On February 20, 2024, the National Interbank Funding Center announced LPR**: 1-year varieties reported 345% compared to 3 in the previous month45%；Varieties with a term of more than 5 years are reported as 395% compared to 4 in the previous month2%。
Note that the 1-year LPR was not lowered, while the 5-year LPR was cut by 25BP alone, the largest drop in history.
This is an extremely important signal.
The change in the 1-year LPR is mainly related to the consumer market, and the lack of adjustment means that the focus is not on consumption this time.
In other words,The reduction of the 5-year LPR alone is to stabilize the real estate market expectations.
This rate cut is to stabilize real estate, and maybe you are resistant to this.
However, stabilizing real estate is stabilizing short- and medium-term economic expectations, which has increasingly become a social consensus.
Especially at the investment level,Whether real estate can land smoothly has increasingly become the key to whether a large country can stabilize capital expectations (foreign capital + domestic private funds).
In the process of domestic economic development, there are few industries that are as controversial as real estate.
There are many people who support it, and there are many people who oppose it.
I remember before, hello, hello, hello, everyone, senior leaders once said that real estate is the pillar industry of economic development.
However, today, the high housing prices, high debts, and other ecological and environmental problems brought about by real estate have made the real estate industry a rat crossing the street, and everyone shouts and beats it.
The rise and fall of real estate is in response to the old saying, 20 years in Hedong, 20 years in Hexi.
At present, although real estate has passed its glory days, it is definitely a big adventure to let it immediately withdraw from the stage of history.
Because it's too big to fall, it's the kind that really can't fall.
I am referring to the industry, not to a few real estate companies, such as Evergrande, Country Garden, Jianye, etc.
The reason is very simple, the real estate industry has led to the expansion of our construction, steel and cement industries, and has also indirectly led to the expansion of consumer goods markets such as home appliances and furniture.
The combined output value of the upstream and downstream can account for more than 20% of China's GDP, and behind the figure is the livelihood of tens of thousands of families.
What is more noteworthy is that real estate investment and home sales also provide a large amount of land transfer fees and taxes for local ZF.
At its peak, land transfer fees can account for more than 80% of local finances, affecting the development trajectory of one city after another.
Data**: Finance Associated Press.
What is the economic dilemma right now?
No money! ZF at all levels, enterprises around the country, and all kinds of groups generally have no money.
The people have no money to consume, enterprises have no money to expand, ZF has no money to invest, and sometimes even wages are in arrears.
In addition, the macro performance of local lack of money is also particularly obvious.
For example, when Tianjin issued local bonds in March 2023, the AAA-rated Tianjin Urban Construction 1-year bond issued an interest rate of as high as 7.75%。
Tianjin 7The interest rate of 75% is almost twice that of government bonds, and it is also higher than the interest rate of some central state-owned enterprises.
To put it simply, the credibility of the local government is facing a great challenge, and behind this is the market's concern that the local government "has no money to repay its debts". (See image above).
You must know that Tianjin is a municipality directly under the central government in China, and its administrative level is equivalent to the vice-national level, which is half a level higher than that of ordinary provincial capitals.
One Tianjin is still like this, and there are many more.
Third-, fourth- and fifth-tier cities may be even more sad.
Talking about money hurts feelings! But the reality is that whether it is urban development or economic transformation, it just needs money!
Next, I can't help but ask, why is there no money?
The reasons are too complex, but one thing is certain: the decline in land transfer fees has put tremendous pressure on local fiscal revenues. (See image below).
Here's an example. In 2020, the land transfer fee was almost 82 trillion yuan, and the fiscal revenue of the entire local government at the same level is almost more than 10 trillion yuan.
Dividing the two, the result is calculated to be about 82%. It's also an all-time high!
That is to say, if there are 100 yuan of fiscal revenue at the local level, 82 of these 100 yuan will be contributed by local transfer funds, and the other 18 yuan will be local tax revenue, local bond issuance and other revenues.
The bonuses and benefits of local enterprises and institutions may be inextricably linked to these 82 yuan.
Chart: Land Transfer Fee; Data**: wind, rice basket investment collation.
However, things took a new turn in 2021.
After 2021, land transfer fees have been sharply adjusted in line with the decline in the real estate industry.
Let's look at a set of data and feel how deep the intensity is.
In the first half of 2021, the national land transfer income was 344 trillion yuan.If the land transfer fee is cut in half, can it not be difficult for the local government to collect fiscal revenue?In the first half of 2022, the national land transfer income was 236 trillion yuan, down almost 31%.
In the first half of 2023, the national land transfer income will be 186 trillion yuan, a decline of about 21%.
1. in 202386 trillion yuan, compared to 35 trillion is close to halving.
Can enterprises and institutions at all levels, and even government agencies, live a hard life?
How can local governments still be able to leverage their economies?
The real estate is down, the land transfer fee has shrunk significantly, and the place is really difficult!
This is also why it is said that the development of the economy can only rely on the central government to increase leverage, and the local government really can't increase it.
This is also why the development of economic real estate must be stabilized.
As far as the present situation is concerned, as far as it is concerned to tide over the current difficulties, the land transfer fee is the money bag of the local government.
Therefore, this time the 5-year LPR was lowered alone, and the 25 basis points was the largest reduction in history, in order to stabilize real estate and give the local area a breather.
To sum it up:The stability of real estate must be an important signal of economic stability and an important cornerstone of economic transformation.