Economic Observer reporter Zheng Shuxin Wenzhao "There is a great risk of a systemic financial crisis in China." In 2017, Huang Yiping made such a prejudgment, and after nearly five years, his judgment has not changed.
In recent years, the reform of the financial sector has not stopped, and there have been many actions to "blast" some prominent financial risk points in a targeted manner. So, why does Huang Yiping still think that there is a risk??
Huang Yiping is a professor at Peking University, vice president of the National Development Research Institute, director of the Digital Finance Research Center and chairman of the Academic Committee of the China Finance Forty Forum, a former member of the Monetary Policy Committee of the Central Bank of China, and one of the most influential experts on monetary policy. He is an observer, researcher, and advocate and participant of financial reform, and he once proposed that the fundamental experience of China's 40 years of successful economic reform is neither the pursuit of "theoretical optimal solutions" nor "well managed", but the results-oriented "pragmatic" reform strategy.
Affected by the epidemic, China's GDP growth rate in the four quarters of 2021 was 18.3%, 7.9%, 4.9%, and 4.0%, respectively, and China's economy is also facing the "triple pressure" of demand contraction, supply impulse, and weak expectations. Huang Yiping said that China's economic development model has changed from an extensive factor input type to an innovation-driven type, and innovation-driven growth needs to rely more on private enterprises, and how finance supports innovation is a great challenge to the existing financial system. The reform and innovation of the financial support model is also imminent.
How can finance continue to support innovation? Huang Yiping wrote in his new book "The Value of Finance" that China's financial reform is a pragmatic financial reform, in fact, it is "crossing the river by feeling the stones", and the financial system should be improved in practice and give greater support to the real economy. In 2020, banks will issue a large number of loans to small and medium-sized enterprises, which is undoubtedly a financial support for the real economy, but who should bear the responsibility for the resulting bank non-performing rate? Huang Yiping is more concerned about this, he believes that it must not be completely the bank's back, the finance also needs to bear, but the reality is not the case.
Focusing on how to do this year, Huang Yiping believes that the focus of this year is to stabilize the macro economy and support the stability of the real economy with finance.
This is not to say that structural policies are not important, such as education and training rectification, platform economic supervision, carbon emissions, real estate, etc., these structural policies are to achieve high-quality economic growth, but they still have to be done slowly, to balance between short-term goals and long-term goals, and can not cause very large economic downward pressure in the short term in order to achieve long-term goals.
Long-term goals and short-term pressures pose greater challenges to financial reform. Huang Yiping believes that it is very important to clarify what financial supervision should do and to innovate financial supervision. The cycle of chaos, chaos and death is constantly reproduced, which is a manifestation of the regulatory framework that has not yet matured, such as the rectification of the platform economy, Huang Yiping said, and the supervision focuses on improving competitiveness, rather than suppressing to death.
The Value of Finance: Reform, Innovation, Regulation and Our Future
Huang Yiping/Author
CITIC Publishing Group
Published in December 2021
| Dialogue┃
The economy is in transition, the financial system has not yet transformed
The Economic Observer: In 2017, you said that there was a great risk of a systemic financial crisis in China, when China's GDP growth rate was 6.5%, but the external environment has changed a lot in the past two years.
Huang Yiping: This judgment has not changed.
First of all, if China breaks out of systemic financial risks, its manifestations should be different from the collapse of the US financial crisis. A financial crisis on the mainland is more likely to manifest itself in terms of lost efficiency, ineffective allocation of funds, or stalled growth. But that doesn't mean there won't be another kind of financial crisis on the mainland, such as last year's real estate developer default event, and the possibility of a full-blown outbreak exists. However, compared with some typical market-oriented economies, the participation of the mainland government in the financial system is still relatively high, and it still has a strong ability to cover the bottom.
China's financial system is characterized by large scale, many regulations, weak supervision and bank leadership. Of course, such a financial system will have a lot of efficiency losses, but the growth model that supports factor input is not a big problem, the efficiency of capital allocation is not high, but the effectiveness of converting savings into investment is very high, so it better supports economic growth.
The problem of more regulation also needs to be viewed from two aspects, regulation will affect financial efficiency, but when the market mechanism is not particularly sound, the complete liberalization of the market may produce greater problems, and when the market mechanism and regulatory framework are not very mature, government intervention in the market has a positive effect. Overall, this financial system worked well in the past.
