In the first quarter of 2024, the National Bureau of Statistics and the head office of the People's Bank of China adjusted and optimized the accounting methods of the financial industry, and optimized and adjusted the quarterly accounting methods for the added value of the financial industry. The optimized accounting method is mainly based on the bank's profit indicators, including the growth rate of net interest income in operating income, the growth rate of net fee and commission income, etc.
In 2023 and before, when the added value of the financial industry is calculated on a quarterly basis, the added value of the monetary and financial services industry, the main component of the financial industry, is mainly estimated with reference to the year-on-year growth rate of the balance of deposits and loans.
Therefore, at the beginning of each year, economic data such as GDP are released one after another, and topics about the accounting methods of the added value of the financial industry and the possible "distortion" of GDP growth will attract attention.
There are signs that under the pressure of assessment indicators such as GDP growth, due to the high proportion of the financial industry, there is a possibility of "water" in financial data. However, the impact of deposit and loan growth indicators on the added value and GDP growth rate of the financial industry is relatively large, which to a certain extent causes all localities to compete for deposit and loan resources in a disorderly manner at key points in time, and "inflat" the deposit and loan data to meet the index requirements of the added value and GDP growth rate of the local financial industry.
If the added value of the financial industry and its contribution to GDP are "inflated", it will affect the decision-makers to grasp real and effective data and information, which is not conducive to the true judgment of the development status of the financial industry, nor is it conducive to the objective judgment of economic recovery and growth, and will also affect the implementation of the strategic policy of financial support for the high-quality development of the real economy.
The Central Financial Work Conference emphasized that to promote the high-quality development of the mainland's finance, it is necessary to "optimize the financing structure, increase the proportion of direct financing" and "better play the role of the capital market hub".
In this regard, the optimization and adjustment of the existing value-added accounting indicators and accounting methods of the financial industry can more scientifically reflect the achievements of high-quality financial development and truly promote financial support for the high-quality development of the real economy.
The financial sector accounts for a high proportion of GDP, and the tertiary industry contributes the most to GDP
For a long time, the added value of the mainland's financial industry has been in a leading position among the world's major economies in terms of the proportion of added value in GDP. According to the "Opinions and Suggestions on the Report on Financial Work" published on the official website of the National People's Congress on November 22, 2023, during the deliberations, some participants pointed out that the added value of the mainland's financial industry accounts for nearly 8% of GDP, which is higher than the average of 4.8% of the member states of the Organization for Economic Cooperation and Development, and also higher than the average of 3.8% of the EU member states, indicating that there is still a lot of room for the financial industry to make profits to the real economy.
According to the Bureau of Statistics, in 2023, the mainland's gross domestic product (GDP) will 1260582 billion yuan, an increase of 5.2% over the previous year. From the perspective of the three major industries, the added value of the primary industry was 8,975.5 billion yuan, accounting for 7.12%; the added value of the secondary industry was 482589 billion yuan, accounting for 38.28%; The added value of the tertiary industry was 688238 billion yuan, accounting for 54.60%.
Compared with 2022, the added value of the primary industry accounted for 7.32% of GDP, the added value of the secondary industry accounted for 39.33%, and the added value of the tertiary industry accounted for 53.35%, while the added value of the primary and secondary industries decreased significantly, while the added value of the financial industry increased by 1.25 percentage points to GDP.
In terms of proportion, the mainland's tertiary industry, including the financial industry, accounts for the largest proportion and contributes the most to GDP.
The high proportion of the financial sector in GDP reflects that indirect financing is still the main channel for physical financing, and financial institutions have played a great role in helping the process of entity financing. When the incremental expansion of bank deposits and loans is rigid, and the growth rate of GDP declines, this proportion will be further increased, and the contribution of the financial industry will be higher, and the impact of indicators will be greater.
