How to understand the current economy?

Source: Li Xunlei Finance and Investment Author: Li Xunlei

Can we cross the middle-income trap?

The concept of middle income trap was put forward by the World Bank in 2006, that is, all countries (regions) in the world are divided into four levels according to the per capita national income level: high income, middle and high income, middle and low income and low income. From a mathematical point of view, these four levels of population should each account for 25%, but because the World Bank classifies countries, it is not so strictly defined that only 25% of the world's population can become a high-income country.

According to the data released by the World Bank, the latest income grouping criteria in 20 15 years are: low-income countries with per capita gross national income below 1045, low-and middle-income countries with 1045 to 4 125, and 4 126 to/kloc. According to World Bank statistics, there are 80 high-income countries, 53 upper-middle-income countries, 5 lower-middle-income countries, and 3 low-income countries.

At present, the population of 32 OECD high-income countries plus 48 non-OECD high-income countries has exceeded 654.38+0.5 billion, accounting for about 22% of the global population. If China, a country with a population of 65.438+0.4 billion, can also become a high-income country, that is, 40% of the world's population countries belong to high-income countries, wouldn't it be against mathematical logic?

Some people think that China will become a high-income country in 2022. Is this too optimistic? Due to the rigidity of global economic growth and the persistent monetary excess, the World Bank will definitely raise the threshold of per capita national income in high-income countries. Now it is $65,438+02,736, and it is estimated that it will rise to more than $65,438+05,000 in five years. In addition, we must consider the future ratio of RMB to USD. If the current ratio can be maintained under the condition of free convertibility, China's per capita national income will at least approach the level of high-income countries in the future.

In 20 17, China's GDP accounted for 15% of the world's total, and its population accounted for 18.8% of the world's total, with a difference of nearly four percentage points, indicating that, per capita, the urgent task for China is not to cross the middle-income trap, but to reach the middle-income level. If we want to find the gap between China and the global average, it is the problem that the per capita disposable income accounts for a low proportion of GDP. The former is the gross gap, and the latter is the quality gap.

Mathematically speaking, the word "middle income trap" is not applicable to China, Indian and other populous countries, because middle income and high income are always a relative number. In the future, the population of these two countries will account for nearly 40% of the global population, while the ability of high income is only 25%. In the process of China's economic growth, crossing the middle-income trap is a bit like catching up with your own shadow.

Business Cycle: An Old Theory Easily Falsified

Nowadays, more people talk about the economic cycle than the stock market cycle (bull market, bear market). I remember that in the early 1990s, a large number of domestic investors believed in Eliot's wave theory, and everyone went to "count the waves" and argued endlessly about which stage of the cycle the stock market was in. Nowadays, few people study the cycle in the stock market because the operation effect is not good. Someone joked that "the more lines you draw, the less money you gamble." Even the Merrill Lynch clock, which was later proposed according to the business cycle, was proved to be unsuitable for asset allocation.

The cycle theory in economics actually feels very old. Mathematically speaking, the so-called cycle theory is similar to regression analysis, that is, if the deviation from the mean is large, it will return. In the early days of capitalist society, due to less government intervention, the cyclical characteristics of the economy are more obvious. Marx saw this fatal flaw in society at that time and put forward the theory of * * * *. Now no matter what kind of system, government intervention has become the norm and the cycle has been smoothed out.

Not only the economic cycle has been smoothed, but also the life cycle of human beings, such as the improvement of living standards and the progress of medical technology, the life expectancy and childbearing age of the population have been greatly delayed, and the fertility rate and mortality rate have fallen sharply. While the government intervenes in the economy, it also intervenes in fertility, with the aim of smoothing the long-term economic cycle.

The rebound or stabilization of China's economy in 2009 and 20 16 was actually the result of strong government intervention. It is a bit far-fetched to regard government intervention as a sign of economic cycle recovery. In 20 16 and 20 17, the growth rate of fixed assets investment in the secondary industry was only 3.5% and 3.2% respectively, while the growth rate of infrastructure investment was as high as 17.4% and 19% respectively. We really can't see that we are experiencing a rising period of the Jura cycle (the so-called equipment investment cycle).

