luo zhiheng: we must quickly reverse the downward trend in real estate prices and remove the institutional barriers that emphasize supply over demand
2024-09-12
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21st century business herald in recent years, real estate market adjustments and local government debt pressure have become the two major "gray rhino" risks that domestic economic growth needs to face.
what impact do real estate and local finance have on the current economic operation? how to evaluate the fiscal and debt pressure of local governments in my country? is the rapid increase of local government non-tax revenue sustainable? what role should finance play in the current and next stage of social and economic development?recently, luo zhiheng, chief economist and director of the research institute of guangdong securities, gave an exclusive interview to a reporter from 21st century business herald on the above issues.he pointed out that china's economy is generally in a post-epidemic recovery period, and more forceful measures should be taken to reverse the downward pressure, solve the imbalance between supply and demand from the institutional and mechanism level, and remove the institutional barriers that emphasize supply over demand. it is necessary to optimize real estate policies to release incremental demand and reverse the downward expectation of housing prices. it is also necessary to further increase the issuance of treasury bonds to support local debt and promote local governments to return to normal from emergency status.we must remove the institutional barriers that emphasize supply over demand21st century: what do you think of the current macroeconomic situation? what will be the trend and characteristics of gdp growth in the second half of the year?luo zhiheng:in general, china's economy was in a post-epidemic recovery period in the first half of the year, and it was commendable to achieve a growth of 5.0% in the first half of the year. at the same time, it should be noted that the year-on-year growth rate of gdp in the second quarter was 0.6 percentage points lower than that in the first quarter. judging from the situation of pmi and ppi in august, the economy is still under pressure, so more forceful measures should be taken to reverse the downward pressure.the main contradiction in the current economy is the imbalance between supply and demand caused by insufficient effective domestic demand, which in turn leads to a divergence between the actual economic growth rate and the nominal growth rate, and between macro data and micro perceptions, which has had a certain impact on the effective boost to expectations and confidence, consumption and investment.the differentiation in economic operations should also be taken seriously. at present, there are roughly five major differentiations: supply is better than demand, external demand is better than domestic demand, industry is better than service industry, macro is better than micro, central fiscal expenditure and the central infrastructure investment it drives are significantly better than local infrastructure investment, and macro data is better than micro feelings.we need to solve the imbalance between supply and demand from the institutional and mechanism level, rather than simply adopting policies to reduce supply on the supply side or expand demand on the demand side. we need to break down the institutional barriers that emphasize supply over demand.for example, the principle of taxation at the place of production will be changed to taxation at the place of consumption, so as to encourage local governments to pay more attention to improving the consumption environment rather than attracting investment; the principle of shifting from construction finance and food finance to people's livelihood finance will be changed to solve the worries of residents' consumption; the urbanization of migrant workers and the transfer payments that follow people will be promoted, which will help release the consumption demand of migrant workers and their demand for housing after settling down; and low-priced industrial land will no longer be compensated by high-priced residential land.judging from the economic and financial data in july and the high-frequency data in august, we must not relax in the second half of the year to stabilize growth. as all regions and departments accelerate the implementation of reform and stable growth policies, it is expected that the quarter-on-quarter gdp growth rate in the third and fourth quarters will be stronger than the same period last year. considering the lower base in the second quarter of this year, the greater determination and strength of the stable growth policy in the third quarter, and the stronger policy continuity in the fourth quarter, assuming that the quarter-on-quarter growth rate in the third and fourth quarters is 0.2 percentage points faster than the same period last year, the year-on-year gdp growth in the third and fourth quarters will be 4.9% and 5.1% respectively, and the annual gdp growth will be 5%, but the premise is that more forceful policies must be adopted. if the strength is not as expected, the growth rate may also be lower than expected.reverse the downward trend in real estate prices as soon as possible21st century: what is the core issue that affects the current macroeconomic recovery? what suggestions do you have for this?luo zhiheng:real estate and local finance are two core variables that affect economic operations. these two issues influence each other. the fact that real estate is in a period of adjustment and transformation will affect local finance. we must further optimize real estate policies to release incremental demand, reverse downward expectations for housing prices, and do our utmost to ensure stable confidence in the delivery of buildings. we must further increase the issuance of treasury bonds to support localized debt and push local governments back to normal from emergency status.i think when discussing specific policy directions, we still need to clarify the policy objectives and policy anchors.