On April 10, the Chief Economist Forum at Wudaokou, Tsinghua University, was held with the theme of "Global Economic and Policy Outlook 2021". Xiao Gang, member of the CPPCC National Committee and former chairman of the China Securities Regulatory Commission, and Zhu Min, dean of the National Institute of Finance of Tsinghua University and former vice president of the International Monetary Fund, all delivered keynote speeches.

Xiao Gang: the causes and Countermeasures of the trend of Global Economic differentiation

Xiao Gang said that since last year, the trend of global economic polarization has been further highlighted. The so-called "K-shaped" recovery has become a topic of concern. At present, with the introduction of stimulus measures in various countries and the improvement of the overall epidemic situation, the economies of all countries are continuing to repair on a month-on-month basis, but the global economic polarization is still serious, mainly in the following aspects:

I. Regional differentiation

The economic gap between the two largest economies of the United States and Europe is widening. In 2020, GDP fell by 3.5 per cent in the US and 6.8 per cent in the eurozone. This year, according to the latest OECD forecast, the us is expected to rebound by 6.5 per cent, while the euro zone is likely to grow by only 3.9 per cent, so the gap between the two economies is widening.

Judging from the situation of some less developed countries and low-income countries, their economies are still quite difficult, especially in Africa and Latin America. As far as a country is concerned, there are also some divergence in economic recovery.

II. Industrial differentiation

Some industries are booming because of the epidemic, while others are shutting down. According to a recent analysis of global bonds and bank loans by the Bank for International Settlements (BIS) during the epidemic, a large number of large companies issued large amounts of bonds, while financing for small businesses decreased significantly. In other words, globally since the outbreak, most of the new loans and new bond issuance have gone to large companies, while small businesses are still very difficult.

Judging from the situation in the United States, the science and technology industry and financial industry in the United States have basically returned to the level before the epidemic, but the tourism, entertainment, catering and other service industries have not yet recovered. Some say it is difficult to return to pre-epidemic levels. Of course, the proportion of American manufacturing is declining, and the problem of industrial hollowing out is still serious.

III. Stratum differentiation

The gap between the rich and the poor continues to widen. According to the world inequality database, the pre-tax income of the top 10% of American adults accounted for 50% of the total pre-tax income of Americans in 2019. Since last year, countries have opened the floodgates and waterproof, pushing up the prices of financial assets and greatly increasing the wealth of the rich, while the poor have been affected by the epidemic, fewer jobs and less income, so the gap between the rich getting richer and the poor getting poorer is getting wider and wider.

IV. Differentiation of the financial market

The first is the differentiation between real economy and fictitious economy. Some people say that now the bad real economy and the beautiful virtual economy coexist. Generally speaking, the real economy is still in the process of recovery, and some countries may still be shrinking, but the stock market is rising sharply. As far as the stock market itself is concerned, there is also a divergence. For example, the five leading stocks of US stocks rose very fast, while the other stocks did not rise much. The same is true of the housing market in the United States, where sales of luxury homes have risen sharply, but low-cost home prices are still falling, so they are also divided in terms of financial assets.

Generally speaking, "economic differentiation" is a neutral word, which reflects the objective phenomenon of economy, not a derogatory term, so it is necessary to make an objective and rational analysis of economic differentiation.

In the past, economic theory generally believed that the cycle of recession and recovery has a wide range of relevance in all sectors of the economy. In other words, when the economy is in recession, all sectors are declining, and when the economy recovers, all sectors are recovering. But this time is different, there is a trend of differentiation.

Xiao Gang said that the so-called "K-shaped" world is essentially a world of strong people. I think the reasons for this phenomenon are various and complicated. Some factors are normal and some are unreasonable. Some are caused by short-term factors, while others are long-term. Let me make an analysis, there are about a few:

1. Different countries have different modes and effects of dealing with the epidemic, which leads to economic differentiation. There is a great difference in the strength and ability of each country to deal with the public health crisis, and there are also great differences in the level of governance in each country, which determines the effectiveness of epidemic prevention and control, and the risks to economic recovery are not exactly the same.

2. The differentiation caused by macro-stimulus policy. It is mainly the double stimulus of fiscal policy and monetary policy. Although these stimulus measures have played a positive role in mitigating the huge impact of the economic shutdown, after all, big companies have benefited first, and they have also spawned a rise in asset prices, more to the rich. Moreover, economic differentiation and stimulus policies interact with each other. The result of differentiation leads to the further increase of stimulus policy, and the further increase of stimulus measures further aggravates the differentiation, and the two promote and interact with each other. This situation brings unprecedented challenges to economic and social development.

3. The trend of the reverse growth of digital economy, the evolution of industrial structure year by year, the survival of the fittest, the improvement of industry concentration and the aging of population. I do not think these factors occurred during the epidemic, but accumulated over the years. Of course, it happens to be hit by the exogenous impact of the epidemic, which makes the economic differentiation more obvious.

4. The excessive disparity between the rich and the poor has had a serious adverse impact on economic development. I think this is also an important reason for economic differentiation.

How to deal with the trend of economic differentiation?Policies should be classified according to different situations. For those in line with economic laws, it is necessary to give more play to the role of market allocation of resources, not to adjust market intervention, and to adopt more targeted and structural policy tools to deal with them.

