The era of "large-scale water release" is over, and the underlying logic of China's economy will undergo a fundamental change.
Three years ago, at the Lujiazui Forum, the then deputy governor of the central bank and the chairman of the China Banking and Insurance Regulatory Commission stated:
People who bet that house prices will never fall will end up paying a heavy price!
And then what is the situation of real estate in the last three years, everyone has experienced it, a 30% decline is a common phenomenon, and some areas have fallen by more than 50% from the highest point.
A few days ago, at the Lujiazui Forum, the governor of the central bank once again made a blockbuster declaration:
The era of rapid growth of China's currency has passed! Since the epidemic, the "big water release" for three consecutive years has come to an end.
This means that the fundamental logic of China's economy and capital market will be completely changed.
.01
The top management made a big statement
It is said that when Western capitalism responds to the economic crisis, it always likes to "stimulate the economy by releasing water", but in fact, in the past few years, in the face of the impact of the epidemic, we have also opened the floodgates to release water.
The data shows that from the end of 2019 to the beginning of 2024, our money supply M2 has risen from 200 trillion to 300 trillion, with an average annual growth rate of 10%, far behind the GDP growth rate.
If we compare the growth rate of M2 with the United States, our data is actually higher than that of the United States.
But recently, the central bank suddenly stated that it would brake sharply, which one is this singing?
Don't worry, in fact, there are already signs of this in the financial data disclosed by the central bank in April. From the data, it is not difficult to find that the scale of social financing in the mainland shrank by 65.8 billion yuan in April. This is the first time in history. Moreover, the year-on-year growth rate of mainland M2 in May fell rapidly to 7% from more than 10% at the end of last year. This super-speed decline is also a relatively rare phenomenon in recent years.
Of course, the report also explains why the central bank suddenly did not insist on releasing water, which is simply put: if there is too much water, there will be problems.
.02
What's the problem?
1. Idling arbitrage of funds
In recent years, in order to support entities, a lot of loans have been put in, but banks have always only done the work of "opening umbrellas on sunny days and collecting umbrellas on rainy days". The internal and external environmental impact has led to many of our small and medium-sized enterprises not being able to "live", and banks are afraid of risks, so many loans are given to large enterprises without the risk of bankruptcy, and the interest rate of this kind of loan is low.
How low?
Some people on the Internet say that many large enterprises take loans from banks, and the interest rate of one-year loans can be less than 2%, and three-year loans can be less than 3%. Therefore, the company does not use this money to invest in the expansion of the factory, but uses it to buy fixed deposits and financial management.
Large enterprises use money to play capital operation, and entities do not have "water" injection, which does not help stabilize employment and boost GDP. On the other hand, small businesses cannot borrow money, and it is becoming more and more difficult to survive. This is known as "financial idling arbitrage".
To put it bluntly, it is a sentence: money is not used to the blade.
2. Exchange rate issues
What have rich people been doing in recent years? It is easy for the rich to get loans, so they play with transferring assets abroad, buying American stocks, and speculating in houses in Singapore and Australia. As a result, the pressure on the renminbi to depreciate has increased, and in this way their capital has increased, and the wallets of ordinary people have shrunk. The prices of imported goods have risen all the way, and it is ordinary people who suffer.
Therefore, after this operation, the rich get richer, the poor get poorer, and the gap between the rich and the poor is getting wider and wider.
Just like the big release carried out by the United States in 2008, the gap between the rich and the poor caused in the end has spawned a series of chaos such as Occupy Wall Street, the rise of populism, the rise of Trump, the BLM movement, and the separation of the two parties.
But we are a socialist country, and we must not follow their example. Therefore, since last autumn, on a series of top-level occasions such as the "Central Financial Work Conference", the official has constantly emphasized "preventing financial idling" and "resolutely stabilizing the RMB exchange rate". The series of disorders in the financial system has been criticized in the strongest terms, and an unprecedented wave of reform has been set off.
.03
Financial change is coming
Now that it has been clear that we will not release water, should we stimulate the economy?
The main thing is to put the money to good use.
1. The central bank and the State Administration of Financial Supervision are strictly monitoring the flow of bank loans. If the company takes a loan, it still does not make physical investment and does not do the right thing, it will be fined. For example, in the first five months, the State Administration of Financial Supervision issued more than 1,900 fines, with a cumulative amount of more than 600 million yuan.
2. Emphasizing "party management of finance", to put it bluntly, is to tilt more resources towards small enterprises and grassroots people.
The result? Since the beginning of this year, the distribution of social wealth has shown signs of improvement.
According to the data, in the first quarter of 2024, the "median" per capita disposable income in urban areas increased by 5.7% year-on-year, 0.4 percentage points higher than the "average" growth rate. This is the first time since 2017!
As the distribution of wealth begins to bridge again, the logic of capital markets has also undergone a fundamental shift. In the past, it was always said that inflation at the top and deflation at the bottom. But now, that has changed. In the luxury market, there has been a significant price drop, for example, the well-known Moutai has even been on the hot search many times because the price has fallen too much.
On the other hand, some civilian brands, such as Pinduoduo and Mixue Bingcheng, have been booming recently, and their financial reports and profits have risen year after year. Not to mention the real estate market, in the past two months, the news of the collapse of luxury home prices is not uncommon.
To put it bluntly, this series of changes is correcting the imbalance of the past.
We pursue development, but we also have to pay attention to fairness. There is a truth in this saying that we do not suffer from a small number but suffer from inequality.
Epilogue:
Reform will inevitably have short-term pains, but from a longer-term perspective, this will be a good thing for us ordinary people. With the implementation of regulatory measures, the money of financial institutions will no longer be idling in the financial market, and will gradually be invested in the real economy, which also indicates two points:
1. China's economy is moving towards a fairer and healthier economy.
2. The capital market funds have been withdrawn, and in the absence of speculation bullets, there is no need to look forward to a "buffalo" market like 2015.
Wan Ziwen said: Every word of the article was typed out by me, and I clicked "watching" to let me know that you are also "doing your best" for life.
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