，from supply shortage to demand shortage, we need a new perspective.it is necessary to reconstruct the macro-control policy target system.first, attach great importance to price indicators and economic growth targets.we should pay more attention to the nominal gdp growth rate and, on the basis of retaining the real gdp growth target, explore some form of nominal gdp target system to gather forces for stabilizing growth.it is recommended to maintain the nominal gdp growth rate near a certain policy target level, which can overcome the asymmetry of the inflation targeting system to a certain extent.second, fiscal policy should focus more on the growth rate of expenditure rather than the deficit ratio, so as to truly achieve counter-cyclical regulation.due to the limited deficit ratio, my country's fiscal policy has shown procyclical characteristics, weakening the function of countercyclical regulation. in the economic downturn cycle, government tax and land transfer revenues declined, and the government's debt scale was limited, resulting in a decline in the growth rate of fiscal expenditure, making it difficult to effectively support the economy. it is necessary to break through the concept of the 3% deficit ratio warning line and give full play to the countercyclical regulation function of fiscal policy. the 3% deficit ratio is not an "iron rule". european and american countries broke this limit during the international financial crisis.third, monetary policy should pay more attention to real interest rates, that is, nominal interest rates minus inflation levels. the inflation target of monetary policy should be symmetrical. responding to downward price pressure is as important as fighting inflation.specifically, we can start from three aspects to promote the continued recovery of the current economy.in terms of fiscal policy,first, we will study the increase of deficits and the issuance of additional treasury bonds to make up for the slow spending caused by the decline in land transfer income and other factors, and increase counter-cyclical adjustments. second, we will speed up the issuance of special bonds. on the one hand, we will relax the scope of use of special bonds, and on the other hand, we will consider adjusting some special bond quotas to general bonds. third, we will optimize the "debt reduction" policy, create conditions to resolve the debt risks of financing platforms, and promote local governments to return to normal from emergency status.the additional treasury bonds can be used in three aspects:for example, refinancing to some local governments under greater pressure can alleviate liquidity risks and push local governments back to normal from emergency status; for example, issuing partial subsidies to unemployed or unemployed university graduates in recent years and low- and middle-income groups in urban and rural areas to improve their risk resistance and consumption capacity; for example, investing in major projects reserved in advance for the 15th five-year plan and giving sufficient time for project reserve to avoid project packaging and inefficient use of funds caused by temporary project search.in terms of monetary policy,first, the reserve requirement ratio should be lowered when it is necessary, and the interest rate should be lowered when it is necessary to boost residents' consumption and corporate investment demand. with the ban on banks' "manual interest supplement", banks have recently lowered deposit rates, and the federal reserve may start a rate cut cycle in september, the external constraints on monetary policy have gradually eased and policy space has gradually opened up. second, actively use structural monetary policy tools to increase financial support for large-scale equipment renewal and consumer goods trade-in, and local governments' acquisition of existing commercial housing. third, reduce the interest rate of existing mortgage loans, reduce residents' loan repayment pressure, and enhance residents' consumption capacity. the impact of lowering the interest rate of existing mortgage loans on the net interest margin of commercial banks is relatively controllable, and it can stabilize the scale of existing mortgage loans and curb the current "rebate" violations of some banks in order to compete for mortgage business. or it can be done in a market-oriented way, allowing existing mortgage loans to be "transferred to mortgages", and commercial banks decide whether to "borrow new to repay old", which was implemented in 2008.in terms of real estate policies, we must continue to optimize real estate policies and reverse the downward trend in real estate prices as soon as possible.first, in terms of purchase restrictions, it is necessary for first-tier cities to further relax them, such as lifting purchase restrictions in suburbs, large-sized apartments, and commercial and residential properties, canceling the standards for ordinary and non-ordinary residential properties, reducing the number of years of social security for non-local residents, and increasing the purchase quota for families with multiple children. second, in terms of purchase costs, local governments should, on the basis of "differentiated policies for different cities", reasonably adjust down payment ratios and mortgage interest rates, reduce transaction taxes and fees, provide housing subsidies, etc., to lower the threshold and cost for residents to buy houses. third, in terms of government purchases and storage, the central government should increase its support for local