Step by step, the money is going wild or will be determined in mid-July

On June 28, news from various ministries and commissions said that the central bank was leading the relevant ministries to jointly study how to revitalize the stock of funds and guide the financial support of the real economy. The discussion paper on financial support for the real economy at the executive meeting of the State Council will be issued in the name of the State Council in the near future after the ministries have solicited opinions. The State Council will also hold a press conference for this purpose.

An official from the Finance and Development Department of the National Development and Reform Commission told the Economic Observer: "The relevant departments are deploying according to the State Council to further study and implement the relevant policies. Everyone has realized that excessive disharmony between the financial and real economy will trigger an American-style financial crisis. ."

The Ministry of Industry and Information Technology is also waiting. Both officials of the Economic Operation Monitoring and Coordination Bureau of the Ministry of Industry and Information Technology and the Raw Materials Division told the Economic Observer that they are waiting for the next specific operational measures of the central bank and the China Banking Regulatory Commission. "And to solve the real economy problem, monetary policy alone is not enough, the next step is to support the fiscal and taxation policy." In fact, the Ministry of Commerce is also waiting for the central bank to introduce exchange rate policies to support exports. At the time when the RMB exchange rate reached equilibrium, the Ministry of Commerce and the central bank struggled to reach a consensus on further pushing forward the exchange rate reform.

The mid-year economic situation analysis meeting of the State Council in mid-July will be a key node. An official from the Economic Operation and Monitoring Coordination Bureau of the Ministry of Industry and Information Technology said, "At present, all ministries are conducting mid-year research and analysis to prepare for the mid-July mid-year analysis meeting."

This meeting will determine where the "money shortage" that was fermented last week will be directed by the policy. The above-mentioned officials of the Ministry of Industry and Information Technology said that after raising the tolerance for China's economic slowdown, it was decided to relax the policy or continue to tighten the conditions and become the impact of the real economy on social employment. There is no problem with employment, and the policy of “revitalizing the stock of funds” will not be relaxed.

However, some officials are worried that if the financial policy fails to provide support for the real economy, it will further aggravate the asset bubble. The ultimate cost will be that the real economy will continue to fall. Once China's huge real economy enters the downtrend channel, it will be very difficult to start again.

Revitalize the adventure of the brave

In the week after the State Council executive meeting formally proposed the principle of “optimizing the allocation of financial resources, using the incremental growth and revitalizing the stock”, China’s commercial banks, capital markets and central banks jointly staged a game of jumping on a spring bed. This completes the stress test for each other. In the end, the central bank’s “concession” ended the panic decline in the market. At the same time, the China Banking Regulatory Commission is drafting a specific plan for the adjustment of financial support structure, and will refine each of the discussion drafts. The document supporting the financial restructuring of the economic structure that combines the opinions of the “three lines of meetings” will be issued in the near future.

As early as April, the China Banking Regulatory Commission issued a guidance on the banking industry to serve the real economy, requiring the banking industry to support the expansion of domestic demand, energy conservation and environmental protection, and agriculture in the credit supply in 2013. The State Council documents drafted by the CBRC are consistent with the April guidance.

In response to the central bank’s measures, the authorities close to the central bank said to the Economic Observer: “The central bank’s main focus is not to release liquidity directly to the market, but to provide window guidance to large banks with sufficient liquidity to allow them to move to small and medium-sized banks with tight capital. The release of liquidity to stabilize the high market interest rates. But this also shows that the attitude of the central bank is a controllable, opportunistic regulation."

According to the officials of the National Development and Reform Commission, "the central bank's statement is only to stabilize the market psychology and guide the expectations. It is not really relaxing, and the determination of the central adjustment structure is clear."

The “revitalized stock” statement has triggered speculation that financial institutions may freeze liquidity. However, the currency oversold for many years has led to the proliferation of liquidity among banks, which has caused banks to make a large number of mismatches.