The degree of economic differentiation in different countries is different, and the reasons are not the same. The degree of influence of various factors is also different, so it is necessary to carry out in-depth analysis to find the crux of the problem and prescribe the right medicine from the reality of our country. There is a core issue here, that is, to properly handle the relationship between the government and the market, whether it is a capitalist country or a socialist country, as long as it is a market economy, it is necessary to combine an effective market with a promising government. Of course, the key and difficulty here is to distinguish which factors are the role of the market mechanism, there is no need for government intervention; which factors are market failure, which need government policy intervention.

China's economy does not belong to the "K-shaped" development. But the overall upward growth trend.Since 2020, China has won a decisive victory in the prevention and control of the epidemic, and the economy has taken the lead in recovering, becoming the only large economy in the world to achieve positive growth. Since 2021, China's economic operation has made steady progress, and the overall situation of continuous and stable recovery. In the first quarter of this year, China's economy got off to a good start, with investment, exports and consumption picking up in an all-round way. the growth rate of industrial value added, the production index of the service industry, the total retail sales of social consumer goods, the growth rate of imports and exports of goods, and investment in fixed assets have greatly exceeded the level of the same period in 2019 before the epidemic. In particular, consumption, a slow variable, is also accelerating the repair, and the service industry business activity index has risen to a relatively high level of prosperity. Excluding the base effect of last year, the momentum of economic growth is also further strengthened, and the development trend is improving.

At the same time, it should also be noted that there is still an imbalance in China's economic recovery. From both ends of supply and demand, the recovery of supply is better than demand, and the gap between supply and demand continues to expand. From the investment side, the growth rate of real estate investment is much higher than that of manufacturing and infrastructure investment. From the perspective of enterprises, the prosperity of large enterprises is far better than that of small and medium-sized enterprises. The online economy is growing rapidly and the offline economic recovery is weak. From the perspective of the industrial chain, the upstream is strong and the downstream is weak, and the proportion of manufacturing in GDP is also declining. The proportion of China's manufacturing industry in GDP was 27% in 2019, and dropped further to 26% in 2020. The decline in the proportion of manufacturing industry may cause a structural drag or downward effect on China's potential economic growth rate. From the perspective of the job market, it is also very unbalanced. In Guangdong, Zhejiang and other economically developed areas, there is a shortage of workers in a large area, and it is difficult to recruit workers. On the other hand, a large number of job seekers in the central and western provincial capital cities and prefecture-level cities are difficult to find jobs, the flexible employment of the whole society is increasing, and it is difficult for manufacturing enterprises to recruit workers. From a regional point of view, the gap between the East and the West and the gap between the North and the South are widening, especially the gap between the North and the South, which is reflected not only in the total amount, but also in the per capita level. In terms of residents' income and wealth, the gap between the rich and the poor is also widening.

In short, there is a structural imbalance in China's economy, which is not only due to the common reasons with the global economic development, but also has its own unique factors. These factors are mainly the various influences brought by the transformation of our country from planned economy to market economy. There are not only the short-term or special factors affected by the impact of the epidemic, but also the profound impact of the conflict between China and the United States, as well as the influence of long-term institutional mechanisms in history. Therefore, it is necessary to make a comprehensive, objective and in-depth analysis.

To solve the problem of insufficient and unbalanced economic development in China, fundamentally speaking, we should comprehensively implement the new concept of development, build a new development pattern, adhere to supply-side structural reform as the main line, and strengthen demand-side management at the same time. To expand domestic demand as the strategic starting point.

Xiao Gang said that the full implementation of the registration system still needs some time and conditions. China's capital market has developed for only 30 years, and its time is still very short, but it has developed very fast. Now it has ranked second in the global capital market. Compared with itself, it has made great achievements. The reform of the registration system is a "bull's-nose" project, which will lead to the ecological change of the whole capital market. It takes time to cultivate, a process and a running-in of the system.

Xiao Gang believes that the reform of the registration system may have labor pains, but it is only temporary and should be pushed forward unswervingly in the direction of reform.

Xiao Gang said that the United States has introduced unilateral measures against Chinese stocks to harm others and themselves, and should not politicize the professional and regulatory affairs of the securities market.

The Securities and Exchange Commission previously announced that it had passed a temporary final amendment to implement the requirements of the Foreign companies Accountability Act authorized by the United States for information disclosure of listed companies. While the bill applies to all foreign companies listed in the US, a number of provisions are clearly targeted at Chinese companies listed in the US and Chinese-listed Chinese stocks already listed in the US.

Referring to the possible return of Chinese stocks in this context, Xiao Gang stressed that it is mainly the responsibility of the United States to cause the current problems. The China Securities Regulatory Commission and the United States Securities Regulatory Commission have reached a memorandum on the audit of US-listed stocks. The United States put aside the bilateral agreements and unilaterally issued some regulations and administrative orders to implement them, a measure that harms others and harms itself.

He pointed out that the move is not conducive to Chinese companies to list and raise funds in the United States, but also harms the interests of the United States. The listing of Chinese enterprises in the United States has promoted the development of the capital market in the United States, especially for the development of intermediary institutions and service industries in the United States. If a large number of Chinese stocks return and delist from the US capital market, the interests of the United States will also be hurt. "We firmly oppose [relevant measures] and should not politicize the professional and regulatory affairs of the securities market. "

Xiao Gang saidAt present, there have not been a large number of delisting of Chinese stocks, but judging from the current trend, there may also be a large number of Chinese stocks returning.On the one hand, these Chinese stocks can return to the capital market of Hong Kong, China, because Hong Kong is also an international financial centre with free convertibility and free flow of capital. In addition, if there are conditions, they can also return to the mainland A-share market, which is good for improving the structure of listed companies in the A-share market and allowing domestic investors to share the development dividend of Chinese-listed enterprises.