Why is the risk still relatively high? There are two main problems. First, economic growth decelerated, the past development model is difficult to sustain, some industries are facing crises; second, in the past, maintaining financial stability mainly relied on the government to support the bottom and sustained high economic growth, and now these two pillars are difficult to sustain. Under the deceleration of economic growth, the development model has changed from an extensive factor input type to an innovation-driven type, which is a greater challenge to the financial system, and if financial supervision cannot keep up, the possibility of systemic financial risks is increasing.
In fact, from 2015 to the present, financial risks have occurred where they have occurred, at the beginning of the stock market downward adjustment, and then the foreign exchange market, shadow banking, Internet finance, bond market, local financing platforms, etc. have fluctuated, although there is no systemic problem, but now still can not relax the vigilance, the risk has not been completely eliminated. Therefore, the financial system must be transformed as soon as possible and the financial regulatory framework must be improved as soon as possible in order to reduce financial risks.
The Economic Observer: You have warned many times about the middle-income trap, do you think China has crossed the middle-income trap in the past two years?
Huang Yiping: There should be no suspense in China's crossing the middle-income trap, according to the current World Bank standards, if a country's per capita GDP exceeds $12,535, it is considered to have entered the ranks of high-income economies, and China should reach that threshold in the next one to two years. But the real question of the middle-income trap is whether economic growth deceleration or even stagnation can be avoided through innovation, and the general international experience is that the key node is at $15,000 per capita GDP or about 30% of the per capita GDP of the leading country, the United States. Therefore, the challenges of the mainland still exist, and to maintain sustainable growth, the economy must be transformed, transitioning from factor-invested growth to innovation-driven growth, and innovation-driven growth depends more on private enterprises. Whether private enterprises develop well or not determines the future of China's economy to a considerable extent. The fundamental challenge facing China is that the economy needs to be transformed, but the financial system has not.
The Economic Observer: How to carry out financial reform through market-oriented means?
Huang Yiping: There are many market-oriented means of financial reform, and a simple look can be started from three aspects, first, to complete the reform of interest rate marketization, the core of interest rate marketization is to achieve market-oriented risk pricing, and how high-risk it is to set what kind of price. Second, build a diversified financial system that serves private enterprises, including capital markets, commercial banks, and new institutions such as digital finance, with different institutions having their own focuses to improve the financing environment for private enterprises. Third, regulate, rather than eliminate, the informal financial sector, although they pose some financial risks and require stronger regulation, but in fact they also provide financial services for physical finance, providing supplements to the formal financial sector. In addition, the reform of financial marketing also needs some supporting policies and systems, such as the phenomenon of discrimination against private enterprises in the allocation of funds by financial institutions, but this is not a problem of financial institutions in itself, but it is necessary to truly achieve ownership neutrality at a higher level. There was also a need to strengthen the protection of property rights.
Economic Observer: The relationship between innovation and supervision is very delicate, as if once you say supervision, innovation is gone, once you say that innovation has no supervision, once you put it out, you will be chaotic, a chaotic collection, and a collection will die, how to balance the relationship between supervision and innovation?
Huang Yiping: This is a manifestation that the regulatory framework is not yet mature. P2P online lending is a very typical example, in 2007 the first P2P online lending platform was launched, in 2016 only issued the first interim management measures, nine years there are no rules, supervision is to take responsibility. In the past few years, a number of small and medium-sized banks have had risk problems, and the board of directors and management of banks have generally failed in their duties, but supervision is also inseparable. Wherever there is a big financial risk, it is often because the supervision is not in place.
I have been calling for a thorough reform of regulation, China has a regulatory framework, there are institutions, people, rules, practices, that is, when it is necessary to manage financial risks, it is not controlled. Speaking of innovation, supervision does not dare to manage, and when a problem arises, it becomes "sports supervision" and "regulatory competition", and it is eager to strangle innovation. None of this is normal regulatory behavior.
The Economic Observer: What are the criteria for a thorough financial regulatory reform?