Jugla cycle was first put forward by French doctor and economist C Jugla in 1862 in the book On Business Crises and Their Occurring Periods in France, Britain and America. 150 years later, is such an ancient periodic observation still applicable to today's society? Especially for China, a country that has never experienced an economic crisis in the past 40 years of reform and opening up, it is even more inappropriate to mechanically copy these cyclical theories.

History will be strikingly similar, but history will not be simply repeated. Contrary to the optimists in the new cycle, some pessimists are called "every eight days will fall", that is, 1998 had the Asian financial crisis, and in 2008 there was the subprime mortgage crisis; But last year, someone suggested that "it will fall every seven days", but the calculation of crisis time was one year ahead of schedule.

The reason why the ancient cycle theory is still popular in China is that it is simple and rude, just like analyzing constellations, and it is suitable for fortune-telling, which is exactly what China people particularly like. The Nasdaq index hit a record high on Friday, and the "stock crash" some time ago was immediately falsified. Therefore, the observation period is too short and the sampling should not be too small. The reason why the cycle theory has been falsified repeatedly is because the founders or users are not up to standard in these two aspects.

In my opinion, China's economic growth rate is still in the downward stage, which is in line with mathematical logic, because there is always a limit when it is getting bigger and bigger. Even if the increment is constant, the growth rate will drop.

How big is the urbanization space?

Many people think that there is still much room for improvement in China's urbanization, because the current urbanization rate is less than 60%, while the urbanization rate in developed countries is usually above 80%. In other words, there should be 20% room for improvement in China.

The question is, when will it reach 80%? No time is given, and the conclusion is of little significance. I find that when discussing the urbanization space, people often ignore one dimension: the age structure of the population.

Because population mobility is related to the age of the population, the older the population, the worse the mobility. According to the data of the National Bureau of Statistics, the floating population in China decreased by about 5 million in 20 15, and continued to decrease in the following two years; In 20 16, the number of urban migrant workers decreased for the first time10.6 million, and the number of domestic tourists decreased for the first time in 20 17. In other words, the urbanization process characterized by population mobility has basically ended, and the rest is local urbanization.

On the other hand, the urbanization process in Europe, America and Japan has achieved a high level of urbanization when the population age structure is relatively young. For example, the urbanization rate in Japan reached 70% in 1970s, but it has been rising very slowly since then.

The urbanization process in China has been relatively fast, which is related to the policy orientation. However, at present, the average age of migrant workers has exceeded the average age of the national labor force, and the trend of migrant workers returning home will become more and more obvious in the future. For example, the population decline in megacities such as Shanghai and Beijing is similar to that in megacities such as Tokyo at the beginning of 1970-90. It takes 25 years for Japan's urbanization to reach 80% from 75% (1975).

Because the population structure in China is similar to that in the 1990s, the level of aging has been greatly improved. Therefore, if the policy factors are not considered, the urbanization process in China should slow down. It is estimated that the urbanization rate of China will reach its peak at around 70% in the future, for the reasons shown in When Urbanization Encounters Aging.

Why do high-level officials emphasize systemic financial risks so much?

As early as 20 15 Central Economic Work Conference, it was put forward that "the bottom line of no systematic and regional risks should be firmly held". After that, whether it is the report of the 19th National Congress or other important reports, the top management put forward the requirement of "keeping the bottom line without systemic financial risks".

Why didn't China worry too much about domestic financial risks when the US subprime mortgage crisis occurred in 2008? On the contrary, when the European and American economies recover, why worry about risks? This is because 10 years ago, the leverage ratio in the United States was very high and that in China was very low; Today, some leverage ratios in the United States have fallen sharply, while China's leverage ratio is still high.

Many people think that China's leverage ratio is not high compared with that of developed countries, but if we look at it from the dimension of population age structure, the leverage ratio is obviously too high, that is, the age structure of China's population is incompatible with its development stage-getting old before getting rich. Therefore, the 20 15 Central Economic Work Conference proposed structural reforms on the supply side, aiming at controlling the problem of overcapacity and reducing the leverage ratio of the whole society.