governments, ease local fiscal pressures, and promote the smooth progress of purchases and storage. fourth, in terms of supply, high-quality plots of land should be transferred, unreasonable planning restrictions should be canceled, and some commercial land in core areas should be modified into residential land to meet residents' demand for high-quality commercial housing in good locations. (for details, see "》）prevent and resolve debt risks rather than debt size21st century:currently, the decline in local government fiscal revenue and the increase in debt repayment pressure have become risks to the stable and healthy development of china's economy.how do you evaluate the current fiscal and debt pressures of local governments in my country?luo zhiheng:overall, china's local debt risks are controllable. while recognizing the risks, we must remain confident and not be overly pessimistic.first, because the public ownership state has corresponding assets and support, second, because the central government has large room for leverage, the local debt problem is not unsolvable, and third, most local debts are domestic debts.the key is how to respond. if responded to properly, the debt problem will gradually diminish over time. debt will always exist, but debt risks may decrease.the formation of local debt does not happen overnight, so the solution to the debt problem must also be gradual.two points need to be made clear:first, we should guard against and resolve debt risks rather than debt size. as long as the structure and efficiency of debt-forming expenditures are good, such debt is beneficial to promoting economic growth. we should not allow a contraction effect to occur due to the resolution of debt size.second, debt reduction must be carried out during development, and development and debt reduction must be coordinated. the resolution of debt risks depends on economic growth, and there must be no risk of debt reduction triggering an economic downturn.21st century:the central government has previously carried out local government debt swaps, but the model of local debt-raising development has not changed. regarding existing debts, the central government has clearly stated that "whoever has the child, he can take it away." however, many local governments lack the ability to generate income. faced with high existing debts and debt repayment pressure, what other debt reduction paths can local governments seek?luo zhiheng:we must fully affirm the positive results achieved by the package of debt reduction, further consolidate the implementation effects, and at the same time optimize the debt reduction plan to promote the recovery of local government enthusiasm and capabilities and promote economic recovery.first, continue to mobilize resource assets and strengthen resource coordination.for places with idle resources, it is a good thing to actively revitalize resource assets to improve resource utilization efficiency. according to the survey, resource revitalization also requires strengthening coordination. some regions have reported that resources exist but require cooperation from other departments. for example, the coordination of environmental protection, auditing, planning and other departments is very important, otherwise it will be difficult to revitalize resources.the government will sell its equity, land use rights and operating state-owned assets to repay debts, and transfer some state-owned assets with better liquidity to resolve part of the existing debts.second, continue to issue special refinancing bonds, the central government will issue treasury bonds and then lend them to local governments, and policy financial institutions will issue medium- and long-term loans to solve short-term liquidity problems.some regions are relatively limited after continuous resource activation, and other methods are needed to help local governments overcome tight balance and liquidity risks and push local governments back to normal from emergency situations.third, leverage the synergy between finance and fiscal policy to resolve government debt.first, encourage local governments to negotiate with financial institutions to extend existing debts and "peak-cut" high-interest debts, thereby exchanging time for space.second, on the premise of making the existing implicit debt explicit and market-oriented, we should do a good job in risk isolation, reduce debt through bankruptcy reorganization, liquidation, etc., and avoid risk transmission that may cause regional systemic risks.third, the four major asset management companies will purchase municipal bonds issued by local city commercial banks and rural commercial banks to prevent municipal bonds from dragging down local city commercial banks and rural commercial banks and triggering financial risks, thus defusing the bomb in advance.fourth, policy banks issue medium- and long-term loans to alleviate the current pressure of maturing debts.fourth, the principles of "whoever's child is the one should take care of it" and "no central government assistance" should be adhered to in general. however, the prerequisites for central government assistance should be set, including the severity of debt risks and the degree of asset externalities formed by debt investment, as well as the simultaneous implementation of assistance and accountability to avoid moral hazard.there are different definitions of non-tax revenue. strictly speaking, land transfer also belongs to non-tax revenue. we cannot simply and crudely view the increase in non-tax revenue. we need to look at the structure. we should affirm the positive contribution of revitalizing idle resources, but we must also resolutely stop the phenomenon of "not enough taxes, so fees make up for it".21st century:we have also noticed that local government non-tax revenue is increasing rapidly, and