Huang Yiping: First, to clarify what financial supervision should do, financial regulatory reform should do three things: first, to ensure full competition or fair competition; second, to protect the interests of consumers; third, to maintain financial stability. The problem now is to give the regulator a variety of other responsibilities, such as financial development, macroeconomics, structural adjustment, including the main body of the economic protection in 2020, which must be separated from the responsibility of supervision, especially considering the separation of financial development and financial supervision responsibility, otherwise the regulatory authorities often do not know what to be responsible for. The second is to authorize under the target precursor and give the regulatory system sufficient authority to see the problem of handling the problem. Third, establish accountability mechanisms, not only for practitioners, but also for specific officials.
How finance supports innovation
The Economic Observer: Is financial support for the real economy weakening?
Huang Yiping: Let's look at a metric, the marginal capital output rate, which reflects the need for several new units of capital input for each new unit of GDP produced. The continent's marginal capital output rate rose from 3.5 in 2007 to more than 7.0 now. This is a real indication that financial efficiency is declining. There are many reasons for this, one of which is that private enterprises have taken a pivotal role in the economy, but their financing environment is not ideal.
Since 2013, the Chinese government has been paying great attention to the financing of private enterprises, and almost two or three quarters will introduce a policy to alleviate the policy of financial support for the real economy and the financing difficulties and expensive financing of private enterprises. But after each policy is introduced, we can see immediate statistics, but if we do a closer look, we will find that the actual effect is not ideal. The reason for this is that I am afraid that the policy measures adopted do not pay enough attention to the basic financial laws and do not completely prescribe the right medicine.
The difficulty of financing private enterprises and the high cost of financing are two problems. The problem of financing difficulties for private enterprises is reflected in the contradiction reflected in the macro economy, that is, the channel between macro currency and micro financing is blocked. Even if macro policy expansion increases market liquidity, it is difficult for money to flow into the hands of private enterprises that urgently need financing, just as the purpose of deleveraging is to reduce the comprehensive leverage ratio, but in fact, deleveraging reduces the leverage ratio of private enterprises, and the leverage ratio of state-owned enterprises rises. The problem of financing difficulties is that banks will not do reasonable risk control for private enterprises, and they cannot implement market risk pricing, so banks will lend money to state-owned enterprises, and the contradiction that finance does not support the real economy also comes from this.
The Economic Observer: How can financial innovation support the development of small and medium-sized enterprises?
Huang Yiping: During the epidemic period, banks issued loans to small and medium-sized enterprises, the amount of loans to small and medium-sized enterprises rose by 30% in 2020, this is a policy with Chinese characteristics, bank loans to small and medium-sized enterprises are inherently risky, the risk of lending under the epidemic is higher, this is a policy loan, not exactly commercial loans, but in the end will not cause the bank non-performing rate to rise, I think it is debatable, the consequences are not all borne by the bank? I think the finances also have to bear a part.
I propose to establish a special purpose platform, the platform of the central bank to provide liquidity, let commercial banks to issue loans to small and medium-sized enterprises, and finally by the finance to the bottom, in case of loan problems, the finance to bear a part, commercial banks to bear a part, but I recommended many times, or can not be implemented, and finally may fall on the bank.
It is easy to bring about moral hazard problems, such as the bank's own business is not doing well, but it comes down to policy loans in 2020. I am not opposed to the measures to let banks issue more loans in 2020 to stabilize the main body of the economy, but in the end who will be responsible? Similar problems will be encountered in the future, and banks cannot be left to bear the consequences every time.
The Economic Observer: The arrears of large enterprises have caused the accounts of small and medium-sized enterprises to become longer and longer, what do you think of this problem?
Huang Yiping: The issue of account period is a problem of liquidity crisis, and the management of cash liquidity will become more and more important. All the accounts receivable of small and medium-sized enterprises are about 14 trillion yuan, which is similar to the scale of small and medium-sized enterprise loans issued by banks in 2020, that is to say, almost all the loan funds issued by banks to small and medium-sized enterprises are deducted from the hands of large enterprises, and the money does not reach the accounts of small and medium-sized enterprises, which largely offsets the state's policy support for small and medium-sized enterprises. The essence of the extension of the account period is that large enterprises use their unequal market position to exploit small enterprises, which runs counter to the government's efforts to develop inclusive finance, which will not only affect the operation of small and medium-sized enterprises, but also affect macroeconomic stability.
Economic Observer: Policy-based loans have not fundamentally solved the financing problem, is there a fundamental way to solve the financing problem of small and medium-sized enterprises?
