Yao Yudong: the impact of new crown epidemic does not change the long-term trend of Chinas economy

 Yao Yudong: the impact of new crown epidemic does not change the long-term trend of Chinas economy

1u3001 Chinas economy is resilient and resilient, with short-term losses and a rapid rebound in the medium term

On January 30, treasury bond yields were reversed again. The yield of 10-year US bonds fell to 1.534%, the lowest since October 2019, and the yield of 3-month US bonds was 1.5692%. The yield curves of three-month and 10-year US bonds are reversed again. At the same time, the 30-year bond yield fell to 2.01%, gradually approaching the historical low of 1.905% set in August 2019. The results show that the relationship between the three-month and 10-year periods of US debt has a strong indicator for the economy, and the upside down of the yield is generally the precursor of economic recession. At the same time, recent data shows that the U.S. economy failed to reach the 3% growth target for the second consecutive year, the slowest annual growth in three years. These signs indicate that the Fed may cut interest rates this year.

In China, under the impact of the new crown epidemic, catering, tourism, film and television, transportation and other industries were affected during the Spring Festival, and factors such as the delayed resumption of work of enterprises after the festival also brought great pressure to Chinas economic operation in the first quarter. However, it should be pointed out that as long as the epidemic can be effectively controlled in time, this epidemic may be manifested as a short-term impact on the demand side, which does not affect the potential output of the economy, and the long-term trend of Chinas economic growth remains unchanged.

During the SARS period, from March to June 2003, the year-on-year growth rate of total retail sales of social consumer goods showed an obvious V-shaped trend, indicating that as long as the epidemic situation can be effectively controlled in time, the overall growth rate of consumption will not be significantly affected. China has a population of nearly 1.4 billion and the largest middle-income group in the world, with huge consumption potential. In the medium and long term, Chinas overall consumption level will continue to maintain steady and rapid development. In 2019, the total retail sales of consumer goods will increase by 8.00%. Measured by the expenditure method, the contribution rate of final consumption expenditure to economic growth will be as high as 57.8%, 26.6 percentage points higher than the contribution rate of total capital formation. Consumption plays an important basic role in economic development. At the same time, the consumption upgrading trend will continue u3002 In 2019, the national Engel coefficient of residents is 28.2%, which has declined for eight consecutive years, within the 20% - 30% rich range divided by the United Nations. Although the growth rate of total retail sales of social consumer goods has declined or fluctuated due to the downturn of automobile consumption, the retail sales of consumer goods other than automobiles have remained stable. In December 2019, the cumulative year-on-year growth rate of retail sales of consumer goods other than automobiles was 9%, 1 percentage point higher than the overall growth rate of total retail sales of social consumer goods. In the future, with the gradual recovery of automobile sales, domestic consumption will continue to play an important role in the stable and rapid development of Chinas economy.

Generally speaking, Chinas largest middle class group is the second largest consumer country in the world, and consumption is the ballast of Chinas economic growth. After the consumer demand is restrained for a short time, it will recover obviously. It can be said that as long as the epidemic can be quickly controlled, the impact on the economy will be controlled within a quarter. I believe that the impact of the epidemic on economic growth this year will not be too great. Chinas economy is highly resilient, with short-term losses and a rapid rebound in the medium term. The impact of the sharp drop in consumption growth on GDP growth in 2020 is within 0.3%. There is no problem in maintaining 5.7% economic growth in 2020 (this growth rate can ensure the goal of a moderately prosperous society in all respects).

2u3001 Structural bull of stock market and small market value

During the off-season of Spring Festival, affected by the new coronavirus epidemic, the risk appetite of overseas market was significantly reduced, and domestic investors were worried about the performance of domestic stock market. It is true that the market adjustment in the short term is inevitable, especially the catering, tourism, film and television, transportation and other industries have suffered a direct impact. However, it should be noted that as long as the epidemic can be effectively controlled in time, this episode will not change the bull trend of the stock market structure this year.

