Out Of The "Haze" Stock Market Is Not Impossible

Out of the haze, it sounds like a literary flavor. It seems that we are not directly linked to the economy. In the light of China's economic operation, we are indeed in the perplexity of various haze. This confusion comes from all kinds of bad voices from the world, and also from the confusion of different expectations in the financial market. From the international point of view, the trend of China's economy has attracted a lot of attention in recent years, and there has been a very strong singing and declining trend in the international market. Mr. Soros has published a series of very clear views on China's economy in a period of time, especially in the Davos forum.

A source of the global financial crisis, that is to say, the Chinese economy will trigger a new round of international financial crisis, which will be more dangerous than the 2008. This is what Mr. Soros said.

During the Davos forum, he organized a forum around him. In the past, reporters asked questions, and this time he made a speech. He wanted to express his concern for China's economy.

Some people say that the trend of China's economy is the most uncertain factor in the world. These are exaggerated. Today we have invited the former chief economist of Soros fund management company. His view is totally different from the view of Soros at present. He can divide Ch Soros's viewpoints from various angles to prove why his views are not necessarily correct.

Haze also comes from the volatility of its own financial market. In January this year, the Shanghai composite index dropped by more than 20%. In the global view, the decline of the stock index in January was the largest in history, and the global average stock index dropped more than 10%.

So there is also a bad view from the financial market.

Last week, our stock index also changed dramatically. Investors gave high hopes to the change of the leadership of the SFC. It rose 2% on Monday, and more than 6% of the stock index fell on Thursday.

This is the basic background of our forum.

What are the basic ideas that we can share with you? So again, I would like to borrow some time for you to talk to you before coming to the stage. I would like to talk about our basic views. We think 2016 is a very critical year for structural adjustment. Indeed, China's economy is facing various challenges, from international and financial markets, but overall speaking,

Why is there a bottom line? Because after nearly 40 years of rapid development, China's economy is still a huge economic growth potential, because the per capita development level of China's economy is in the middle reaches of the world at present. The level of per capita development is only 1/5 of that of the developed countries. Moreover, despite the difficulties encountered by China's economy today, the three most important factors, three factors of economic growth, remain with us. The first is the stability of the government, which supports the development of the market economy.

Second, sustained growth of human capital, which includes both the continuous improvement of the education level of the workforce and the continuous improvement of the health level of the workforce.

The continuous improvement of the health level of the labor force itself is equivalent to the increase of the labor supply. Imagine a blue collar worker who is not in good health. The more than 50 year old blue collar worker is not as healthy as a normal labor force at the retirement age. Therefore, health leveling is very important. We have made various calculations, and we find that the health level of the average labor force in China today is 20 years younger than that of 20 years ago. So we can not just talk about the aging of the population, but also put the health level in.

The level of education continues to increase. Last year, 18-22 of the young people of this age group, 38% of them were in university or have graduated from universities. That is to say, the gross enrollment rate of higher education has reached 38%. Especially, the number of individual provinces has exceeded 50%, for example, the 52% of Jilin province is high, reaching the level of developed countries.

There are also some friends who say that college graduates have difficulty in obtaining employment, but I believe that a college graduate with difficulty in employment has not.

An ordinary worker's contribution to the economy is better for his future life.

So the level of education is very important.

The third factor is that China's economy continues to open to the outside world. There is a basic principle in the study of economics, that is, if you engage in international trade and investment with others, you will be like who, you engage in international trade with developed countries and attract foreign investment or investment. That is to say, today's Chinese economy is undoubtedly the world's largest open body. From international trade to investment, not only has attracted a large number of foreign direct investment, but also the momentum of foreign investment is very fierce. The two investments are basically synchronous. The amount of foreign investment and investment that attract foreign investment this year is basically synchronous.

Through international trade and investment, China's economy must be pformed and upgraded, forcing our enterprises to form...

The experience of the past 70 years tells us that as long as these three things are done correctly, an economy will surely continue to rise and will eventually achieve modernization.

The second way is to find ways.