Huang Yiping: First of all, we must truly realize market-oriented risk pricing, let the market determine the loan interest rate, let the market do the allocation of funds autonomously, the current interest rate on policy loans to small and medium-sized enterprises is relatively low, in the long run, commercial banks are unprofitable, but it is a regulatory requirement that has to be implemented, and finally either the yang and the yin, or cause great bank risk.
The second is the means to improve risk control. It is difficult to do loans for small and medium-sized enterprises in the lack of means to control risks, so financial innovation must first find ways to solve risk control problems, such as big data to assess the ability of enterprises to repay loans, such as relationship loans, many loan officers fully understand the enterprise before issuing loans, as well as investment-loan linkage, technology branches and other digital technologies to do credit risk assessment.
Another innovation is digital supply chain finance, which is now consumer finance, through the consumer line of loan lines, even if the loan to small and medium-sized enterprises is also a logic based on individual credit, the future through supply chain finance can greatly increase the loan amount.
The main task of the recently established Beijing Stock Exchange is also to support the financing of small and medium-sized enterprises. However, it still cannot avoid the difficult problem of how to risk assess small and medium-sized enterprises. Perhaps the securities market can also use big data analysis to assess the development and investment potential of smEs.
The Economic Observer: We need a financial system that can support innovation and technological progress, how different is this financial system from the current financial system?
Huang Yiping: At present, China is still a bank-based financial system, so how the financial system supports innovation and how banks support small and medium-sized enterprises overlap to a large extent.
Compared with banks, the capital market is more meaningful to support innovation, investment is more professional, and the money for equity investment is more suitable for innovative enterprises. There are many political, cultural, legal and historical factors behind the development of the capital market, objectively speaking, I am a little disappointed in the development of China's capital market, and the current capital market is lacking in supporting corporate financing, supporting residents' investment and reflecting the macro economy.
Banks can also support innovation, Germany and Japan are mainly bank support, but China's economic development has entered a new stage, the growth model has changed, from extensive factor input to innovation-driven growth, the financial model to follow the change, so it is very important to discuss financial transformation at present.
The Economic Observer: In such an environment, why regulate the platform economy?
Huang Yiping: The platform economy is a new thing, and the biggest benefit of the platform economy is that massive reach, fast computing and personalized services have become an important driving force for the economic growth of the mainland. However, some characteristics of the platform economy also have two sides, such as economies of scale can improve efficiency, but it is also easy to form monopolies. The platform creates many opportunities for flexible employment, but it may also harm the interests of workers. Big data analytics can reduce the information asymmetry of the platform, but it can also exacerbate the information opacity of other participants. The purpose of the "strong supervision" policy starting from 2021 is to achieve "standardization in development and development in norms." ”
The Economic Observer: What principles should be grasped when regulating the platform economy?
Huang Yiping: I think the principle is to balance the relationship between innovation and stability.
Considering China's economic development level, China's platform economy is actually doing well, and it is currently in the second position in the world. However, the technical advantages of China's platform economy are not very prominent, mainly market advantages. In recent years, the productivity of digital economy platforms has a tendency to decrease, there are many factors behind them, the important point is that China's platform economy and the international market are separated, although the efficiency of efficiency to bring market advantages to enterprises, but in the long run, this situation is easy to cause unfair competition problems, so it is imperative to strengthen supervision and governance, but there are several points to consider in the process.
First of all, it should be clear that the purpose of strengthening supervision is to make the platform achieve orderly development, help common prosperity, rather than suppression, these platforms themselves are innovative enterprises, bringing a lot of contributions to economic growth and employment, in the process of supervision, to reduce some sporty supervision, more to take daily response to supervision, the new industry has some problems are not easy to quickly judge, such as "two to choose one", a sound feel bad, but in economics exclusive agreement is justified and reasonable, For example, if a company's agent only sells products in a certain area and other agents can't do it, I am not saying that "choosing one of the two" is correct, but that the problem should be analyzed in depth in the process of governance platform. Using traditional methods to govern the platform is not suitable, an important feature of the platform economy is economies of scale, if it is bigger, it will be suppressed Is it reasonable? Economics has a concept called competitiveness, a platform will not form a monopoly key to see the threshold for potential competitors to enter, for example, in 2013 Alibaba in the e-commerce market accounted for 92%, in 2020 its proportion is 42%, look at the former data, is to do anti-monopoly processing, but in fact, in these years Pinduoduo, JD.com, WeChat, Douyin are developing, Ali's market share was divided by competitors, indicating that Ali did not have a monopoly position, the competitiveness of the e-commerce industry is relatively strong.