The data shows that the scale of social financing in January-May 2013 was 9.11 trillion yuan, 3.12 trillion yuan more than the same period of the previous year. In the month of May, the scale of social financing was 1.19 trillion yuan. Among them, RMB loans increased by 667.4 billion yuan in the month, a year-on-year increase of 125.8 billion yuan, but entrusted loans increased by 196.7 billion yuan, an increase of 175.2 billion yuan, and trust loans increased by 99.2 billion yuan, an increase of 43.5 billion yuan. These signs indicate that China has invested more than the planned increase in the beginning of the year, and a large number of them have not directly entered the real economy.

At the end of the first quarter of this year, China’s financial inter-bank assets were 32 trillion yuan, accounting for 23% of total assets; an increase of 28% over the same period last year. The interbank market has become the best channel for financial institutions, including China's four major banks, to expand their assets and achieve high returns. Recently, insurance funds have also joined the capital arbitrage game; insurance funds and even redemption of money funds, into the bank wealth management products with higher return on income.

Liao Qiang, a senior director of Standard & Poor's financial institutions, believes that it is difficult to predict the consequences of the current policy of the central bank. This will make commercial banks pay more attention to liquidity management and increase liquidity, which will lead to deleveraging of interbank and wealth management businesses. This process will lead to a reduction in the associated credit supply and may result in bad debts for some high-risk companies that rely on shadow banking credit. In addition, business deleveraging itself will reduce the bank's profitability opportunities.

Liao Qiang said: "If the central bank lacks sufficient communication with the market when it adopts policy tightening for its interbank and wealth management business, and the long duration is long, it may lead to the rise of credit interest rates in the real economy, but it will have obvious economic growth during the year. Negative impact.” He believes that although the new policy is under pressure, there may be phenomena such as the deterioration of bank asset quality and profitability, but it will not cause bank runs. He estimates that the bank's NPL ratio may rise to 3% in 2013.

Zhu Haibin, chief economist at JPMorgan China, also reminded us of whether the level of interest rates on borrowing would increase. In Zhu Haibin's view, once the level of interest rates on borrowing rises, it means that monetary policy is actually tightened, which will put more pressure on the already weak real economy. In addition, even if the funds are vacated from the financial sector to the physical sector, how to achieve the flow of funds to the key sectors and industries that the government hopes to support. This is a thorny issue for decision makers.

Distorted credit structure

The authoritative person close to the central bank interprets the “revitalized stock” from the Economic Observer: “One is to adjust the credit structure. The current loan balance of commercial banks is, for example, 60 trillion yuan. 20 trillion yuan is due each year, which is 20 trillion yuan. It can be used as a pivot for the structure. In addition, asset securitization can be used to transfer credit assets and use new funds to support the real economy that should be supported. At the same time, Internet finance can also be used to improve efficiency."

Obviously, policymakers are aware that “crowding money” from financial vacancies to the real economy is only the first step in regulation. Only by adjusting the distortion of the credit structure can we finally act on China's economic restructuring, upgrading and transformation.

Jia Kang, director of the Treasury Department of the Ministry of Finance, told the Economic Observer that China currently has more than 103 trillion yuan of broad money. To distribute such a large amount of money reasonably, it is not only for large enterprises, real estate and other enterprises to get money. More SMEs and emerging industries are not available.

From the perspective of investment data, real estate and infrastructure construction are still the main driving force for investment in the first half of the year. In the first five months, real estate investment growth rate was 20.6%, two percentage points higher than the same period last year. Investment in the infrastructure sector is also growing steadily, while industrial investment growth, which represents the growth of production companies, is steadily declining.

Officials from the Economic Operation and Monitoring Coordination Bureau of the Ministry of Industry and Information Technology believe that the money of the banks in these years is either idling in the financial system or investing in large enterprises, real estate, and financing platforms in the hands of local governments. Most SMEs still have no money. Or the problem of excessive financing costs.

And many big companies have not used the money directly for investment. A banker said that many state-owned enterprises have once again returned to the financial sector through trusts and other channels.

One of the feelings of Xue Feng, director of the Finance Department of the Shaanxi Provincial Development and Reform Commission, is that some banks prefer to pursue loans from city investment companies and are unwilling to lend to production companies. The bank explained to Xue Feng that the current real economy is sluggish and many enterprises are not good at the benefits. It is better to invest the money in the city investment company, because this can be regarded as quasi-government debt, and generally there will be no problems.