Zhu Min: we should see the imbalance in economic activities.

Zhu Min delivered a speech on topics such as global economic outlook, China's macro-economy and policy outlook.

Zhu Min said: "2021 is a particularly important year, and this year's policy starting point will lay the foundation for China to move towards a new green sustainable development paradigm."Therefore, the policy objectives and landing this year are particularly important. while seeing the total amount, we should also see the structure, promote the balance of the structure, lead the structural transformation, and put China's economy on a new green and sustainable development model. this is the challenge and goal of macro policy this year. "

Zhu Min said at the forum that China will be the only big country with positive economic growth in 2020, which is a great achievement, but we should also see the imbalance in economic activities as a whole.

With regard to the above-mentioned "imbalance", Zhu Min pointed out: "from the total supply side, the rebound in industry is very strong, while the rebound in the service industry is very weak. for example, tourism is a big industry of 6.6 trillion yuan, down nearly 60%. The catering industry is also a big industry of nearly 6 trillion yuan, down about 1/3, which has a great impact on the service industry that is in close contact with people. From the total demand side, China's investment contributed a lot last year, accounting for more than 52% of GDP, while imports and exports accounted for 13%. Consumption is very low. From the perspective of growth, consumption is still a negative contribution. "

At the same time, Zhu Min pointed out that when the epidemic caused structural imbalances to the economy, it was entering a new period of economic structural transformation from 2021. He believes that the new structural changes are mainly manifested in the following three areas:

First, China has entered an aging society. The structural change of aging and longevity is huge, which fundamentally changes demand, supply and finance, because old-age insurance will become a big thing in the future.

The second is to achieve the goal of carbon neutrality in 2060, which is a fundamental road to green development and a change in the mode and paradigm of development. As a result, China will bid farewell to the traditional western industrial development track based on fossil fuels since the industrial revolution for more than 300 years, and begin to take the green-based development track, which is unprecedented.

The third is digital transformation. The epidemic occurred unexpectedly, the trade friction between China and the United States intensified, and turned to scientific and technological friction, scientific and technological competition, scientific and technological competition has become a global competition. At the same time, the new infrastructure policy is also based on this idea, through the digitization of the economy to enhance our core competitiveness, when the economy reaches $10,000, the challenges such as a middle-income trap will be effectively resolved by science and technology.

"the whole world, including the core of China's entire macro policy, should see not only the total amount, but also the structure, which is a very important major direction and variable. Zhu Min said at the forum that the epidemic has caused a huge recession to the economy, and governments of various countries mainly focused on getting out of the epidemic and promoting economic rebound in 2020, so the total amount was the main policy goal at that time, but it can also be seen that unprecedented fiscal policy, monetary policy, etc., should control the total amount.

Zhu Min said that the epidemic has objectively created a new imbalance in the economic structure, and the structural imbalance caused by the epidemic needs to be repaired in 2021.This year's economic growth target is set at 6%. This is not to put too much emphasis on total quantity and quantity, but to see the importance of structure and quality, and important steps have been made.

He went on to point out that the world's major economies continue to stimulate easing and begin to tighten the transition, hesitation stage, the market is also constantly changing, the slightest change will cause big fluctuations. In this case, it is important to maintain ample liquidity. China's interest rates have now begun to rise, and the rate of increase is faster than the international average. Therefore, monetary policy should remain loose, and it is still important to support liquidity.

In Zhu Min's view, compared with other countries in the world, China has adopted reasonable stimulus in the epidemic, and the scale of fiscal and monetary policy is lower than the international level, seeing not only the existing risks and high debt, but also the importance of the transmission mechanism. Therefore, using the method of subtle drip irrigation to gradually promote it, leaving room for fiscal policy and monetary policy, making good use of this space at this point today, accurate positioning, layout in both directions, and doing a good job of structural transformation, I think it is a major event, and the total amount is not the main policy goal this year. Rebalancing and structural recovery, development and transformation are the main objectives of the policy.

"2021 must be an important year in Chinese history, because it is the starting year of the 14th five-year Plan, the starting year of the medium-term Plan, and an important foundation year for economic restructuring. This year's policy starting point will lay the foundation for China's move towards a new green and sustainable development paradigm, so this year's policy objectives and landing will become particularly important. While seeing the total amount, we should also see the structure, promote the balance of the structure, lead the transformation of the structure, and put China's economy on a new green and sustainable development model, which is the challenge and goal of this year's macro policy. Zhu Min said.

Wang Tao: China's economy is expected to grow by 9%.

'in terms of the overall judgment of the Chinese economy this year, we think the economy will rebound strongly and the policy will gradually adjust, 'said Wang Tao, chief economist at UBS.

First of all, we predict that China's economy is expected to grow by 9% this year, driven by domestic consumption and exports. Among them, exports are mainly due to the global vaccine promotion, economic normalization, and the large-scale fiscal stimulus introduced by the United States on this basis. we believe that export growth for the whole year is about 16%, and there are even upward risks. stronger than last year.

Consumption with the further recovery of the domestic economy, there will be restorative growth in the labor market, employment and wages, and consumer confidence will also recover further, especially for services that were relatively weak last year, and there may be some restorative growth this year. It will grow slightly faster than the consumption of products.

