China'S Economic Form: There Are Many Variables In The Future.

There are still many variables in China's economy in the 2015.

Five variables are especially noteworthy: the risk of catastrophic economic deterioration; monetary policy operation; the strength of real estate recovery; the reform of local government financing system; and the impact of the US monetary policy tightening.

2015 five major variables in China's economy 2015 five variables in China's economy

As in the past few years, China's economy in 2015 is still uncertain.

Among them, five variables are of particular concern.

First, the risk of economic deterioration.

China's GDP growth has dropped from 10.4% in 2010 to 7.3% in the 3 quarter of this year.

In the process of slowing down growth, the fundamentals of the economy seem to have not deteriorated all the way, and the employment market has remained stable.

This makes it easy for people to feel that the economic growth rate is even lower.

However, under the seemingly smooth appearance, the potential pressure on the macro-economy has been surging.

According to the "employee" sub index of manufacturing PMI, the willingness to work has been shrinking for several years.

This year's rapid rise in the bank's bad debt rate also shows that the deterioration of the real economy has begun to erode financial stability.

The decline of economic growth will not always be a mild slope, and there will be a sudden change in the middle.

When the pressure on the economy is beyond the affordability of the enterprise, or the economic expectation will deteriorate sharply, it will lead to the sudden instability of the economic structure in the short term and enter the "hard landing" state.

From this year's economic situation, this mutation point is not far away.

Considering that next year's economic growth may be further slower than this year, the risk of catastrophic economic deterioration should not be underestimated.

Second, monetary policy operation.

Since the shortage of money in the 6 month of 2013, the domestic monetary policy is like a magic trick.

Monetary policy implemented directional easing in 2014 to try to control the flow of money accurately.

However, because of the mismatch between the policy orientation and the financing demand of the real economy, it has blocked the pmission of liquidity from the inter-bank market to the real economy.

As a result, the "financing difficulty" of the real economy and the "bad money" in the financial market are also generated.

It not only amplifies the pressure of economic downturn, but also spawned the risk of bubbles in financial asset prices.

As the downward pressure on economic growth is still heavy, we believe that monetary policy will still be dominated by loose keynote in 2015.

However, there will be a lot of changes in the way it will be carried out.

If the recent easing of credit growth has become a trend, it is expected to ease the backlog of liquidity in the financial market to the real economy, while playing a steady growth role while cooling the financial market.

Conversely, if the directional easing tone continues, then the trend of financial asset bubbles will also intensify.

Third, the strength of real estate recovery.

Obviously, to stabilize growth, we must stabilize investment in real estate.

This is the reason for the continued relaxation of real estate regulation policies in recent months.

In the wake of the policy rebound, real estate sales have shown a marked recovery.

But on the other hand, real estate investment is still in a poor position, and real estate investment is still in a downward path under the constraints of financing constraints.

Under such circumstances, whether monetary policy can effectively stimulate credit to the real estate industry and relax the capital bottleneck of real estate investment is the key variable to determine the strength of real estate recovery.

Considering the uncertainty of monetary policy, there is no problem in the direction of recovery in the real estate industry, but there are many variables in intensity and speed.

Fourth, local governments

Structural reform.

In 2014, No. 43 of the State Council really called for "stripping government financing functions of financing platform companies", and their corresponding financing needs were met by means of finance, special bonds, and PPP.

However, to what extent can the reform reach the goal of separating government from enterprises?

To eliminate the hidden guarantee in financial market, the key is whether the budget deficit can be substantially enlarged, thus leaving room for the normalization of informal local government financing.

Considering in recent years

The size of next year's fiscal deficit will not be enlarged too much (not more than 2 trillion yuan).

This means that when blocking the "back door" of local government financing, the "main gate" of Finance may not be big enough.

In this way, the local government financing constraints will lead to a slowdown in infrastructure investment, and then the economy will sink, or urge local governments to use more "backdoors" to seek financing.

No matter what happens, the risk of economic operation will increase.

Fifth, the impact of monetary tightening in the US.

The US QE3 has ended.

It is widely expected that the Federal Reserve will start raising interest rates in the middle of 2015.

This shows that the recovery of the US economy is strong enough, but at the same time it brings risks to our economy.

In the process of tightening monetary policy in the United States, whether the US economy will stall as QE2 quit in 2011, we need further observation.

The tightening of US monetary policy has driven the appreciation of the US dollar and increased the pressure of capital outflow in emerging market countries, including China.

Whether the emerging market countries will break out a big crisis will have great impact on China.

Of course, China's economy in 2015 is not just those variables.

How to eliminate the deviation between the stock market and the real economy, whether the RMB exchange rate will fluctuate greatly and how fast the reform measures can be pushed forward is a variable that needs attention.

But from the perspective of risk prevention, the five variables mentioned above are especially important.