Li Xunlei
Since economic activities have a conduction process between the upstream and downstream, and between the inside and the outside, a "time lag" phenomenon occurs. In addition, because the conduction speed is fast and slow, the "time lag" is also long and short. For example, in nature we always see lightning first, then hear thunder, because the speed of light is much faster than the speed of sound, so there is a time lag between lightning and lightning. However, many people are afraid that the roar of thunder is more than the lightning that has passed through the sky, but in fact thunder does not have lethality, and lightning is a truly destructive force.
It is precisely because of this "time lag" of economic activities that people are often confused by appearances and even lead to decision-making mistakes. For example, for this round of cyclical industry recovery, many people think that the rise of the new round of economic cycle, then why is it not a short-term rebound in the mid-long period of economic downturn? The high point of China's economic growth appeared in 2007. After the US subprime mortgage crisis in 2008, China launched a two-year, four trillion yuan infrastructure investment stimulus policy, which basically ended in 2011, but with the economic growth. As the speed went further, the government finally launched a new round of economic stimulus in mid-2012.
Since 2013, China's infrastructure investment (excluding electricity, heat, gas and water production and supply) has rebounded again, with an investment scale of 7.1 trillion yuan, and 8.7 trillion in the next three years (2014-2016). Yuan, 10.1 trillion yuan and 11.9 trillion yuan, maintained a high growth rate of more than or nearly 20% for four consecutive years, but the growth rate of manufacturing investment fell sharply in the same period, from 22% in 2012 to 4.2% in 2016. At the same time, GDP growth rate also dropped from 7.7% in 2012 to 6.7% in 2016, indicating that although the government is trying to achieve steady growth through large-scale infrastructure investment, the actual effect is not satisfactory.
However, the mid-upstream industry has been going to capacity and stimulating demand for several years, which will inevitably lead to an increase in the prices of production materials in the middle and upper reaches. For example, at the end of 2015, the prices of a number of bulk commodities such as steel began to move, but the macro-level stimulus policy did not. Dare to slack off, the credit scale in the first quarter of 2016 reached 4.6 trillion yuan, exceeding the scale of 2009 in response to the subprime mortgage crisis. Therefore, despite the good signs of the economy, the existence of time lag has led to excessive policy stimulus. Not only is the decision-making layer difficult to grasp the economic hot and cold, but private enterprises are also difficult to make correct judgments. For example, in the first quarter of 2016, private investment has experienced a cliff-like decline, which is equivalent to “selling at the short-term low point of economic growthâ€. ".
It is not difficult to find that the PPI's year-on-year data has been negative since March 2012 and lasted for more than four years. It was not until the September of 2016, but the PPI's ring data began to turn positive in March 2016. In general, the overall behavior of private investors in the real economy is not much different from the overall behavior of retail investors in the capital market, that is, they are chasing up and down. One of the important reasons is the time lag factor, if it continues to be huge Investing does not achieve the desired results after a period of time, which will make people more pessimistic about the economy.
Today, whether it is official or private, everyone seems to have confidence in the future economy, because the published data is very beautiful. For example, in January-February this year, the total profits of industrial enterprises above designated size increased by 31.5% year-on-year, even the export was 3 The month has increased by 16.4%, setting a new high in two years. In addition, indicators such as power generation and rail freight volume have also reached new highs for many years, but most of this data can be attributed to the lagging response from sustained economic stimulus since mid-2012.
Behind the gorgeous data, we need to pay attention to two aspects: one is the time lag factor, and the other is the input factor. The time lag factor is no longer described, and the research input factor is to examine the input-output ratio. The improvement of various economic indicators since the second half of 2016 is related to the government's debt collection, high investment by state-owned enterprises and residents' leverage. With the substantial expansion of credit of commercial banks, such as the short period of four years in 2012-2016, the total number of commercial banks Assets increased by 100 trillion yuan, which includes credit expansion of state-owned enterprises, debt replacement by local governments, and PPP.
Of course, from another point of view, it also shows that the Chinese government has a very strong ability to organize resources. This is far beyond the reach of Western governments. For example, in 2016, the investment of the Chinese government and state-owned enterprises accounted for nearly 40% of GDP. US government investment accounts for about 10 times of GDP. From this perspective, we do not seem to worry too much about the ability of the government to grow steadily in the next few years, but it is difficult to change the downward trend of the economy. Moreover, in the short term, the inventory cycle seems to have entered the destocking phase.
At the moment, those who believe that house prices will not fall should account for the majority. From the perspective of statistical laws, the consensus expectations of most people are always wrong when judging market trends.
I remember that at the beginning of 2003, someone told me that the house prices in the United States have risen for ten years and should not fall. I have observed it for a few years, and sure enough. In 2005, even the conservative Fed Chairman Greenspan testified to Congress that it was rare to say that "the United States has not yet had a national real estate bubble." Although everyone was more consistent about the existence of bubbles at the time, some economists described it as “beer foam and coffee (Cappuccino) foamâ€, which would not “secate†each other and form a bigger bubble. Various places also regulate the market according to local conditions, forcing the bubble to slowly recede. Some economists believe that “diversification of loan channelsâ€, “diversification of product mixâ€, “diversification of loan interest rates and multiple choices of refinancing mechanisms†and “diversified trends in real estate consumption structure†make the bubble not Broken.
Unfortunately, it is in this consensus that 2006 US housing prices have seen a downward trend. In August 2007, the subprime mortgage crisis swept the financial markets of the United States, the European Union and Japan. People are always used to finding reasons for the status quo. We are now also the same. If there is a bubble in the real estate market with Chinese characteristics, the house price will never fall because the land is regulated, that is, the supply is limited and the state has the ability to regulate. This is not the same as the American people’s understanding of the “American-style†real estate market that will not fall in 2005.