Although the Chinese economy has encountered various problems, there should be a way out. What is the way? The central government has put forward five things to do in 2016, such as going to the stock market and decreasing the inventory of real estate. We find that this task of real estate inventory reduction should be able to make some progress this year. Why do we say so? Because the real estate situation is actually diversified, and the inventory situation of a second tier city is not serious at all. On the contrary, it is necessary to strengthen investment in the short term.

For example, Shanghai has only three months' inventory and Beijing is nine months. Therefore, there are some second tier cities in the first tier cities. We have analyzed the boom of real estate investment and development in the middle of this year. Only in this way can we stabilize the prices of the first tier cities and some second tier cities, or else it will be an economic and social problem.

So real estate inventory will make some progress this year.

In the three or four tier cities, inventory is more serious. How to go stock? I believe that we have found a way from the direction. We must speed up urbanization in the direction. We must make every effort to make the population in rural areas temporarily not yet enter the city very happy and very happy to settle down in the city to solve their children's education and solve their medical problems. This is not only a supply side reform, but also a demand side reform.

Rural residents can settle down in cities, and our domestic demand will increase. After they settle down in cities, the supply of labor will increase, and this is also the supply side reform.

So I would like to remind you not to misunderstand the supply side structural reform proposed by China. Many of the structural reforms on the supply side are directly equivalent to the Salvatore people in the 80s of last century.

Totally different, the supply school emphasized only two things at that time, one is tax reduction, the other is deregulation.

The structural reform of supply side we are going to carry out today is much more than just reducing taxes.

Demand has also gone up.

The second is deleveraging, which is an important task worthy of study. China's overall macroeconomic leverage ratio is not the most prominent in the world's major economies. Generally speaking, the overall debt level is GDP250%, which is basically the same as that of the United States.

Japan is as high as 400%, and many countries surpass our level.

It should be said that in the current operation of China's economy, 250% of GDP's leverage is not high, because China's national savings rate is very high. According to official statistics, the savings rate is 50%. Our own estimate is 38%, even according to the 38% national savings rate, which is more than twice that of the US national savings rate.

So the savings rate is high. Many people want to save money. Naturally, some people like to borrow money. There must be someone to pay back the money. Therefore, in a country with high savings rate, a proper increase in leverage is not only a violation of the law, but also a manifestation of efficiency.

The key point I understand is that the core of deleveraging lies in the adjustment of leverage. It is necessary to properly reorganize the debts of some enterprises, including the money borrowed from banks, which is the core of the deleveraging, and the West.

We can not simply compare, our key is to adjust leverage, and the central government's debt needs to be improved. There is not a huge and highly liquid Treasury market. Many financial operations are difficult to operate.

Again, cost reduction is the key to two things, one is the cost of financing will be reduced, because many enterprises are borrowing money at very high interest rates, resulting in great difficulties for their operation.

The second aspect is a number of taxes and fees related to labor employment, which is now very high. Generally speaking, it is necessary to hire a worker to spend 4 or 5 cents on the profit of five risks and one gold if it spends a piece of money.

The key is to help the poor. We should make great progress this year. Generally speaking, 70 million of the poor people, if we want to accurately help the poor, will spend a lot of money on it.

Less than one hundred billion will be able to solve the problem to a large extent. There must be a mechanism for the elimination. In general, the task of making up the short board should make significant progress this year.

The state also proposed to go to capacity, the State Council issued a guiding opinion, hope in the next five years, reduce the steel and coal industry about 10% of the backward production capacity, we have also done some careful analysis, our viewpoint may accelerate the pace of this aspect, the intensity can be larger, because five years to reduce the production capacity of 10%, for the whole capacity to help or not enough.

We believe that the capacity to go to production now is much smaller than that of the textile industry in China at that time after the outbreak of the Asian financial crisis in 1999. It is much less challenging than this. Because the employment situation is very good now, and the financial operation of banks is much stronger than that in the 99 years. If we take the time to make the decision to come to capacity, we should make significant progress.

