage, the focus of China's debt problem is actually focused on local debt.
To think"Dissolve".The first thing to be clear about is the total amount and classification of local debts.
According to the official public channel, the local ** explicit debt that has been clarified can only be issued in the open market with the approval of the Ministry of FinanceLocal ** bonds, which can further be divided into general bonds and special bonds.
According to the data released by the "China Local ** Bond Information Disclosure Platform", as of the third quarter of 2023, the balance of general bonds of local ** is 1483 trillion yuan, while the balance of special bonds is 239 trillion yuan, which adds up38.73 trillion yuan
This is China's official and apparently local** debt balance.
However, in the economic system with Chinese characteristics, the local ** debt on the surface is not the big one, and the really huge debt that the local ** has the obligation to repay is the hidden debt - this hidden debt is"Urban investment company debt".
The scale of this debt is not only extremely large, but also difficult to calculate and calculate.
According to the relevant data of the National Finance and Development Laboratory, an authoritative research institution on China's macro debt, at the end of 2022, the ratio of the total scale of implicit debt to GDP in these places was 73%, and China's GDP was 121 trillion yuan last year88.3 trillion yuan
Ignoring the time difference of three quarters, explicit debt + implicit debt, that is, the total debt of China's local **:
127 trillion yuan, equivalent to 105% of GDP.
Only after figuring out the total amount of debt can we talk about how to resolve it.
According to Wu Ge, chief economist of the Yangtze River, at the ** level, before 2022, we have experienced three rounds of "debt" of local ** hidden debts, namely 2014-2015, 2018-2019, and 2020-2021 - it is an exaggeration to say that in the past 10 years, China's ** at all levels has either been turning into debts or preparing to ...... debts
If you want to talk about the specific idea of debt, it is to help the local government and the financing platform together.
It is a pity that for various reasons, China's local debt problem has not only not been reduced because of the three debts, but has become bigger and bigger, more and more, and the ratio to GDP has become higher and higher, until today, it has fallen into an almost uncontrollable situation.
It seems that the most successful year of 2015 has not reduced the balance of local ** debt (but increased rapidly), and its essence is to print money to solve the problem - allowing local ** to issue bonds, and then, the central bank will include these bonds in the treasury collateral, and then, the central bank will ** these bonds in the open market operation, which is essentially money printing.
Since the beginning of the era of credit money,In the final analysis, the final resolution of the macro debt problem of any country in the world depends on money printing, because only money printing is the most smooth, smooth, and the most able way to solve the problem- In other ways, it will cause great turmoil and even economic collapse in the whole society.
Note that there are no exceptions, and there can be no exceptions, if there is any difference in the way countries "turn into debt", the difference is:
The difference between printing more money and printing less money;
The difference between printing it for you or printing it for me.
For example, in 2008, when the subprime mortgage crisis in the United States was in full swing, it meant that the United StatesThere is a problem with the debt of the residential sectorBut these debts have been transferred to the financial sector, so the large financial institutions in the United States at that time were almost wiped out.
At this time, first the United States ** came forward and directly used 700 billion US dollars of financial funds to acquire the toxic assets of financial institutions (requiring financial companies to use equity as collateral, and then the United States ** hurriedly issued a large number of Treasury bonds to raise financial funds, while the Federal Reserve bought a large number of Treasury bonds to print money, so this is indirect money printing), and then the Federal Reserve came forward to turn Wall Street's Goldman Sachs and Morgan Stanley into commercial banks (which means that they can get loans from the Federal Reserve, which is indirect money printing) - That's it, it's not enough, the Fed personally went into battle, engaged in QE, and directly bought MBS from investors and financial institutions (this is direct money printing).
In the final analysis, after the global financial crisis, the Federal Reserve gave the money printed out first-hand to the US financial institutions and the federal **, and further, the federal ** transferred the money to the US financial institutions, enterprises and individuals through various means.
When the pandemic crisis hit in 2020, it was different.
After the outbreak of the pandemic,The U.S. corporate sector and the residential sector have debt problems at the same timeSo the United States desperately issued Treasury bonds, and then the Federal Reserve desperately bought Treasury bonds, which means that the Federal Reserve directly printed a large amount of money, and then gave the first-hand money to the federal government, and the federal government issued the money to individuals and enterprises in the United States, without changing hands through financial institutions.
Compared with 2008, this time the Fed printed money is far fairer for ordinary Americans than in 2008 - because the dollar is the world's currency, this fairest way for Americans, printing the most money, so it can be said to be the most unfair way for other countries.