In terms of investment, our judgment is that real estate and infrastructure investment may slow down as a result of marginal policy tightening, possibly to low single digits. At the same time, investment in the manufacturing industry has dropped sharply compared with last year because of the substantial increase in corporate income, profits, and orders, including trade frictions, including the epidemic, and so on. Therefore, investment in the manufacturing industry will rebound sharply this year. Growth is likely to be around 10% or more. A rebound in manufacturing investment is likely to offset a slowdown in real estate investment and infrastructure investment.

A big uncertainty about this year's growth comes from the global epidemic and vaccine growth that everyone agrees on. Another uncertainty is real estate, policy is tightened, but the past two years of experience, real estate is stronger than expected, whether this will happen this year, this is also an uncertainty. In addition, the speed and intensity of policy tightening is what the market is more concerned about may have an impact on the economy.

Let me focus on two issues.

First, strong interviews in China and around the world have led to a rise in commodity prices, will it lead to domestic inflation? This is an issue that everyone is very concerned about, and later guests will have a more detailed analysis. Let me talk about our prediction.

The production price index (PPI) has risen by an average of more than 3% this year, especially in the upstream, but the price of the core manufacturing products that can be transmitted to consumer goods downstream, the increase in consumer prices may still be limited. After all, the competition downstream is also relatively fierce.

Consumer prices CPI before and after high, mainly affected by the base, pork prices have entered a downward cycle, will not be reversed for a while. Affected by this, we believe that the average CPI for the whole year is more than 2%, and it may be 2.5% or more in the second half of the year.

Second, the consideration and speed of policy withdrawal. I just said that inflationary pressures are under control. Why did China take the lead in proposing the normalization of policies and withdrawing the stimulus policy? We just mentioned that both the United States and the Federal Reserve are considering it from the perspective of inflation expectations. In China, the main consideration is to control risk and stabilize leverage, which is a very important consideration, because inflation is controllable and is not the main consideration at present. Considerations for policy and sustainability of economic growth are particularly important.

There is a strong impact of the epidemic in the short term, and a strong policy has been introduced, and the policy will be adjusted relatively quickly after the economic recovery. With the withdrawal of monetary policy, we think the marginal liquidity of the central bank will be tightened a little bit, but it is more important to reduce the growth of credit, mainly through macroprudential tools.

Last year, there were many regulatory understandings to encourage banks to lend to enterprises with operational difficulties, but this year there will be more emphasis on strict risk management, so there will be changes in the intensity of supervision. There are also three red lines, the upper limit of real estate credit, and so on. I am classified as macroprudential regulation, including shadow credit and Internet financial regulation. Social finance will grow by about 15% this year, compared with about 13.8% last year. But tightening will not significantly slow down economic growth. There are not as many companies borrowing money to survive as last year. To put it simply, nominal GDP growth is likely to be only 12% this year, compared with more than 3% last year. The control and stabilization of leverage proposed by the central authorities this year can be achieved. We judge that the macro leverage ratio may fall by 4-5 points this year and rise by 24 points last year. This is our basic judgment.

Guan Tao: the difficult problem of international economic policy coordination to deal with the panic in emerging markets

The recent surge in 10-year US bond yields has revived fears of tapering in emerging markets, most typically in the wake of interest rate hikes in Turkey, according to the global chief economist at Bank of China Securities. During the recent spring annual meeting, the International Monetary Fund raised its forecast for world economic growth this year and next in its latest world economic outlook, but also pointed out that the recovery of the global economy will be out of sync. It's called a divisive recovery. In particular, it is suggested that an unsynchronized recovery could pose a threat to international financial stability, especially to prevent monetary policy in major economies from unexpectedly triggering a contraction panic similar to that in emerging markets in 2013. This is a background.

Second, in the post-epidemic era, international economic policy coordination in response to a tapering panic in emerging markets is easier said than done. Why do you say that? The core of international economic policy coordination on the shrinking panic in emerging markets is to reduce the spillover effects of monetary policy from major central banks, especially the Federal Reserve, but it is difficult under the current circumstances for the following reasons:

1. Due to the game among big powers, the anti-epidemic response has been politicized in the global public health response, which destroys the good atmosphere of international economic policy coordination, which is completely different from the atmosphere of the global financial crisis in 2008.

2. The spillover effect of Fed monetary policy is still a reality that emerging markets must face. The former US Treasury Secretary has a very famous saying, "the US dollar is our currency, but it is your problem", which demonstrates the arrogant hegemony of the US dollar. The last time the Fed responded to the 2008 crisis, the Fed launched three rounds of quantitative easing, which was accused of provoking a currency war, but when the Fed withdrew from expectations in 2013, it sparked a scare of tapering in emerging markets. It can be seen that no matter what the Fed does, monetary policy easing is a problem, exit or problem, reflecting the current situation of the international monetary system, that is, the dollar is dominant.

In response to the crisis, although the people's Bank of China leads the world in monetary policy response, because the epidemic broke out first in China, the Federal Reserve still plays an important role in the world. At the height of the epidemic in March last year, the Fed's unprecedented policy of zero interest rates plus unlimited breadth freed more than $400bn of liquidity and played an important role in the global financial rebound. In such a case, the gradual recovery of US dollar liquidity in the later stage will certainly have a great impact on the flow of international capital in global financial markets. The partial capital outflow caused by the upward 10-year Treasury yields in some emerging markets just mentioned is a rehearsal.