the proportion of non-tax revenue in the fiscal revenue of some prefecture-level cities even exceeds 50%.in your opinion, can non-tax revenue become an effective support for local government fiscal expenditure?can it become a tax pillar to replace land finance?luo zhiheng:non-tax revenue can be divided into narrow and broad meanings. the narrow definition mainly includes special revenues, administrative and institutional fees, fines and confiscations, state-owned capital operation income, and income from the paid use of state-owned resources and assets in the general public budget revenue. the broad definition also includes land transfer income, social insurance income, etc.the hot topics in society at present are mainly fines and confiscations in a narrow sense.since non-tax revenue includes not only fines and confiscations, but also revenue from the activation of resources, we cannot simply assume that an increase in non-tax revenue is always harmful; we need to differentiate between different situations.if the efficiency of using idle resources can be improved by actively revitalizing existing resource assets and strengthening resource coordination, this needs to be affirmed.what needs to be guarded against is the situation in some grassroots governments where "taxes are not enough, so fees are used to make up for it". we must truly implement the tax law and resolutely stop behaviors that deteriorate the business environment, such as "excessive taxation" and "random fines".21st century:since the outbreak of the epidemic, the government's fiscal revenue has continued to decline due to many factors such as tax cuts and fee reductions. does this restrict the implementation space of fiscal policy to a certain extent? will tight fiscal policy become the norm in the future? there are currently two different views on government finances. one view is that the government should shift to a small government and a large market, and reduce policies to pre-release water to raise fish;another view is that the government can strengthen its financial strength and play a leading role.which view do you agree with more?luo zhiheng:there is no contradiction between the two. one deals with medium- and long-term issues, while the other deals with short-term issues.short-term economic and social stability provides an environment for long-term reform. medium- and long-term reforms can effectively improve total factor productivity and promote better economic development. the two complement each other and cannot be opposed.when the economy continues to be in a stable and sustainable state of development and the market mechanism can play a better role, it is natural to give play to the decisive role of the market in resource allocation;if the economy is in the stage of recovering from a serious illness, such as the stage after three years of epidemic impact, it is necessary to play the role of countercyclical regulation through fiscal and monetary policies to push the economy back to the operating track before the epidemic, and then match it with corresponding market-oriented reforms to release water and raise fish. both policies and reforms can produce better results than if they were done independently.we must give full play to the role of finance in income distribution reform and other aspects21st century:one of the main tools of fiscal policy is investment, such as infrastructure construction.however, keynes' law of diminishing marginal efficiency of capital shows that as input increases, the marginal benefits of production factors show a decreasing trend. are you worried that the current local investment, especially the infrastructure investment in the eastern region, will become over-investment? what role will fiscal investment play in the current and next stages of social and economic development?luo zhiheng:finance can not only affect investment, but also consumption, so we must look at the role of finance systematically.diminishing marginal returns on investment is an economic law, but we must also see the imbalance in areas such as infrastructure, such as more "visible" infrastructure and less "invisible" infrastructure, such as underground pipeline corridors and sponge cities, which are far from meeting residents' expectations and the frequent occurrence of extreme natural weather.for example, investment in areas such as healthcare, education and elderly care is still insufficient, and more efforts should be made to cope with the aging population and the declining birthrate.for example, first-tier cities face traffic congestion and insufficient parking lots, and infrastructure such as parking infrastructure and new energy charging stations are still insufficient, which all provide room for investment.consumption mainly depends on consumption ability and consumption willingness, so these two problems must be solved to solve consumption problems.the fiscal policy can support the expansion of consumption from both the short-term and medium- to long-term dimensions.in the short term, the market has high hopes that issuing consumer coupons or cash subsidies can improve residents' consumption capacity. this method can improve residents' purchasing power in the short term, but it is not sustainable and may face the reality of local fiscal difficulties. therefore, it is unlikely and unnecessary to give money to all people. the effect of issuing money to specific groups is more obvious, and the funds required are controllable. we should pay attention to three major groups: college students who have lost their jobs in recent years, urban and rural residents' pension insurance recipients, and some staff members of government agencies and public institutions whose wages have been in arrears.to fundamentally solve the problem of sluggish consumption, we must start from medium- and long-term