Looking at the Fed's balance sheet since 2006, we know:
From 2008 to 2014, the debt of residents was resolved, and 3$7 trillion printed to U.S. financial institutions and the federal government;
In 2020-2022, the debt of residents and enterprises will be resolved, and 5$1 trillion to individuals and businesses through federal** handprints.
Since the outbreak of the epidemic in 2020, why has the U.S. economy been able to thrive in the world?
It is because the 2020-2022 U.S. debt resolution printing method is the fairest, most reasonable, most effective, and most problematic.
Well, having said so much earlier, here are my suggestions and ideas for debt reduction
The principle of printing the least amount of money and printing money belongs to the world.
The first suggestion is to incorporate local ** bonds into the management of national bonds in batchesThe principal and interest will be paid by the ** finance department.
Among the world's major large economies, the United States, Russia, India, Germany, Italy, Brazil, Canada, and Australia are all federal countries, while the United Kingdom is also federal in substance, compared to China, Japan, and South Korea are unitary countries, and France is also a unitary country in essence.
The local ** of the federal state, which has no affiliation with the ***, can rely on its own credit to issue bonds in the market, which is called the local ** bond - but in fact, in order not to disrupt the bond market, even the federal state rarely agrees to issue bonds by the local ** alone.
In contrast, the local ** of a unitary state is an extension of ***, and its credibility and authority all come from ***The issuance of bonds by local ** is inherently nondescript and unreasonableJust before 2015, China did not allow local ** to issue bonds at all, but in 2015, in order to pay the debt interest of urban investment companies that were almost bankrupt in various places at that time, local ** had to be allowed to issue bond financing.
According to the relevant regulations, the issuance of local bonds, regardless of its financing amount or financing interest rate, must be approved by the Ministry of Finance) and the central bank, and then, its principal and interest are also repaid by the Ministry of Finance, which in itself means that the credit of local bonds has nothing to do with itself, but is bound to the Ministry of Finance.
As Xu Gao, chief economist of Bank of China International, said
From a legal point of view, China has only one credit, and that is the credit. The debts borrowed by the ** in various places are the debts of the ***. The default of the ** debt in any place will break the credit of the first place.
The unlimited responsibility of each other with the local ** cannot be set aside by the concepts of moral hazard and the hardening of budget constraints. A simple question is: if we insist on "whose child will be held" in the disposal of local debts, then can the local government not hold the "child" in the future?
In the relationship between the central government and the local government, ** must also know that he has the dual identity of "manager" and "back-up". As the superior of the local government, he certainly has the power to lead and manage the local government. But on the other hand, the local ** really encountered a problem that it couldn't solve by itself, and ** had to take action to get to the bottom of it. In this way, we can stop the spread of risks and stabilize social confidence.
Since the existing 39 trillion yuan of local ** bonds are issued under the support and supervision of **, it shows that the formation of these debts, at least in the eyes of **, is reasonable and transparent, and is indeed closely related to local people's livelihood and infrastructure construction, and belongs to the "cleanest" part of local ** debts - otherwise, why would *** approve their bond financing?
Accepting local ** bonds in batches, turning them into national bonds, and paying the principal and interest on behalf of them, can really help local ** reduce an additional fixed expenditure and relieve the pressure of local ** debt.
Even if it takes over the local government's explicit debt of 39 trillion yuan, plus the original 27 trillion yuan of national debt, even according to international standards, plus the bonds issued by policy banks, China's total debt GDP is less than 60%, and it is still one of the countries with the lowest debt GDP ratio among the world's major economies.
Note: The data ** is based on BIS, and China has considered local ** bonds and policy bank bonds.
Since October 2023, the first financial department has issued an additional 1 trillion yuan of treasury bonds, and the funds obtained have been directly transferred to the local government, nominally to "accelerate recovery and reconstruction" and "further enhance China's disaster prevention, mitigation and relief capabilities", but in essence, it is the idea of replacing local ** bonds with national bonds - "improving disaster prevention, mitigation and relief capabilities", which was originally a necessary expenditure for the local government, and with the transfer payment, the local government can save the money for other expenditures.
Taking this 1 trillion yuan as a start, it can be made clear that special treasury bonds will be issued in batches in the future to gradually replace local debts.
The second suggestion is to carry out hierarchical management of the hidden debts of local governments.
There are many types of debts of urban investment companies, such as urban investment bonds, bank loans, trust financing, private financing, and other liabilities, among which bank loans and bonds are the majority.