3. The policy of big countries gives priority to internal policy, which restricts the space of international monetary policy coordination. Theoretically speaking, the euro zone has transferred its monetary policy to the super-sovereign European Central Bank, so the member states have no monetary policy, but the monetary policy of the general big countries mainly depends on domestic growth, employment and price stability, and is unlikely to take into account external spillover effects.

In this world economic outlook, the International Monetary Fund predicts an unsynchronized economic recovery, with the United States taking the lead among large economies, with the exception of China, which is likely to return to pre-epidemic levels this year. Other advanced economies, including the eurozone, may not return to pre-epidemic levels until next year, while most emerging market developing countries, except China, will not return to pre-epidemic levels until 2023. Obviously, under the impact of this epidemic, the economic recovery of emerging economies is lagging behind.

Recently, both the Federal Reserve and the US Treasury have continued to send policy signals of easing stimulus, but not for emerging markets, but to help the US achieve its broad and inclusive goal of full employment. Predictably, once they believe that the goal of full employment has been achieved, the withdrawal of stimulus is inevitable. In such a case, as the economic recovery of most developing countries in emerging markets is relatively backward, it is bound to be affected by multi-Fed policy spillovers. Of course, there will be another situation. If the retrenchment panic caused by the withdrawal of Fed policy in emerging markets triggered a strong spillover effect. The turmoil in emerging markets has also had a negative impact on the economic and financial outlook of the United States, when the Fed may consider the externalities of monetary policy.

I remember when Bernanke was chairman of the Federal Reserve, it was clear that the Fed's monetary policy operations focused only on the impact on inflation and employment in the United States. As for the impact on other countries, it should be considered by the relevant countries themselves.

4. The solutions currently proposed are of limited help to emerging economies in dealing with reduced panic. First of all, it is necessary to make it clear that the so-called shrinking panic is not affected across the board by emerging economies. International investors distinguish between good emerging markets and bad emerging markets. Bad emerging markets are vulnerable and vulnerable to negative spillovers. Good emerging markets are still relatively robust. Under such circumstances, there is a problem. At present, all the plans considered by the international community are emergency relief not poverty alleviation. For example, debt relief, the allocation of 650 billion SDRs, and so on, cannot solve the fundamental problems of fragile economies.

As mentioned earlier, the scare of scaling back in emerging markets caused by the recent surge in US bond yields, emerging economies with capital outflows, such as Brazil and Turkey, were not simply caused by the epidemic. Before the outbreak, the normalization of Fed monetary policy began in 2014, and by 2019, emerging economies had repeatedly experienced currency crisis capital outflows due to economic and financial fragility.

The International Monetary Fund has proposed that major central banks should strengthen policy communication, but in fact this is also a great challenge for the relevant central banks. Chief Wu GE mentioned inflation just now, including in the previous session, Chief Xing also mentioned whether vanishing inflation will make a comeback in the event of unprecedented monetary stimulus, which is a big question. Whether the surge in asset prices can rise to the sky is also a big question. When it will be broken, or never will be broken, this is also a big problem. In the process, how does the Fed communicate with the market? Recently, people have been discussing that the monetary policy of central banks around the world has entered no man's land and has no ready-made experience, so this is easier said than done.

In these respects, the tapering panic in emerging markets is likely to become an important tail risk for the stability of the international financial crisis in the post-epidemic era.

Personally, I think China is in a relatively advantageous position in curtailing panic. There are four reasons:

1. Although China's private net external debt has increased in the past year, the currency mismatch has not deteriorated significantly. After we exclude reserve assets, private net external debt was $1.21 trillion at the end of last year, equivalent to only 7.7% of GDP, much lower than the level before the end of June 2015, enhancing our resilience to fluctuations in cross-border capital flows.

2. After the RMB exchange rate breaks through 7, the degree of marketization and flexibility increases. Foreign exchange market participants are more rational about exchange rate fluctuations, and exchange rate leverage plays a normal role in regulating exchange rate fluctuations. Due to the increased flexibility of the exchange rate, the independence of monetary policy is also enhanced. Even if the Fed tightens its monetary policy, it will not necessarily cause the PBoC's monetary policy to follow. Moreover, in this epidemic response, the monetary policy of the people's Bank of China is the leader in the world.

3. From the perspective of trade in goods and services, China's trade surplus is still relatively large, and cross-border direct investment still maintains a net inflow. There is a possibility that the current account is still a relatively large surplus, regardless of the absolute size, even the relative size of GDP will be higher than in 2020, and the basic balance of payments is relatively strong, providing strong support for reducing the external shock of panic.

4. Both the authorities and the market are happy to see the correction of the RMB exchange rate and the reduction of foreign capital inflows caused by the upward US bond yields. Of course, for China, we should have a plan to deal with the contagion caused by the possible tapering panic in other countries and other emerging economies.

Cui Li: the epidemic has accelerated the transformation and upgrading of China's economy and industry.

Cui Li, chief economist of Jianyin International, said that from the perspective of large indicators, if we say the price of industrial production, our forecast will be slightly higher, because this year's global inflation expectations are relatively strong, and the efforts to drive up the prices of industrial products may be relatively strong, but the transmission of downstream consumer goods prices may not be so strong, so CPI is still relatively stable.