At the macro level, without the impact of the epidemic, Chinas external environment and economic situation this year are better than last year. The agreement on the first phase of Sino US trade is a very important critical moment, which promotes the formation of G-2 pattern in the global economy, which has reached a state of Cournot equilibrium, which is not only conducive to the Chinese and American economies, but also to the global economy. In general, Chinas economy will maintain a growth rate of 6% this year and 5% in the next decade, and its national wealth is expected to double, laying a good foundation for the medium and long-term development of the stock market. At the policy level, monetary policy is flexible and appropriate, liquidity remains reasonable and abundant, and the economy as a whole is in the stage of turning to weak recovery. In addition, in the internal structure, the new and old kinetic energy conversion and the logical continuation of industrial upgrading are also expected to continue the trend of structural bull in the stock market.

The occurrence of the new crown epidemic has intensified the profit differentiation among industries in the short term and promoted the policy level to provide stronger monetary and financial support, but will not change the core logic of the medium and long-term development of various industries. Industries or enterprises not directly affected by the epidemic may actually face better financing environment and stronger policy support. Risks and opportunities coexist, and the 2020 capital market is still promising.

3u3001 Stabilizing the stock market needs the timely response of monetary policy

The stock market is the barometer of economy. When the economy suffers from short-term shocks, it must be reflected in the stock market. To mitigate the impact of short-term shocks on the stock market, it needs policy hedging, especially timely monetary policy response. As long as the epidemic can be controlled quickly, the impact of new crown epidemic on the economy shows as a short-term demand shock. When the economy is impacted by short-term demand, the demand curve will move to the left and down, deviate from the original equilibrium state. If the interest rate level is not lowered in time, it is likely that the economy will continue to move along the existing supply curve to the direction of output decline, so that the economy will fall into recession. At the same time, China has sufficient monetary policy space to meet the challenges. Under the framework of NMT (new monetary theory), the interest rate will gradually go down in the future, even to negative interest rate. From a global perspective, the ECB and the BoJ implement negative interest rate policies, and the Federal Reserve is operating through QE to avoid sliding to a negative interest rate state. China is the only major economy that still implements conventional monetary policy. It has neither directly purchased bonds from the market nor implemented zero interest rate or even negative interest rate policy. There is sufficient space for monetary policy.

The epidemic not only directly impacts the catering, tourism, transportation and other industries, but also promotes the enterprises to return to work longer after the festival. Considering the epidemic prevention and control factors, some enterprises may face difficulties in recruitment and resumption of production after the festival, which directly affects the economic production operation and employment stability. In addition, the directly impacted industries are facing the pressure of cash flow and debt repayment, and some enterprises may face severe survival pressure, so they must pay enough attention. According to the results of the fourth national economic census, by the end of 2018, small and medium-sized micro enterprises attracted 233.04 million employees, accounting for 79.4% of the total employment of enterprises. Wholesale and retail industry, accommodation and catering industry are still the main channels to attract employment in the tertiary industry. Among them, there are 40.085 million people in the wholesale and retail industries, accounting for 10.5%, and 7.069 million people in the accommodation and catering industries, accounting for 1.8%. It can be said that small and medium-sized enterprises or service enterprises have weak anti risk ability but accommodate a large number of employed people. The impact of this epidemic is greater than that of large enterprises. Therefore, we need to consider the introduction of relief policies to prevent the unemployment rate from rising significantly.