But the danger is that credit risk in these areas is accumulating. Zhu Haibin believes that the debt ratio of local governments and enterprises has risen sharply in the rapid growth of credit in recent years. The deleveraging of the financial system will exacerbate its repayment pressure, which may lead to a decline in the quality of credit assets and an increase in non-performing assets.

Zhu Haibin said: "In this sense, the turmoil in the money market last week may be the beginning and not the end of the financial system turmoil in the next few years."

The bottom line of policy pressure

Officials from the Economic Operation and Monitoring Coordination Bureau of the Ministry of Industry and Information Technology said that although the central government has been emphasizing support for small and medium-sized enterprises and the real economy in the past few years, in fact, compared with the huge lending scale of banks, enterprises have actually received very little. The revitalization of the stock is to bring the money to the enterprise.

The relevant person in charge of the banking regulatory bureau of a certain place said to the Economic Observer: "Now the bank is very clear about what should be withdrawn, and it is not sure which areas should be entered, because some areas know that they should be supported, but the risks are relatively large."

Science and technology enterprises, affordable housing, affordable housing, cultural and creative industries, small and micro enterprises, etc., are considered by some banking industry to be the investment after the adjustment of credit structure. Tan Weixian, deputy director of the Shanghai Banking Regulatory Bureau, told the Economic Observer: "Three years ago, Shanghai’s banking industry was lending, lending, and lending real estate. In the past two years, with the adjustment of Shanghai’s industrial structure, Shanghai’s banking industry has also been catering to In the case of Shanghai's industrial restructuring, the credit structure has been adjusted. In the past two years, we have increased our support for small and micro enterprises, affordable housing and affordable housing, and continuously increased credit input for emerging industries that are in line with transformational development."

Yu Shengfa, president of Hangzhou Bank, said that he should pay attention to the support of technology-based enterprises and modern service industries. "Science and technology investment is the guarantee for the transformation and upgrading of enterprises. We have set up a specialized sub-branch for technology-based SMEs - Technology Sub-branch. In the service industry, the proportion of customers in the commerce and trade circulation industry in our bank's credit customers has increased year by year."

But adjusting the credit structure is still a big challenge for banks. The aforementioned central bankers said: "The industries and companies with high risks can be priced higher. Now the pricing power of commercial banks and other risk control capabilities have not improved correspondingly. They can only continue to do some seemingly stable financing platforms, real estate projects, etc. ."

Relevant persons from the Ningbo Banking Regulatory Bureau revealed to the Economic Observer that it is very difficult to complete the “two no less than” targets for small and micro enterprises in the banks in 2013. There are reasons for the large base, there are also insufficient credit demand for small and micro enterprises, and there are many problems such as poor quality of small and micro enterprises. In Ningbo, the bank supports more, or is under construction, continued construction. For example, CCB Ningbo Branch supported 173 projects under construction and continued construction in Ningbo, with an intention to support 67 billion yuan.

Yang Ping, deputy director of the Investment Research Institute of the National Development and Reform Commission, said that China's current industry growth rate is low, and overcapacity in the industrial sector is more serious. The demand for these companies’ own loans is not strong. The “revitalization stock” is undoubtedly the need to direct money into the real economy, but the government needs to point out a relatively clear new growth point for the loan, so that the market can see confidence and let the bank vote.

Authorities close to the central bank told the Economic Observer that “in fact, whether it is the money market or the credit market, there is no shortage of funds, and the lack of effective credit demand. The central bank should insist on not releasing water this time. Power is to hope that the Chinese economy will go back the old road. This is not necessary. We must be brave in adjusting, or we will miss too many opportunities."

According to officials of the Economic Operation and Monitoring Coordination Bureau of the Ministry of Industry and Information Technology, the bottom line of high-level tolerance for the real economy is that there is no big problem in employment. This is the last step in the decline of the real economy. The central bank’s officials said that this time the attitude of the State Council and the central bank is still relatively firm, and it is hoped that they will be able to adjust to the end. If there is a market volatility in the middle, which may lead to systemic risks, the central bank will take certain measures. In general, this is a dynamic process. A balance is reached in the game. The central bank does not want to take the old road. This time the State Council has this determination.