Looking back at history, most countries achieved deleveraging during the crisis. No matter the United States, Japan, South America and Southeast Asian countries, the crisis broke out because of the high leverage ratio, and the leverage ratio was reduced because of the crisis. China is actively deleveraging, which reflects our institutional advantages. De-leveraging can easily lead to systemic financial risks. Without leverage, a financial crisis is bound to break out, and the lesser of the two evils is taken.

There is a famous story: Archimedes played chess with the king, and the king lost. What did the king ask Archimedes for? Archimedes said to the king, "I only need to put one grain of rice in the first box, two grains in the second box, four grains in the third box and eight grains in the fourth box? Fill the whole chessboard like this. " This is seen as a case of leverage. If the king increases leverage at this rate, he will go bankrupt.

What if the leverage is reversed? There are 64 squares in chess. If only the last square is removed, the number of rice grains in one square is nominally removed, but actually18.45 million tons of rice is removed. In other words, the practical significance of removing one grid is to reduce the leverage ratio by 50%. This is of course an extreme example, just to illustrate the risk that deleveraging will easily lead to the break of the capital chain.

As far as China is concerned, the rapid rise of social leverage has much to do with "implicit rigid exchange". As long as the rigid exchange can be broken, the leverage level will drop rapidly and the asset bubble will burst rapidly, but it may be the outbreak of systemic risks. If the risk premium in asset pricing is expressed by this formula: risk premium = liquidity premium+credit premium, then the reason for the collapse of the New Third Board is insufficient liquidity, that is, the liquidity premium has risen sharply; The risk of credit bonds lies in the financial crisis of enterprises. Recently, some credit bonds have fallen sharply because the credit premium of some financial holding groups has risen sharply under the background of deleveraging.

It is logical for top management to worry about systemic financial risks, because they stand tall and see more clearly. For example, during the recent two sessions, the top leaders put forward at the Shandong delegation meeting: "All successful enterprises must focus on their main business if they want to climb to the top of their careers. Mixed industry is also to complement each other's advantages and develop the main business, not for speculation. " This speech may be well remembered for those financial holding groups that have obtained full licenses at present, or for Internet giants and large-scale entities that have been deeply involved in financial business.

In 20 17, the contribution of financial industry to GDP was 7.9%. Although the proportion has decreased, it is still high. At present, the focus of financial supervision is on assets, and the central government recently suggested that the National People's Congress focus on the quality of government expenditure budget and policy implementation. To put it bluntly, supervision ranges from total management to structural regulation, from trunk supervision to detailed supervision.

In a word, the analysis of China's economy needs multi-dimensional thinking in order to see it thoroughly. As mentioned earlier, the time dimension (time weight, periodic nature, population aging, etc. ) is an important dimension, spatial dimension (multiple effects of checkerboard, observation height, etc. ) is also an important dimension.

Before 1988, that is, it has been nine years since the reform and opening up, the government has always regarded the growth of total industrial and agricultural output value or total social output value as the primary goal of national economic development, and the water content of total output value is the largest, which belongs to the total index; 1988-20 17, in these 30 years, GDP is basically the primary goal, and GDP is actually an incremental indicator; The current policy has focused on the quality of economic operation, so China's economy has entered the stage of pursuing quality.

From total to increment to quality, these three concepts are very easy to distinguish in mathematics, but when analyzing the social and economic fields, it is found that many people have forgotten the basic knowledge of mathematics and would rather believe in miracles than care about logic.

To improve the quality of economic operation, we should not only optimize the national governance structure, but also improve the corporate governance structure. If China's economic quality can be continuously improved and there is no systematic financial risk, should the trend of stock price index be more optimistic? Because the stock price index is an indicator of economic quality. The share price index in the United States far exceeds the GDP growth rate because of the increase in corporate profits and the increase in return on equity.

If we really value quality, it doesn't matter whether the middle income level can be crossed, whether the urbanization rate is high or low, and whether the GDP growth rate is in the rising stage of the cycle.

Source: Li Xunlei Finance and Investment.