The issuance of urban investment bonds must go through a series of steps, such as the preparation of application materials, the setting of the issuance plan, the establishment of underwriters, the issuance of a guarantee letter by a guarantee agency, the issuance of an audit report by an audit institution, the issuance of a lawyer's work report by a law firm, the issuance of a credit rating report by a credit rating agency, the approval of the People's Bank of China and the China Securities Regulatory Commission, the submission of issuance approval documents to the China Bond Listing and the Exchange, the arrangement of distribution registration, and the publication ......of bond issuance announcements or fund raising prospectuses
Therefore, the public issuance of urban investment bonds in the market can be said to be the most transparent and market-oriented local hidden debt, this part of the debt, and is one of the most important bond investment varieties in China's capital market, therefore, this part of the debt, on the one hand, must resolutely follow the market-oriented path, on the other hand, ** and the localities**, also need to clearly require the urban investment company to take the urban investment bond as the highest priority debt repayment.
According to public data, as of the third quarter of 2023, the stock amount of China's urban investment bonds is about 135 trillion yuan, and its overall scale has remained basically stable since 2022;According to the research of Guoxin ** Wang Jian and others, at the end of 2022, the overall risk exposure of commercial banks to urban investment was about 40 trillion yuan, including 37 trillion yuan of loans and 3 trillion yuan of non-standard loans - we can simply think that bank loans are about 40 trillion yuan.
In other words, bank loans accounted for almost half of the approximately 88 trillion yuan of urban investment company debt at the end of 2022, while urban investment bonds accounted for 15%, and the two together accounted for 60%.
Obviously, with the current operating capacity of urban investment companies, especially those in the central and western provinces, it is impossible for their cash flow to repay the bank's loans and interest in full.
Since it is a loan from a local financing platform, it is necessary for the local government to come forward as a debtor and the creditor bank to negotiate debt extension, write-down or discount.
In this regard, Guizhou Zunyi Road Bridge and Zunyi City** have set an example for other urban investment companies.
On December 30, 2022, Zunyi Road & Bridge Construction (Group)** hereinafter referred to as "Zunyi Road & Bridge") disclosed an announcement on promoting the restructuring of bank loans on China Bond Information Network.
As for the other trust financing, non-standard financing and even contract liabilities of the urban investment company, there is nothing to say, and it will be solved in a market-oriented way.
After the above steps are processed, if the urban investment company has good assets, can continue to operate and pay the principal and interest of the debt, it will be converted into a local state-owned enterprise. If it is really insolvent, or even has only a shell of debts, then it will be liquidated after the debts have been disposed of.
The third suggestion is to fully consider the differences in local hidden debts in the eastern, central and western regions
Because the financial system in the eastern region is relatively developed, and the population from other places has continued to flow in recent years, coupled with the hematopoietic capacity of its own finance, with the continuous development of the economy, it is possible to successfully turn debts into debts purely by relying on the local government itself. Comparatively speaking, the vast majority of central and western provinces, relying on their existing finances, are unlikely to successfully deal with the hidden debt problem.
In view of this, in the process of nationalizing local ** bonds in batches, the local ** special bonds formed in infrastructure construction in the central and western provinces will be given priority in the batch management of national bonds.
The fourth suggestion is to streamline and optimize the assessment mechanism for local governments.
As a unitary country, the local government will be subject to a comprehensive assessment, including social stability, environmental protection, energy consumption control, cultivated land protection, people's satisfaction, etc., and now I am afraid that a hidden debt control will be added.
The local implicit debt control, the explicit proportion of implicit debt, and the proportion of regional debt GDP before and after taking office are clearly added to the assessment mechanism of the local government, and a relatively high weight is given in a certain period of time, which is probably necessary - at least, in the two years of debt, the weight will be raised.
Of course, we all know that in the past ten years, there have been too many assessment objectives for the local government, too comprehensive, and more assessment objectives overlapping and contradictory, so that most of the energy of the local government, especially the grassroots administration, has to be used to cope with the assessment of the superiors, and the energy that is really used to serve the local masses is very little.
In this case, what is more needed is actually the change of the local government, streamlining and optimizing the local government assessment - for example, the hidden debt treatment, only need to set up a red line index according to the current situation of the region's debt base, and if the red line is not touched, it will not be included in the assessment content to reduce the pressure of local government performance assessment.
Of course, this may not only be a problem of local debt, but a big topic of improving the overall governance capacity, so let's stop there.
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