institutional reforms, and especially give full play to the role of finance in income distribution reform, narrowing the gap between the rich and the poor, and optimizing the structure of fiscal expenditure.first, we need to reform the national income distribution structure of the government, enterprises and residents, and increase the proportion of residents' income distribution. we need to improve farmers' social security, reduce farmers' reliance on land for social security, and promote rural land transfer reform, increase the property income of farmers and migrant workers, and accelerate the pace of urbanization of migrant workers to increase their marginal propensity to consume.second, narrow the gap in income and wealth distribution through secondary distribution such as taxation and social security and tertiary distribution such as encouraging charitable donations.it is necessary to promote individual income tax from a combination of comprehensive and classified collection mode to comprehensive collection mode, avoid the difference in tax rates between labor and capital income, and strengthen strict collection and punishment of high-income groups.。third, further optimize the structure of fiscal expenditure and promote the transformation of fiscal expenditure from "things"-oriented to "people"-oriented investment, that is, from infrastructure to people's livelihood and welfare expenditure.through fiscal investment in medical care, education, and pensions, we can address residents' worries, reduce precautionary savings, and increase their marginal propensity to consume.delaying retirement is one way to ease the financial pressure of social security21st century:the current fiscal and taxation system reform is being promoted. what do you think should be the focus of the current fiscal system reform? what other policy suggestions do you have?luo zhiheng:the "decision" of the third plenary session of the 18th cpc central committee pointed out a clear direction for deepening the reform of the fiscal and taxation system, but there are still some reform measures that need to be refined and further studied.the reform of the fiscal and taxation system concerns the overall situation and requires systematic planning and steady progress. supporting reform measures should also be put in place as soon as possible to ensure that the effect of the reform implementation can meet the expectations and effectively respond to the expectations of all sectors of society for reform.first, further clarifying the boundaries between the government and the market, optimizing the central government's multi-target assessment mechanism for local governments, and avoiding unlimited expansion of government spending responsibilities can better play the role of the fiscal and taxation system in macroeconomic governance.second, strengthening central government powers and increasing the proportion of central fiscal expenditure must be implemented simultaneously with the reform of central administrative institutions.my country has long implemented the "superior decision-making + subordinate execution" policy, which easily leads to situations where "superiors order dishes and subordinates pay the bills" and "thousands of lines above and one needle below". under the constraints of assessments, the expenditure responsibilities of lower-level governments, especially grassroots governments, have been invisibly increased.in the future, it is necessary for the central government to play a greater role in promoting regional coordinated development, promoting social equity, and promoting the construction of a unified national market. third, stabilizing the macro tax burden is still necessary as an important consideration for the next round of reforms. major countries must ensure a certain level of macro tax burden, otherwise it will be difficult to cope with risks and challenges in all aspects.fourth, reforms can be advanced in an incremental, pilot-based manner, to avoid triggering a contraction effect and to set a clear timetable and roadmap.fifth, we need to study in advance the pressure that social security will put on finance. delaying retirement is one of the ways to do this, and the third plenary session of the 18th cpc central committee has already made arrangements for this. at the same time, we need to further systematically consider the reforms of finance, land, social security, and state-owned assets, establish a "big finance" mindset and perspective, and avoid talking about finance only.sixth, we must further optimize the expenditure structure and improve the efficiency of fiscal expenditure;clarifying the expenditure standards for basic public services in different regions can not only achieve rough equality, but also avoid excessive expansion of expenditure responsibilities caused by increasing standards at each level and expanding the scope.seventh, we should carefully study whether there should be new changes in fiscal concepts and the logical basis of fiscal regulation in the context of unprecedented changes in a century, and we should proactively study and respond to the general laws of structural adjustment during economic downturns.it is necessary to further reach consensus among all parties on the measurement criteria for proactive fiscal policy.eighth, deepening the reform of the fiscal and taxation system has many goals to achieve. we must distinguish priorities and balance multiple goals. we must formulate an operational implementation path based on the problems faced in the fiscal and taxation field, the national key development strategic planning, changes in the domestic and international economic situation, tax collection and management capabilities, and social acceptability, and make timely adjustments when necessary. 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