Song Guo Qing the logic behind the price increases

Speaker: song Guo Qing (National School of development at Peking University Professor, former member of the Central Bank's monetary policy Committee)

Topics: analysis of recent macro-economic trends

Time: March 20

Sponsor: National School of development at Peking University, Shanghai Municipal Government Development Research Center, Research Institute of Shanghai State-owned capital operation

"Editor's note" Interview Stamford principal equality in education

Now says the economy warming up? On March 20, China's macro economy in 2016 (Shanghai) Forum, the National School of development at Peking University Professor Song Guoqing's answer is not sure. He said, "seems a bit, as if not sure, we're talking six or seven possibilities. "

For the recent rise in prices in first-tier cities, song Guo Qing's logic is that China has a high savings rate, return on investment and falling. Coupled with the urban land supply card is dead.

Following is a surging News (www.thepaper.CN) Professor Song Guoqing of the finishing parts of the speech excerpts:

On March 20, China's macro economy in 2016 (Shanghai) Forum, the National School of development at Peking University Professor Song Guoqing.

I recently have been doing some studies of short-term economic fluctuations, also done this kind of thing in the past. Ordos have, not to mention the readymade House is, but houses there nobody wants. House prices rise and the economy warming associated with it? Can say warm yet? Seems a bit, as if not sure, we're talking six or seven possibilities. Luke (wing) teacher mentioned, we simply don't care "economy warming" back house prices on the subject, of course, not real estate increased by itself, but the logic behind it.

Should be said in December the investment growth rate is very high, was for many years one of the few high growth. Last December's growth rate is several points to 3 points. Logically, this involves six things.

First, potential growth rates declining. Now, of course, some people say an l-shaped drop, drop, at 6%, 7%, later maintained at this level for many years. If this is the case, of course, is very good. There is pessimism, said last fall. Pessimists say, leaping down. L-shape too difficult. Our power supply side reform ... ... Supply side of trust of the party and the people. How should we do? Change it slowly. But from a forecasting perspective, we still see the results now too optimistic projections, just like last year I heard "reform cow" to buy stocks. Hope is hope, forecast is to predict, are two different things, real things to do realistic plans.

Savings rates are slowly declining, high savings rate, so many savings do? Investment, investment is not exports, buying United States Treasury bonds. There is also a stock savings to GDP ratio in the high growth, a year of savings a year, savings that year and GDP growth, and a slight fall in the past few years, and this trend is difficult to determine. But a very high proportion of the stock savings growth.

Asset growth of industrial enterprises above designated size was 6.9% last year, liabilities grew by 5.6%, with a net worth growth rate 8, 9 points, profit fell 2.3%. 6.5% nominal GDP growth last year, disposable income growth is 9.1%, 0.5% population growth, profit growth rate of less than 2% of the whole society. Simply put, it is the rate of return on investment in the fall. Even after an l-shaped economic decline, rate of return on investment will decline. If not l-return on investment faster decline. Declining rapidly over the past few years, and from this point you can understand why the fall in interest rates.

Last year, financial markets, and financial product's expected rate of return has been shrinking. In April last year the Central Bank has done some work, monetary policy has to take some action, interbank interest rates fallen faster since last April, as compared with the past fell by more than 1 point, and return on investment have fallen much faster than this. Financial products are also reduced, interest rates are falling. Stock market last year in April or May, when is the most crazy moment, we don't know what's on you mind, two into loans interest rate is 8, and Rob were not forthcoming, the market interest rate at around 3, when it is 8 points more to borrow money in stocks. Also rating Fund, a conversion down share prices should also be 8 per cent interest rate, stock, and at least some of the expected rate of return is more than 8. Of course, by the end of June (the stock market) has been dropped, the expected rate of return fell, including two melt in contraction, grade a rose, all the expected rates of return expected to go flat. According to the current real interest rates, and bank deposits 1.7%, three-year t-bond yield 1.6%, 1.7% level. Why are interest rates so high? We are talking about China's high savings rate, in fact, count per capita assets, individual financial assets in the country, do not lose the mortgage, calculate other financial assets, less than 100 trillion-kilometer, is 70,000 yuan per capita.

That prediction, we are now seeing the real rate of return on investment in China will decline, which seems to be a sure thing. The real interest rate, now we can in accordance with expectations of about 1 point, the medium term may not be like this, real interest rates can also count to 1, but will soon come down, after that it will put all of the interest rate, rate of return on investment, and so on down. Reasons that speculation in the stock market last year, interest rates, stock prices were on the rise. The reasons for the decline in interest rates is a bad return on investment, the boss ran, so interest rate cuts, the news for the stock valuations are at best neutral, is not good news. If only because the rate cut speculation in the stock market, this is not right, cut business is the cause of poor performance. To put the entire chain together, because the economy is bad, so to cut interest rates, so the stock to rise, link removed, so is bad, so the stock to rise. Final return on investment to decline, real interest rates to 0, this should be a pretty quick thing, may be a fraction of the interest rate.

Price I again emphasize that if first-tier cities as well as land supply, that's entirely another matter, already dead, has been unable to expand the scale of investment, this is a hypothesis, but if there is supply that is another situation. Buy a House, from the demand side, there are different considerations from the supply side, to take these factors into account. Certainly not say China, global interest rates to drop, why didn't fed raise interest rates? Plus plus plus no more, is the Chinese save too much, you don't have enough capital. 2014, net national savings in China is probably the United States eight times, that is China saving a little to the United States over United States Treasury bonds, at once his interest rate to 0, this is a very bad thing. So China's savings and incremental thing, global interest rates are important factors, and not to mention the global economy itself has a tendency to lower interest rates, if they are not, Chinese money going out, playing very low interest rates.

(Finishing surge journalists according to the lecture shorthand draft, without review of the speaker. ）