Being competitive does not mean that antitrust is not needed, but it may make more sense to focus policy on improving competitiveness and lowering the threshold than traditional antitrust.
How to do it this year
The Economic Observer: What do you think of this year's situation? What are the priorities for this year?
Huang Yiping: As the Central Economic Conference said, this year to be steady, steady progress, then macroeconomic policies are the most important, of course, structural policies are also important, such as education and training, platform economic supervision, carbon emissions, real estate, etc., these structural policies are to achieve high-quality economic growth, but still have to do slowly, to have a balance between short-term goals and long-term goals, can not cause very large economic downward pressure in the short term in order to achieve the goals in a few years, This year's focus is still to stabilize the macro economy and support the stability of the real economy with finance.
The Economic Observer: Many people think that consumption should be used to drive growth, what do you think is the appropriate proportion of consumption and investment in the "troika"?
Huang Yiping: The proportion of investment in the world is about 20% to 40%, the average investment rate of Japan and the Asian tigers in the period of rapid growth is about 35%, the average investment rate in general countries is about 20%, the United States is relatively low, china's investment proportion is more than 40% for a long time, and there is not much problem when the economy is growing rapidly.
The question of whether consumption pulls economic growth is highly controversial in economic circles. Some scholars think that consumption-driven growth is a very ridiculous statement, because when consumption is finished, there is no more, how to drive growth, and some scholars believe that consumption was too weak in the past, and I think that maintaining an appropriate proportion of investment and consumption is necessary to maintain stable economic growth.
More investment, less consumption, easy to cause the problem of excess capacity, products can not be sold, production has no return, growth is not sustainable. Why doesn't China have a problem with excess capacity? This is because we have exported our products abroad, without causing accumulation, but production is not to earn foreign exchange, or to meet the growing needs of the people for a better life, and exports are unlikely to maintain high growth as in the past, and it is important to see the proportion of consumption rebound now.
The Economic Observer: Why is consumption weak?
Huang Yiping: The first is that the income of the people has not grown rapidly, the proportion of labor wages is too high, the asset income is too small, which will be a big problem in the era of aging; the second income distribution is not very equal, economics has a theory called consumption tendency, how much of 100 yuan is used for consumption, the consumption tendency of the poor is very high but there is no money, the consumption tendency of the rich is very low but there is more money, and the inequality of income distribution reduces the demand for total consumption. The third is that the social welfare system is not very sound, China's epidemic control is not bad, production has also resumed, but the income of the people has been affected, the social welfare system is not perfect, and money does not dare to spend.
The Economic Observer: What do you think of the consumer goods market?
Huang Yiping: In the long run, solving the above three problems, China's consumer goods market is very promising. Compared with the proportion of foreign consumption, there is still a lot of room for China's consumption to rise. This year, China's total retail sales have surpassed that of the United States, becoming the world's largest consumer goods market. Even if the growth rate goes down, it will still be the world's largest and fastest growing consumer goods market. The Chinese market is attractive to producers around the world, and with a consumer market of 1.4 billion people, it is very open, but at this stage the challenge is relatively large.
The Economic Observer: Compared with the traditional renminbi, what changes will the digital yuan bring? What are the positive significance and challenges for the internal and external double cycle after the introduction of the digital yuan?
Huang Yiping: Now the biggest role of the digital yuan is to improve the efficiency of payment, in the short term, I don't think there is any need to exaggerate the role of the digital yuan. From the perspective of the general consumer, the difference between the digital yuan and Alipay and WeChat Pay is not large, compared to Alipay and WeChat Pay, the advantages of the digital yuan are more reliable, because it is issued by the central bank, followed by the lower cost of the digital yuan, and the digital yuan is more inclusive, such as offline payment, for the elderly to use conveniently. Why do the central bank do the digital yuan, I think their focus is on the inclusiveness of mobile payments, not necessarily the internationalization of the renminbi, because the renminbi is not yet an international currency.