In fact, in this round of US real estate bull market since 1993, the high point of real estate development investment growth occurred in 2000, but the house price decline occurred in 2006, indicating that the inflection point of house price lag behind investment growth began to fall in six years. The high point of China's real estate development investment growth rate in 2010, reaching 33%, has now fallen back to single digits, indicating that real estate as a cyclical industry will certainly undergo a process from prosperity to recession, but it is difficult to predict the specifics of the recession. time.
The rebound with this short-term economic cycle was finally achieved through continuous stimulus policies. The PPI experienced a negative growth of four and a half years before it turned positive. Similarly, the policy of regulating real estate has been implemented very early, but the effect has been very unsatisfactory. Since the second half of last year, the state’s regulation of housing prices should be the most stringent in so many years – “the house is used for living, not for speculationâ€, and measures such as purchase restriction, limit lending, and price limit are becoming more and more More cities are launched. If housing prices continue to rise in 2017 and in the next few years, the real estate policy will continue to tighten. This will mean that the housing price bubble will be more and more blown. Once it breaks down, it will definitely have a greater lethal effect on the economy. Diving in the three-meter springboard, I will have to jump down on the 10-meter platform in the future.
The bursting of the housing price bubble is hard to avoid in almost any country, although policymakers do not want this to happen. However, due to people's limited cognitive ability, it is prone to overcorrection in policy regulation. For example, as early as 2003, the relevant ministries and commissions jointly issued a document ("Notice on Stopping Some Opinions on Blind Investment in the Iron and Steel Electrolytic Aluminum Cement Industry" - No. 102), "At present, the three industries of steel, electrolytic aluminum and cement are under construction. The production capacity of the project greatly exceeds the expected demand, which will inevitably lead to overcapacity, disorderly market competition, waste of resources and environmental pollution, and even financial risks and other hidden dangers in the economic and social sectors.
In fact, China's steel production capacity in 2003 was less than 300 million tons. In 2003-2007, China was in the period of rapid development of heavy industrialization, and the production limit was not timely. Today, only Hebei's steel production capacity exceeds 300 million tons, and the country exceeds 1.2 billion tons. It can be seen that the judgment of expected demand is often difficult to be accurate, and the actual demand greatly exceeds expectations. In addition, Hebei, the water-deficient province that should limit the development of steel enterprises, has the largest scale of capacity expansion, which has also brought about Beijing-Tianjin-Hebei. Serious pollution in the area.
However, the passivation of the regulatory policy does not mean that the time lag effect of the policy will not occur. The most terrible thing is that so many regulatory policies continue to accumulate, and eventually the phenomenon of “the last straw crushing the camel†may occur. Since the rise in housing prices is essentially a demographic phenomenon, according to the Ministry of Human Resources and Social Security monitoring data on rural labor transfer in 500 villages, the number of migrant workers in the first quarter of this year was 279,000, a year-on-year decrease of 2.1%. This should be the first negative growth of migrant workers in China since the reforms of the 1980s, and the decline in China's floating population occurred in 2015. In addition, the decline in the number of 25-45-year-olds who are the main buyers of home buyers also appeared in 2015. I also found that in the past, Anhui, as a province with a net outflow of population, increased its permanent population by more than 600,000 last year, which means that the population inflows of other developed provinces or large cities are slowing down or even decreasing. So where does the driving force behind the rise in housing prices come from? In addition to monetary expansion factors, other explanations such as improving demand are not strong.
The factors that have an inhibitory effect on housing prices, such as population aging and negative population growth, have not fully demonstrated their effects. I think it is also a time lag phenomenon. The rise or fall of the price of capital goods will form a trend. Once the trend is formed, its inertia will greatly exceed that of consumer goods. This is because investors' profitability and irrationality exceed consumers. This is the case when house prices are rising. Once it falls, I believe so. The view that house prices will only rise, not fall, or fall is only a small adjustment is widely accepted because the current housing prices are in the midst of rising inertia, thus neglecting the negative forces are constantly strengthening.
In the real estate bull market in the United States from 1993 to 2006, the average annual increase in house prices was about 6%. In the 2006-2008 subprime mortgage crisis, the cumulative decline in national house prices averaged around 20%, and individual cities were even close to 50%.
In the decade from 2000 to 2010, China's housing prices rose the fastest, with an average annual increase of more than 15%. After 2011, housing prices have transitioned from general to structural growth, with a cumulative increase of 40% in six years (China's Index Research Institute announced the price of 100 cities) The weighted index), although the late increase slowed down, but the cumulative increase far exceeds the last round of real estate bull market in the United States. For example, the cumulative increase in house prices in the north and the west is estimated to be more than 15 times. In addition, the growth rate of residential mortgage loans has been accelerating over the years. In 2016, new residential mortgage loans reached 4.96 trillion yuan, and urban residents spent 23% of the total disposable income of urban residents in the year. More than 60% of the loans of the four major banks are residential mortgages. Residents buying houses and levers are so fast, is it a bit of a taste of subprime inflation in the United States?
When the residents department purchases a large proportion of debts, their consumption power and demand will be weakened. Therefore, the CPI has been below 1% for two consecutive months. This is called the so-called hoist. Therefore, do not underestimate the effect of time lag. The social economy is a big system, and investment and consumption tend to be different. When you notice that there are several asset price bubbles, the bubble has already spread, and the control is only a small part of the big system.
(The author is the chief economist and director of China Railway Securities)
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