GDP growth is too dependent on the expansion of the financial sector, bringing about a "false fire" of high financial growth
For a long time, local governments have formulated industrial plans and action plans, and have taken the increase in the added value and proportion of the financial industry in GDP as the main indicator and assessment task to measure the effectiveness of economic development.
For example, a provincial capital city in the east released in 2023 that "in the first quarter of this year, the added value of the city's financial industry was 59.525 billion yuan, a year-on-year increase of 9.6%, and the proportion of GDP increased to 14.1%, and the contribution of the financial industry to economic growth continued to increase steadily." In the first three quarters of 2020, the biggest highlight of the province's financial industry in operation was that the added value of the province's financial industry increased by 4.6% year-on-year, becoming the industry with the strongest positive pull on the province's GDP growth. ”
The growth rate of the added value of the financial industry continues to be ahead of the growth of GDP, which will also lead to a significant increase in the proportion of the added value of the financial industry in GDP.
It can be seen that the contribution of the financial sector to economic growth continues to increase. Under the pressure of local GDP growth assessment, this may bring certain growth pressure to the financial industry.
In 2013, the Organization Department of the CPC Central Committee made structural adjustments to the evaluation system of local officials, clearly proposing to weaken the assessment weight of GDP growth and strengthen the assessment of environmental protection. However, there are no particularly typical cases of the assessment criteria for the internal structure of GDP.
For a long time in the past, the evaluation of lower-level local governments by higher-level governments was mainly based on economic development performance, especially GDP growth, which is also the most critical assessment indicator for local officials, and trying to improve local GDP growth is one of the most important goals of each government.
Specific to the growth of the financial industry, a source from a local financial institution revealed that the key assessment time points of each year, mainly in the six months and the year, the local financial offices (financial bureaus) will organize financial institutions to hold coordination meetings to allocate and issue growth target tasks.
In order to meet the target requirements at a critical point in time, local banks had to "pull deposits" from enterprises or peers, resulting in the "relocation" of deposits in other places. Once the time point has passed and the data statistics are completed, deposits and loans may "return to the original place", especially interbank deposits, which may further aggravate the idling of funds.
In terms of loan expansion, for a long time, the credit expansion of the financial industry was more to invest in "high-growth" areas such as real estate and local urban investment at higher interest rates, which not only raised the cost of physical financing, but also caused the illusion of "high financial growth" and false fire, and at the same time, it may also crowd out investment in other industries, affecting the quality and efficiency of financial services for the real economy.
Deposits and loans have a great impact on the added value of the financial industry and GDP growth
From the perspective of the accounting of the growth rate of added value of the financial industry, the added value of the financial industry is currently calculated according to the sub-sectors such as monetary finance, capital market and insurance, and the weights are about 0.7, 0.2 and 0.1 respectively according to the growth rate of the basic indicators of the subdivided industries (mainly using the year-on-year growth rate).
Among them, the growth rate of deposits and loan balances in domestic and foreign currencies used in monetary and financial services, the growth rate of securities transactions within the jurisdiction of the capital market, and the growth rate of original premium income used by the insurance industry.
In addition, the growth rate of deposits and loans needs to be further weighted according to their proportion in total deposits and loans.
According to the weights, the growth rate of deposits and loans is currently the sub-item that has the greatest impact on the growth rate of added value of the financial industry.
Taking a provincial capital city in East China as an example, as of the end of October 2023, the balance of domestic and foreign currency deposits was 20.02 trillion yuan, and the balance of domestic and foreign currency loans was 11.01 trillion yuan, with deposits accounting for 64.5% and loans accounting for about 35.5%.
By multiplying the weight of monetary finance (0.7) by the weight of deposits (65%) and loans (35%), the impact weights of the growth rate of the four basic indicators can be approximated: deposit growth rate (weight of about 0.45), loan growth rate (weight of about 0.25), growth rate of securities transaction volume (weight of about 0.2), and growth rate of original premium income (weight of about 0.1).