Today, I will mainly talk about some medium-term views. In addition to the short-term, that is, this year's point of view, take a look at the structural changes in China's economy in the next few years. I very much agree with Chairman Xiao and President Zhu that economic restructuring, including differentiation, is a very important trend and a trend worthy of attention. If we look at the recovery of China's economy after the epidemic since last year, it is different from the previous economic recovery. this time, the recovery is stronger in the high-tech industry and stronger in the manufacturing industry. High-tech and advanced manufacturing industries, including some consumers, the online Internet industry is also relatively strong. It is different from the recovery caused by the construction industry in the past.

In terms of profit margins, we can see the differentiation of these two types of industries, the profit margins of construction-related industries are relatively weak, and those of the new economy are relatively strong, continuing the structural changes of economic transformation before the epidemic. The structural transformation in recent years and the supply-side reform since 2016 can see structural changes in several aspects:

1. The proportion of the so-called old economy, the proportion of the old economy related to real estate and construction is declining. The share of consumer, medical and electronics industries is on the rise.

2. The industries of the so-called old economy and traditional economy are also integrating and improving. There is not only a certain increase in concentration, a certain increase in profitability, but also a certain increase in asset efficiency in the past few years. In other words, there has been more sustained progress in terms of profitability and ROA. These transformations, the epidemic itself has further pushed up the trend in this area, including new consumer demand, online consumer demand, medical demand, and digital demand in the electronics industry. We believe that the transformation will continue. Therefore, from a certain point of view, the epidemic has accelerated the transformation and upgrading of China's economy and industry.

These changes are crucial. There are several aspects of impact:

1. As far as the macro-economy is concerned, it has been in a downward channel over the past decade, and an important reason is the decline in capital efficiency. If we look at economic growth, the growth rate of total factor production efficiency is declining. The transformation itself means that the allocation of resources is more efficient, and it is more likely that the economy will recover from the bottom out of the "L-shaped" in the future.

2. As far as the market is concerned, the logical relationship between the economy and the market may change. Because in the past, during the economic downturn, we often looked at the financial cycle and thought that only the relaxation of credit could affect the profit cycle of enterprises. Because the whole real growth rate is in the downward direction, only the financial cycle affects the price cycle, near affects GDP, and recently affects the profit cycle of enterprises. However, in the future, with the economic transformation and the improvement of the growth power of enterprises, the financial cycle itself is no longer the most critical factor affecting the profit cycle.

We can see this from last year. There is a certain degree of relaxation under the epidemic, but the range is relatively small, and it is mainly to make up for the shortage of cash flow under the epidemic, the incremental increase is relatively small, but there is a relatively obvious improvement in corporate profits.

We can see that there is a certain disconnection between the financial cycle and the corporate profit cycle. In other words, the future is still looking forward according to the original logic, although the policy began to tighten to a certain extent, but because of its own dynamic changes, the upward cycle is more sustainable. Not only growing enterprises, but also traditional enterprises will benefit. It is a continuous change in the relationship between the economy and the market.

3. In terms of efficiency, due to the improvement in efficiency, China's risk-free interest rate will not have a downward trend. Of course, savings have also shrunk to some extent, supporting risk-free interest rates. But generally speaking, the trend of China's risk-free interest rates is different from that of overseas risk-free interest rates, because our efficiency is improving, so it is quite supportive for us to maintain strong fluctuations in the range of risk-free interest rates in the next few years.

Such a development is very important to our judgment of policy. As the economy improves this year, policy begins to tighten slowly. If the industrial cycle becomes an important driving force of the economy, growth itself no longer needs to be greatly stimulated, and the macro policy itself should manage more policy adjustments. The other is the problem of risk prevention, so our judgment on the policy:

First, monetary policy is gradually withdrawn, interest rates are still in the process of recovery, and we think they will rise further, especially long-end interest rates. Because interest rates are too low and liquidity is too loose, it will also cause asset bubble problems.

In addition, the trend of fiscal policy is still relatively loose at present. First, the economy has not yet fully recovered, and some industries need targeted support; in addition, the scale of special bonds this year is also relatively large, mainly to solve the problem of hidden debt.

Generally speaking, finance is relatively loose at this stage, which is still a more appropriate orientation, but there is a certain exit compared with last year.

With the upgrading of the industry, I think the macro policy will gradually tighten in the next few years, of course, the pace may be fast and slow, but the gradual tightening is still a high probability event, and industrial policy may be an important aspect of the policy.

Wu GE: currency overissue may not lead to inflation

Wu GE, chief economist of Cheung Kong Securities, said that if you look at the recent data, there have indeed been some higher-than-expected changes, including the recent PPI, whether in China or the United States, rising very fast, exceeding market consensus expectations.

When it comes to price, it is really complicated to say that the price is complex, and it is also very simple to say simple, which is mainly determined by supply and demand. Therefore, I would like to simply explain the future price and currency from both supply and demand.

The biggest macro background this time is still the scene after the epidemic, but the difference between the epidemic shock and other crisis shocks is that it has the characteristics of both demand shock and supply shock. Why is this important? Because the formation mechanism of price has produced very different characteristics from that in the past. For example, you can see that in the process of falling prices, China's economy has fallen by more than ten points. Take PPI as an example, it has only dropped by three points in the process of decline. In the subprime mortgage crisis, it is very different. In the past, the economy of the subprime mortgage crisis fell by more than ten points, and prices also dropped by more than ten points. Why is the economic downturn so severe this time that the price drop is not so obvious? There is both supply and demand. If both supply and demand move to the right, prices are not falling so fast.

