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Financial policy itself contributed to the financing difficulties
source : author : time:2015年6月27日

In the medium term economic downturn will continue

Over the past 30 years, China's economy has been very successful, but since the beginning of 2014, economic growth is declining. Although the government to take "stimulus", "targeted easing" measures, but a stimulus to relax, growth rate began to fall.

The economic downturn has two main cyclical factors at work. One is the macro economic cycle. Short-term factors, such as weak exports, will lead to growth, this is a worldwide phenomenon. China's exports grew by an average of 20% to 20% in the past, now only 5%. The short-term economic cycle can use macroeconomic policies to deal with, such as take expansionary monetary policy and fiscal policy. In the first quarter of last year, the poor economic data in the second quarter of the government will take various measures to steady growth. Now the situation is similar to that in the first quarter of this year the economic fundamentals is not very optimistic, so the government from top to bottom are urged to carry out the investment project. So, second, stabilised economy is expected to rebound in the third quarter this year, but I think it's may only be a temporary phenomenon, unsustainable. One important reason is that the second shift of cyclical factors - the leading industry.

The replacement of dominant industry is medium-term cycle factor. In a nutshell, is used to support China's economic growth of the most active industry, now has been greatly reduced. In the Chinese economy troika - consumption, exports and investment, consumption has been relatively weak, exports and investment both engines has been always the main force to support China's economic growth. If a corresponding to the manufacturing industry, support the export is labor-intensive, low value-added manufacturing this part size is very large; Support investment products of heavy industry, steel, alumina, such as cement on larger scale. The two parts are the problem now, low-end labor-intensive industries to sustainable development. Rising by an annual rate of 15% over the past ten years, labor costs, the competitiveness of the low labor costs, many vibrant enterprise each step in the past. Used to support the investment industry, the current operating conditions are poor, average excess capacity rate reached 40% or even higher. Therefore, simply rely on monetary policy, fiscal policy is difficult to solve the problem.

So should be how to solve the problem? Which is now often said to cross "middle-income trap", the competitiveness of the future? Should rely more on high value-added and high technology industries. At present, we also have this kind of industries in the economy, such as e-commerce, logistics, financial, telecommunications, the Internet equipment and large machinery and equipment, etc., quite a number of industry is more competitive, and is developing very fast, even in the world are relatively advanced, such as huawei, alibaba. But at present, such enterprises and industry have not formed the climate, also need a long time to form a new pillar industry, instead of a pillar industry of the past.

Short-term factors can pass to ease monetary policy and fiscal policy, but the medium-term downward pressure is difficult to reverse. So, the question now is not the short-term cyclical problem, but structural problems.

The financial system did not provide strong support for economic growth

Our country's financial system is very large, the market capital is abundant, but there has been no provide strong support for economic growth. For instance, the people's bank of the current liquidity is ample, is a measure of excess reserves. Plenty of excess reserves reflects the bank funds, if the Banks' capital shortage, can only meet the minimum reserve requirements, but if a bank's capital is abundant, there is no better channel, will be in the central bank. In the past the excess reserves an average of 1.5 trillion yuan, the scale is now reached 4 trillion yuan, the reflects a bank's capital is abundant.

The problem is that, on the one hand, prime minister li keqiang, a state council executive meeting for many times, stressed the need to solve the problem of financing difficulties, but objectively financing difficulties has not been obviously ease; On the other hand, money is very abundant in the market. How to explain this phenomenon? Why hasn't the funds to those who need money?

Objectively speaking, financing difficulty is a common phenomenon, because of the cost of capital is, everyone wants to finance. Inspect whether the financing difficulties need to see money prices. If willing to subject to improve price, generally can be bought, financing difficulties is similar. When economic growth is slowing, financial risk is on the rise, small and medium-sized enterprise financing difficult is normal phenomenon, Banks are reluctant to risk of lending to a sharp rise in enterprise, which has certain reasonable composition. But China does exist some special factors contributed to the status of the financing difficulties.

