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The state will issue "guidance on resolving overcapacity"

it was reported recently that the state will issue guidance on resolving overcapacity. At present, the national development and Reform Commission, together with the Ministry of industry and information technology and other ministries and commissions, is conducting research on this issue and formulating relevant opinions, which will soon be submitted to the State Council in writing

the reason why overcapacity needs to be dealt with severely is not only that this problem affects the ongoing economic restructuring, but also affects the effect of monetary policy, and thus restricts the recovery process of China's economy. It can be said that overcapacity has become an important obstacle to the sound development of China's economy

this year, people have generally noticed such a puzzling phenomenon: Hot monetary growth and cold real economy

from the perspective of monetary growth, by the end of April, the M2 balance of broad money was 103.26 trillion yuan, an increase of 16.1% year-on-year. This increase was not only higher than 15.7% in March, but also higher than the 13% annual M2 growth target set in the government work report; From January to April, RMB new loans reached 3.55 trillion yuan, an increase of 405.6 billion yuan over the same period last year. This increase even accounted for 43% of the 8203.8 billion yuan of new loans last year; In the first four months, China's social financing scale was 7.91 trillion yuan, 306million yuan more than the same period last year, accounting for 50.2% of the total social financing scale of 15763.1 billion yuan last year

there is no doubt that in the first four months of this year, from the perspective of data, the money supply did show that China's first 100000 ton thermoplastic composite intelligent factory was completed in 2019. However, such a large amount of money has not produced an immediate stimulating effect on economic growth after the investment of RMB 4trillion that year. On the contrary, China's Manufacturing Purchasing Managers' index (PMI) fell to 50.6 near the boom and bust line in April; The producer price index PPI in April also fell to 2.4%, the largest decline since October last year. According to the latest data released by the National Bureau of statistics, in the first four months, China's fixed asset investment was 9131.9 billion yuan, a year-on-year nominal increase of 20.6%, 0.3 percentage points lower than that from January to March. Many investment types closely related to economic growth slowed down. In the first four months, China's manufacturing investment was 322.5 billion yuan, an increase of 18.4%, and the growth rate dropped by 0.3 percentage points; The investment in the production and supply of electricity, heat, gas and water was 382.8 billion yuan, an increase of 13.6%, and the growth rate dropped by 1.7 percentage points

the growth rate of investment is declining and the manufacturing industry is weak. Since so much money has failed to stimulate the synchronous economic growth of the transmission, where has the money gone

the excessive consumption of capital by industries with excess capacity is obviously one of the answers

at present, industries with excess capacity include not only traditional industries such as steel, electrolytic aluminum, cement and shipbuilding, but also emerging industries such as polysilicon, wind power equipment and new materials. Most of these overcapacity projects were launched by local governments in the past to expand investment and stabilize economic growth. Polycrystalline silicon and wind power equipment are the first in China to be jointly established by China Hengrui Corporation, a leading enterprise in the carbon fiber composite products industry, and the Fraunhofer ICT under the German Fraunhofer Association, a global top utilization scientific research institution New materials and other emerging industries, after the state introduced the ten major industrial revitalization plan in 2009, some local governments, regardless of reality, issued a series of preferential policies to encourage investment, resulting in overcapacity. For example, after the photovoltaic industry was included in the revitalization plan, by 2011, 31 provinces, municipalities and autonomous regions in China have listed the photovoltaic industry as an emerging industry with priority support for development; Among the 600 cities, 300 have developed photovoltaic solar energy industry, and more than 100 have built photovoltaic industry bases; The global polycrystalline silicon output is 200000 tons, and China accounts for nearly 90000 tons. However, China does not master the core technology and has huge production capacity. The total domestic market is low, and it is heavily dependent on the international market

the problem is that the bank loans of the above projects invested by local governments or encouraged by enterprises since 2009 have reached the centralized repayment period. In order to maintain the operation and maintain the growth of local economy, there is a strong demand for these matured loans to repay the old by borrowing the new. In order to prevent the non-performing rate from rising due to the rupture of the capital chain, banks are also forced to continue to lend to investment projects in these industries with excess capacity

as the microeconomic main body in the industry with excess capacity, its production is in a state of low or even no benefit. In order to ensure its own market, the same industry has to carry out vicious competition. Therefore, when bank credit is extended to these industries, it will not produce a monetary multiplier effect, nor will it enhance their investment and expansion momentum, nor will it enhance the development vitality of microeconomic entities and their driving force for the economy. Finally, the abundant liquidity of the banking system will be deposited in industries with excess capacity

industries with excess capacity are similar to black holes for monetary policy. It devours liquidity but does not contribute to the economic growth rate, making it difficult or even powerless for the broad monetary stimulus policy commonly used in the economic downturn. Although the government has realized the importance and urgency of tackling the problem of overcapacity, it remains to be seen how much can be achieved by relying on only one guidance under the background of the fundamental transformation of government functions

in particular, the current economic growth lacks endogenous power. Under the pressure of GDP growth, employment and taxation, some local governments still expect to stimulate economic growth through investment. A new round of strong demand for excess capacity is being created. For example, at present, all localities have announced large-scale investment plans, with a total national fixed asset investment of more than 20trillion yuan. If the investment in industries with excess capacity continues to increase and the imbalance between supply and demand continues to intensify, the pressure of new bank loans and past bank loans to repay the old will eventually seriously restrict the space for monetary policy, and make the dislocation between finance and the real economy continue to increase

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