The reason why I want to express such a picture is a thing of the past, but I would like to further elaborate that in the process of price recovery, we should also pay great attention to changes on the supply side, not just on the demand side. We have just talked about a lot of things about demand. Demand is easy to capture and supply is not easy to capture. It is precisely in the middle of unconventional outbreaks that the supply side is of great concern.

Although we don't want to focus on the demand side, we should talk about a few objective facts. The objective fact is that China is still filling the gap between global supply and demand, and this process is not over, which means that China's external demand will be booming for some time to come. The gap between domestic consumption and services is not over yet, and we think it is necessary to return to the equilibrium of consumption, so the process is not over. The early period of investment saw the rate of decline in January and February, but as far as the empirical judgment that money can precede investment and economy, even if the scale of social financing reached an inflection point in November and December last year, it may take at least half a year to boost and stimulate the economy. Therefore, at least until the first half of the year, we do not think there will be a significant decline in domestic investment, especially those driven by social finance.

The most troublesome thing, of course, is that the first quarter was heavily affected by the base effect. It means that when the data is good, it does not mean that the data is really good, and when you see the data is bad, it does not mean that the data is really bad. In the future, due to the base effect, China's economy may decline in all directions, but it does not represent a decline in China's economic momentum. Excluding the base effect, China's economy was relatively solid in the first half of the year, both domestic and external demand.

When it comes to price, the main engine of this price may not come from China, but from the United States. As the epidemic control index, such as the blue line, continues to decline, we believe that the prices of both services and consumer goods will continue to rise. We have the most intuitive understanding of inflation is that the excess of money is bound to lead to inflation. Our observation is not necessarily! Monetary overissue is a very important necessary condition for causing inflation, but it is not necessarily a sufficient and necessary condition. The necessary and sufficient condition lies in the supply side, especially the balance between supply and demand, especially the global inventory. If global inventories are relatively low and easing continues, there is a high probability that prices will rise. At present, the necessary and sufficient conditions are available.

Of course, the only thing that is different from the past is that in the process of global inflation, it seems that China's infrastructure and real estate are not very strong, which may give a discount to global re-inflation. However, what I would like to emphasize is the supply side. It is obvious that the delivery time of manufacturing suppliers has increased significantly since the epidemic, and the supply has not been available after placing orders. This process reminds us of an intertemporal perspective. Last year's investment is a demand behavior in the current period, but it may become a supply behavior in the second or third year. If the overall investment was low last year and the year before last, investment this year and last year would have been low in supply. If we match the global industrial capacity together, the global supply capacity will not be able to adapt to the expansion of demand this year, that is, supply cannot respond to the expansion of demand, resulting in an artificial gap between supply and demand.

This is evident in shale oil. In the past, the biggest balancing force in the market was shale oil, and the increase in crude oil in the past mainly depended on the balance of shale oil in the United States. OPEC has almost always decreased in increments over the past few years. OPEC has obviously seen that in the United States, due to the epidemic in the past 1-2 years, the investment in shale oil is very small, or many enterprises have gone bankrupt, so that the number of drilling wells, the number of platforms and the supply capacity of shale oil can not be recovered in a short period of time, so it is doomed that even if OPEC wants to increase production, the range of increase will be limited. He knows where the weakness of the United States lies, and there is no way to get up the supply capacity, curbing the traditional energy supply. There will be an increase in OPEC production in May, but we doubt whether the increase can keep up with global demand, especially the rapid expansion of global PMI. In the data of the past month, the PMI index of Europe and the United States has reached a new high of the past two decades, the speed is extremely fast, and the vaccination rate in the United States is also extremely fast. In this sense, many markets are in a tight balance.

Another concern is that the global recovery of the epidemic is uneven. Chile, Brazil and India, which are important producers of many raw materials and even food, have reached record highs. In this sense, the new demand and PMI of consumer countries, including manufacturing and service industries, recover quickly, but the supply of raw materials supply chain is constrained by the epidemic. At present, such a gap still seems to be widening, which also makes the market more tense.

A more interesting situation is that the vacancy rate of jobs in the United States is rising, but the rate of labor demand tends to decline. When Americans subsidize themselves, they certainly improve their lives, but objectively lead to a certain degree of moral hazard. The year-on-year growth rate of wages in the United States is significantly higher than that before the epidemic, and the spiralling inflation of costs and wages is predictable in the United States for some time to come.

This picture is even more interesting, you can see the concept of a vacancy in the US labor market, and it can even be six months to a year ahead of US core inflation. Such inflation is a cause for alarm. China's inflation I agree with Chief Wang Tao's judgment that CPI inflation is still on the rise.

The fundamentals of China's economy have begun to expand steadily from rapid repair in the past, and this process may be accompanied by a decline in the overall trend of social integration, and interest rates are difficult or easy to go down in the second quarter. There may be a phased relaxation in the second half of the year.

Zhang Zhiwei: this year is the year of policy shift.

Zhang Zhiwei, chief economist of Bao Bank Investment, said that the judgment for this year, from the policy point of view, is that no matter from the perspective of Chinese or global governments, this year is a year of withdrawal or a year of turning, not necessarily a sharp turn. it depends on how fast you define it, but it must be a year of turning.

From the market point of view, from the point of view of investors, it is relatively cautious. We feel that this year is a year of defending the city and keeping the fruits of the bull market of the past year or two. This is a big judgment.