The first reason is that interest rates are applicable. One of the most important intervention is the central bank intervention in the interest rate, directly show the Banks hold down interest rates. Capital cost reduction as a result of increased demand, who all loans from the bank. Therefore, finally can only through the proper credit controls to balance the market, can remain unresolved are state-owned enterprises, large enterprises, was out are state-owned enterprises, small and medium-sized enterprises. Although small and medium-sized enterprises can also raise funds from private lending, but the cost is very high. So our financial policy itself to intensify the financing difficulties, it is actually to non-state-owned enterprises and small and medium-sized enterprise of a kind of institutional discrimination. The problem is that there has been, but may now be more outstanding.

The second reason is that private lending, especially the development of the shadow banking, financing market system and enterprises to provide a lot of opportunities. Shadow banking theory can relieve outside the formal system of corporate financing environment, but although the shadow banking in China, but private enterprise financing condition and no real ease. Developed one of the reasons is that the shadow banking, followed by many institutions, the most typical is the local financing platform, including the part of the state-owned enterprises. Them to markets will cause two direct result: one is their size is very big, put out a lot of small and medium-sized enterprises, known as "crowding out"; Second, they first to set the interest rates, we think it is covert support of government, so its interest rate becomes a new so-called "risk-free rate", all other corporate financing, will rise again on the level of a few percentage points. In disguise as a result, the so-called market-oriented interest rate, that is, the development of the shadow banking, does not really ease the small and medium-sized enterprises and private enterprises financing difficult problem, and the most fundamental reason is that the soft budget constraint on the market and institutional distortion has not been eliminated.

The third reason was mainly used for large Banks in the financial system is not fit to support development of small and medium-sized enterprises. China's huge financial system of bank, this structure is suitable for manufacturing support, support the development of many existing enterprises, but not very good at working with small and medium-sized enterprises. Bank credit in risk assessment, the most important means of risk control is to look at the balance sheet and ask for collateral, this is very bad for many small and medium-sized enterprises (smes). So, today China's economy is faced with the problem of the middle-income trap, how to overcome? There is only one road, is innovation + industrial upgrading. Bank clearly offers a variety of financing for the innovation enterprise, the need to have other financing institutions. The past is given priority to with bank financial system to support manufacturing expansion is very effective, but today in front of the new economic structure change, become very not adapt. So the financial system must be changed and so have the possibility to meet the requirements of this innovation and upgrade.

Internet financial help to solve the problem of asymmetric information

Is the most fundamental function of financial financing, and the information asymmetry is the biggest difficult financial transactions. In finance, asymmetric information may lead to two questions: one kind is trading before the "adverse selection"; One kind is trading after the "moral hazard".

So, the Internet can help to solve the financial problem is the core of can solve the problem of asymmetric information. Of course, the solution of the asymmetric information have a variety of channels. I think the Internet to help the financial decision-making has two important features: one is the channel, one is the data.

About the channel. Now the domestic market has more than 600 million mobile terminals, its use can solve the problem of a lot of information asymmetry. For example, I have wanted to borrow 10000 dollars out, if there is no financial intermediary, I don't know exactly who need so much money at the same time. Solve the information asymmetry problem of the cost is very high, now of the mobile terminal via the Internet, however, have so many individuals and businesses together, provides a potential huge market.

The second is the big data. If large data analysis well, can partly solve the problem of asymmetric information, and help in the financial sector. Such as Banks to lend to a company, or a securities company to be listed roadshow, first need to do an important job is to due diligence. Analysts, bank employees need to spend a lot of cost to get to know a enterprise and industry, but the Internet financial partly replaced by artificial do now due diligence. For example, the ant gold suit now loans to more than 160 small and medium-sized enterprises, the loan process is 1 minute, 2 minutes approved funds to the account, 3 minutes, all loans are completed via the Internet. Implementation of this process is an important premise, is that it is only to give alibaba website platform enterprise loans, and these enterprises data are already know.

Internet financial if it can be developed, maybe can be solved some problems of the financial system. A direct result, help more enterprises and individuals to enjoy a better financial services.

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