From December 14th to 17th, 2023, the "2024 Great Changes, New Momentum China Steel Market Outlook and 'My Steel' Annual Meeting" was held in Shanghai.
At the theme conference on the 17th, Xu Xiaoqing, chief economist of Dunhe Asset Management, delivered a keynote speech entitled "China-US Economic Cycle from Divergence to Convergence - Macroeconomic and Asset Outlook in 2024".
Xu Xiaoqing, chief economist of Dunhe Asset Management
In the past few years, the synchronicity of the global economic cycle has weakened, the divergence of the economic cycle between China and the United States, and the inversion of interest rates between China and the United States, which is relatively rare in history, due to the relative changes in fiscal policy of the two major economies. Specifically, first of all, the high growth of the US economy is mainly due to the aggressive fiscal expansion policy. However, fiscal expansionary policies have a crowding out effect on private investment, and the current debt growth rate of the US corporate and household sectors has dropped significantly, and the growth of corporate sector debt is lower than the average growth level before the epidemic. Second, the expansionary fiscal policy has led to the average cost of the U.S. stock debt has risen to 3%, the U.S. fiscal spending has begun to fall, and it is expected that the U.S. interest rate may peak next year, but as inflationary pressures fall, the probability of a soft landing for the U.S. economy is rising, and the U.S. manufacturing cycle also has a need to replenish inventories, and the U.S. economy will not cause greater pressure on China's exports.
Domestically, the short-term decline in China's real estate shows that the scarring effect after the epidemic and the lack of real estate policy relaxation have exacerbated the negative impact of long-term cyclical factors, but the domestic real estate downward cycle is close to the bottom. Compared with Japan, South Korea and Taiwan, at present, China's real estate sales area has declined faster than Japan and South Korea after peaking, and the proportion of real estate investment has fallen back to near the low point in the downward cycle of Japan, South Korea and Taiwan real estate in the 90s, and the urbanization rate of Japan, South Korea and Taiwan real estate sales peaked at more than 75%, while Chinese mainland is only 65%, so even if the population peaks, the per capita living area and urbanization rate of Chinese still have room for improvement. While it is unlikely that Chinese residents will continue to increase their leverage aggressively, debt growth of around 6% will be sustainable in line with China's nominal GDP growth rate. In terms of real estate enterprises, the biggest problem they are currently facing is that they cannot continue to finance, and the real estate policy will improve at the level of real estate financing, the cash flow situation of real estate enterprises will improve, and the area of new construction is expected to increase, and it is expected that the new real estate construction will be better than the sales situation next year.
Finally, as for the reason why the performance of commodities has diverged from the real estate cycle in recent years, he believes that the main reason is that China has returned to a manufacturing-driven model after the epidemic, superimposed on the reshaping of the global industrial chain, and the proportion of reindustrialization has increased significantly, thereby stimulating the demand for bulk commodities. In the long term, commodities will no longer be in the long-term bearish trend of the past.
Disclaimer: The above content is the guest's personal academic opinion, which has not been reviewed by the guest himself, and does not represent the views and positions of this website.