The high proportion of added value in the financial industry in GDP has also caused the market to worry about the "idling of funds" in the financial industry. However, the excessive weight of the growth indicators of deposits and loans is too large, which can easily lead to an inflated increase in deposits and loans at key points in time, distorting the real situation of the development of the financial industry in various regions.
First of all, the excessive weight of the growth index of deposits and loans will lead to disorderly competition for deposits and loan resources at the end of the month and quarter, especially at the end of the year, and induce the phenomenon of "deposit moving" between regions, especially the high-interest rate of interbank deposits, resulting in an inflated increase in the balance of deposits and loans at key points in time, distorting the real situation of the development of the financial industry in various regions, which is not conducive to objectively reflecting the economic growth situation and trend changes in various regions, and hindering the central decision-making level from grasping real and effective data and information.
As for the inflated and untrue data that may be caused by the GDP accounting method and the requirements of the assessment indicators, some bankers in South China said that this situation is more common among regional city commercial banks, because of the small scale and cross-regional operation restrictions, and the indicators require the sum of deposits and loans, in order to meet the requirements of the indicators, they can only make up deposits and loans at key points.
Secondly, the current GDP accounting methods and index requirements do not fully take into account the differences in industrial structure between regions. For example, Shanghai's financial industry is relatively developed, the proportion of asset-heavy industries is relatively low, and the proportion of asset-light industries such as service industries is relatively high, and the economic and industrial structure determines that the growth rate of investment and loans in Shanghai is relatively low. In a second-tier city in South China, the industrial and commercial development is average, and in order to meet the requirements of GDP growth indicators, it mainly relies on local banks to "bear".
In recent years, in order to boost the added value of the financial industry and GDP growth, some cities in North China have carried out various coordination and research work closely around the deposits of non-bank financial institutions, so as to ensure that the proportion of added value of the city's financial industry continues to exceed that of the information industry, ranking first.
Optimize the accounting indicators and methods of value-added in the financial industry
Based on this, it is necessary to reasonably set the target of the added value of the financial industry and its proportion in GDP, and further optimize the accounting method of the added value of the financial industry.
The first is to fine-tune the existing value-added accounting methods of the financial industry. For example, the accounting weight of subdivided industries should be appropriately adjusted, the accounting weight of monetary financial services (deposits and loans) should be reduced, and the accounting weight of the growth rate of capital market services and the growth rate of the insurance industry should be increased. At the same time, in view of the large volatility of deposits of non-bank financial institutions, it can be considered to be eliminated.
The second is to comprehensively and thoroughly study and improve the value-added accounting system of the financial industry. Focus on the diversified basic indicators such as operating income, taxation and profit of financial enterprises, which can be obtained in a timely manner on a quarterly basis and are relatively objective, so as to replace the indicators such as deposits and loans that cannot fully and truly reflect the development status of regional industries, so as to more comprehensively and accurately assess the growth contribution of the financial industry.
The third is to consider regional differences, for more developed areas of the financial industry, for example, in Shanghai, Beijing, Shenzhen and other regions, increase the total transaction volume of the financial market, assets under management and other indicators, so as to more scientifically reflect the results of high-quality financial development.
In addition to further optimizing the accounting methods of the added value and GDP growth indicators of the financial industry, it is also necessary to comprehensively consider the coordination and unification of macroeconomic policies and local government governance. First of all, local governments need to establish a correct view of government performance, and the central government should enrich the indicators in the governance assessment standards, pay attention to the internal structure of GDP growth, and reduce the motivation of local governments to increase performance through finance, real estate, and urban investment. Second, continue to guide financial institutions to lower market interest rates and reduce financing costs, so that funds can more effectively support entities; Finally, the relationship between finance and entities is mutually beneficial and harmonious, and in the process of optimization, the financial industry should not be overly suppressed, because in the environment of indirect financing in the mainland, it is necessary to ensure the level of interest rate spreads and profit growth of banks and other financial institutions to avoid systemic financial risks.
(This article is from Yicai)
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