Specifically, just now you have talked a lot about the forecasts of China and the global economy. From the buyer's point of view, these forecasts are very important, but at the same time it depends on what the risks are. What is interesting this year is that the risks are particularly uneven and the main risks are upside. The recent data released by both China and the United States seem to have exceeded expectations. The US ISM and non-farm payrolls in March were significantly higher than expected before trillions of dollars of stimulus policies were thrown down. The PPI on our side is also much higher than you expected. From a risk point of view, it is obvious that the global economy is facing upward risks, and if you look at the United States, it may be the risk of economic overheating. The risk is one-sided.

In this case, from a policy point of view, no matter which country the regulatory authorities are, they should want to achieve a balance. The balance is economic and employment fundamentals on the one hand and financial stability on the other. Now that the economy is doing well and is likely to overheat this year, regulators are likely to increasingly turn their attention to financial stability. Especially recently, everyone has seen the collapse of a relatively large family office in the United States, and more and more reports have come out. The Financial Times reported that this office has added five times the leverage and lost more than 100 billion yuan. It has also caused some financial institutions to suffer relatively big losses.

First of all, this incident should be a wake-up call to regulators around the world. During the crisis in the past year, everyone's policy was very loose and liquidity was rampant. Of course, there was a crisis background, and everyone had to do that. Under the current circumstances, when the economy is already very good, should we discuss it earlier, or consider the balance between economic growth and financial stability, and whether we should pay more attention to financial stability? China has done a good job in this respect. Interest rates have been rising since the second half of last year, and regulators have been communicating with the market about the withdrawal of loose policies. January this year gave the market a relatively clear signal that the policy will gradually normalize. The policies in these areas are correct.

In Europe and the United States, we may move in the same direction this year. Personally, I think it may be a minority point of view that the United States has taken the first step. The policy on bank leverage was adjusted on April 1, which may be related to the rise in interest rates on US Treasuries. including the final collapse of the family office. I won't tell you the details. The story is still quite long.

Baoyin Investment has an official account. I wrote an article the day before yesterday called "when the tide recedes". Only when the tide recedes can we know who is swimming naked. If you are interested, you can go to that official account.

On the other hand, China's policy withdrawal this year has certainly begun, and the withdrawal of the United States and Europe will also begin this year, or has already begun. Everyone's judgment is correct. By May and June this year, the United States has been able to achieve mass immunity, and the data for the second quarter are very good. At least from the perspective of regulatory authorities, financial market supervision and bank supervision, the policy may be more normalized. The market has been paying attention to the risk. From the perspective of policy exit, although the United States has been saying that it will be late for us to exit, the market will gradually doubt his judgment and think that you will quit earlier. I think it's in such a process now.

This is the first thing I want to talk about. One of our judgments is that this year is the year of exit from a policy point of view and the year of success from the perspective of investors. This is the first point of view.

The second point of view, in terms of policy, there is a competitive relationship from a global perspective. What does it mean? There is now a competitive relationship between China and the United States for many years. From the perspective of last year, last year was the management of the crisis, depending on who manages the crisis well. From this year to next year, it is more about how to exit and how to maintain policy sustainability, fiscal sustainability and financial stability in the process of exit. To put it bluntly, the policy of the United States in this respect is relatively unreliable. Including Summers, including the academic and political circles in the United States, are also discussing this matter. From a politically correct point of view, I can also understand that the United States is willing to do fiscal policy, but from a professional point of view, from a technical point of view, the current US stimulus policy can put a question mark. From the perspective of competition between China and the United States, what is the most important? The competition between China and the United States, the first is the competition for talents, where do people go? The second is the competition for capital. Where does the capital flow? Not to mention the talent, the money will flow to more reliable countries. Recent US policies have actually harmed the medium-and long-term interests of the United States, including the dollar.

The previous round table, Dr. Shanghai Bin, discussed something, which I thought was very interesting. I am not going to comment on this either. the main point I want to make is that our current policy is in the right direction, and we should not pay too much attention to how much money we will pay this month and what the number of GDP will be next month. The clear direction of China's policy is not to pursue how high this year's GDP will be, but to pursue medium-and long-term sustainability. A good sign of this year's "two sessions" is that our five-year plan is not only a five-year plan, but also a long-term plan for 2035, diluting the pressure to maintain growth in the short term and focusing on the medium-and long-term. As the United States is increasingly focusing on short-term economic growth, we should go beyond short-term problems and consider more, especially from the perspective of global investors, who are willing to invest their money in more sustainable markets with medium-and long-term fiscal and financial stability. Policy formulation should be considered from this perspective. This is the second point.

Third, with regard to structural reform, my own feeling is that China's reform and opening up has accelerated in the past six months. To cite a few examples, the RCEP, the China-EU Investment Agreement, the registration system, including the bank lending restrictions on real estate mentioned on the last day of last year, are all very good policies. We have been discussing these policies for so many years, and these things have been put on the agenda in a very short period of time, which is worthy of everyone's jubilation, from a macro point of view.

We hope that the momentum can be maintained. For example, with regard to the China-EU Investment Agreement, it has not been finally implemented. It is hoped that the reform measures will not slow down for some external reasons in the future. Some reforms may bring pain in the short term, but the medium-and long-term benefits are very high, so let's go back to the things mentioned above. From the perspective of competition between China and the United States, we should pay attention to these things from the medium-and long-term benefits that policies can bring to us. We will try our best to push forward the reform policy. These are critical for investment, and if you look at where institutional investors around the world are willing to invest their money, they are very concerned about whether structural policies can be implemented.