We have seen that the notice on further strengthening financial support and prevention and control of new coronavirus infection pneumonia jointly issued by the five ministries and commissions on February 1 has put forward a series of policy measures to ensure reasonable and sufficient liquidity and increase monetary and credit support. For example, enterprises, especially small and micro enterprises, which are greatly affected by the epidemic or have development prospects but temporarily encounter difficulties due to the impact of the epidemic, shall not blindly take out loans, cut off loans, or suppress loans, or support relevant enterprises to overcome the impact of the epidemic disaster by appropriately reducing loan interest rates, increasing credit loans and medium and long-term loans, etc., which is highly targeted. On this basis, as an economist, I suggest that monetary policy can further play the role of monetary policy tools such as tmlf, and give more targeted financial support to small and medium-sized micro enterprises. In terms of fiscal policy, for specific industries or enterprises, we can consider reducing part of value-added tax or financial subsidies, as well as delaying the payment of social security or reducing social security rates and other ways to help The enterprise has survived.

5u3001 Confidence is more important than gold

After the chief economist undertakes the mission of the times and deeply analyzes the domestic and international economic and financial situation, he has the obligation to give full play to his own influence and credibility, interpret the partys and states lines, principles and policies, and contribute to guiding market expectations. At present, confidence is more important than gold. The chief economists of major economies should make a collective voice and interpret in time to avoid panic and convey confidence to the market.

According to the current situation, the new crown epidemic is a short-term event impact, and the impact is temporary and controllable. I remain optimistic about the future of Chinas economy. Chinas economy is highly resilient, short-term damaged, and will rebound rapidly in the medium term. In 2020, Chinas economic growth will maintain 5.7%. It is true that affected by the epidemic, the short-term market is facing adjustment pressure, but the epidemic does not change the long-term development trend of Chinas economy, and more powerful macro counter cyclical adjustment policies will be introduced in succession. For long-term value investors in Chinas economy and capital market, opportunities are far greater than risks.

Produced by Netease Research Bureau (wechat Company No.: wyyjj163)

Move wechat official account to see the content that cant be seen here

[highlights] Click to enter Netease Research Bureau u00b7 China Version > >

[highlights] Click to enter Netease Research Bureau International Edition > >

#endText.article_bottom{width:660px;margin:50pxauto0;}#endText.bottom_title{padding-bottom:15px;border-bottom:3pxsolid#ddd;}#endText.bottom_titleh3a{color:#333;font-weight:normal;font-size:20px;font-family:MicrosoftYahei;text-decoration:none;}#endText.part{border-bottom:1pxsolid#e2e2e2;margin-bottom:5px;padding-bottom:10px;}#endText.part.no-bord FT: 10px; font family: Tahoma; line height: 15px;}u0dcfendtext. Partilla {color:; text decoration: none;}u0dcfe ndText.partullia:hover{text-decoration:underline;}#endText.part.img_news{float:left;margin-left:50px;margin-top:25px;}#endText.part.img_news.img_box{width:280px;height:150px;display:block;}#endText.part.img_news.img_boximg{width:280px;height:150px;}#endText.part.img_newsp{font-size:12px;color:#666;text-indent:0;margin:0;}#endText.part.img_newspa{c Chen endtext. Part. Img ufe63 news. Img ufe63 box {width: 250px;}. W9 ufe63 endtext. Part. Img ufe63 news. Img {width: 250px; height: 150px;} Yao Yudong, Netease Research Bureau: new Ren Zeping: the normal opening of a share market shows respect for market rules. Sun Wenkai, Professor of the National Peoples Congress: how should enterprises deal with the epidemic? Tan Haojun: whether Putian or other departments are involved in the prevention and control of the epidemic. Zhou Hongchun: the economic and social impact of the epidemic may be smaller than peoples panic. Is it safe to take stock of your money in the banking industry explosion in 2019? Ren Zeping comments on the stock market crash: we should believe that the markets own recovery power. Lu political commissar: the epidemic is the touchstone of excellent companies. The faster the fall, the faster the rebound. Tube Qingyou: fast decline is good for fast Quick release of risk is better than a negative one Li Qilin comments on the decline of stock market

Exclusive plan to say: is it safe to take stock of your money in the banking industry explosion in 2019?

Zhu Yunlai: the 70th anniversary of the great economic change