The third is that there are bright spots. In China's economy, we should say that the real economy began to show signs of upward trend. Last year, the growth rate of the real economy was 6.

3%.

From last year's overall operation, it has been improved in the second half of this year. This trend is in 1 and February this year.

To judge, the sustained development is the gradual rise of the real economy.

Last year, an important factor driving China's economic growth was finance. Last year, the financial sector accounted for about 9% of the total economic weight, while the value added by the financial industry last year was as high as 15.

9%, close to 16%, this is a huge pulling force. This year, we estimate that the financial industry may slow down due to the fluctuation of stock market and the volume of pactions may shrink. So this year's financial industry should not expect to maintain its growth of 16% last year. The financial industry may have slowed down this year compared with last year. However, the recovery of the real economy is getting warmer and warmer, including the increase in investment in fixed assets.

The second bright spot is the speed of investment and development of the real estate industry this year. We anticipate that in June, we should meet with the bottom and should pick up. Last year, the growth rate of real estate investment and development to zero growth in December, through all kinds of analysis, this zero growth is not sustainable, because many cities have low inventory, tier cities and some second tier cities.

In the 16 year of June this year, in any case, the growth rate of real estate investment and development has returned to positive growth. We expect to be around 5% in the whole year. This can be as expected, and this year's investment in fixed assets should be basically flat or even slightly higher than that of last year.

This year's investment in fixed assets has been improved by analyzing the foundation, the real estate has rebounded, and the manufacturing industry may have declined.

The third bright spot is that in the second half of 16, we expect the Chinese economy to increase 2 million of the newborn babies from the reform of the second child policy. The 2 million of the babies are born in the families most expecting babies. We expect 2 million happy babies to be able to pull the consumption of China's economy in a disproportionate way, because these babies are born in the families that many generations have taken care of together, and we predict that the second child policy can account for GDP0.

2%, the growth of consumption is our common expectation.

In general,

There are strong points, there are ways and bright spots. If a series of reforms can be put in place this year, if all kinds of major measures proposed by the state this year can be put into place, such as inventory and production capacity, if the new urbanization measures can be put in place, the state-owned enterprise reform can appear landing policy. We believe that in the second half of 2016 and the first half of 2017, the cycle of China's economic growth rate should be bottomed up, and the bottom will be reached.

6.

The growth rate of 7% is likely to be bottomed. Our judgement is conditional, that is, all kinds of reform measures must be in place, especially the new urbanization, especially the reform of state-owned enterprises. These reforms can be in place, and the growth of China's economy will be bottomed up by the end of 2016.

2017 will be more international than this year.

The growth rate of China's economy in 2018 not only stabilized but also picked up slightly. If the situation can be formed, the 13th Five-Year plan really has a very good start.

By 2020, the great goal of the first hundred years should be achieved and laid an important foundation.

So I think 2016 is a year worth everyone's expectation.

In the process, there are many uncertainties in 2016, including exchange rate and stock market. Our basic view is that exchange rate can be fully managed through reasonable management of expectations and rational management of capital flows. The exchange rate will remain basically stable in 2016, and the depreciation rate will not exceed 5%. It will remain basically stable for a basket of currencies.

If the exchange rate can be stable, the reform measures can be in place, the growth situation in the second half of this year will be stable, and the large fluctuation in the first half of the stock market will probably stabilize in the second half of the year. In general, the development of China's stock market should be progressively healthy when there are strong points, ways and bright spots.

Finally, before the two sessions will be held, let's look forward to the two sessions, hoping that the two sessions will bring some highlights to our economy and our stock market.

It is particularly expected that during the two sessions, the basic blueprint for the "13th Five-Year plan" will be able to meet with the public. We hope that this blueprint will bring a new confidence to our social and economic sectors.

We also hope that through the opening of the two sessions, through the relevant government leaders during the two sessions and the meeting of Representatives and members of the two sessions, we will be able to speak out a series of major issues facing China's economy and society, and conspire to solve the problems. We really need to take some measures through the two sessions to enable the people to see more hope.