From 'Keqiang index' to 'Keqiang economics' Author: Yu-Wen Deng REVIEW: From vigorously promote urbanization to the recent decentralization, strong signal the release of financial reform, the new Prime Minister Li Keqiang's ruling ideas are gradually emerging. Li took over an economy over-investment, economic imbalances, chronic disease system is increasingly become an obstacle in front line of China's economy, foreign think the success 'Keqiang economics' depend on whether able to promote 'structural reform', and how to make China car are adjusting economic express onto the track of sustainable development is the biggest problem currently facing Li Keqiang.
Chinese Premier Li Keqiang took one hundred days, the media coin a proprietary name - 'Keqiang Economics' - to describe his 'Hundred Days of the New Deal.' Call the media dubbed 'Keqiang economics' whether inspired by the Japanese Prime Minister, 'abenomics' is unknown, but it does reflect the country's prime minister for economic governance is different from its predecessor unique side. Simply put, 'Keqiang economics' features or core, is to relax the market, take control of the government. 'Keqiang index' in this hundred days in the origin of Li Keqiang, the economy seems to be the implementation of inaction. According to Chinese political tradition, in general, the new government took office, to show achievements, usually set off a round of investment. Moreover, this year, China's macro economy has been in a slump, the new government is justified in order to prevent the economic downturn easing, the introduction of stimulus. Many local governments in doing so. But at least for the central government, we did not see the ambitious investment plans. And on the economic inaction mapping phase is Li Keqiang with 'subtraction' to promote reform of government institutions. In March, when answering reporters' questions, Li Keqiang promised the new government to cut more than a third of the administrative examination and approval, has conducted two rounds. Li Keqiang also clear core of this government reform is decentralization. 'Is the market can do, put to the market.
Community can do, it is to the community. Government take control, manage it should control things.' Li also said that to cut government spending, and pledge. These are shown Li Keqiang doing subtraction. Li Keqiang hundred days of such action, described him as a big country in any previous prime minister and its different side. This difference, in fact, when you want to push it any the Liaoning provincial party secretary, called 'Keqiang index', which is a reflection of Li Keqiang ideas for improvement. 'Keqiang index' British 'Economist' magazine launched in 2010, China's GDP growth for indicators to assess the amount, which originated in 2007 when Li Keqiang, secretary of the Liaoning Provincial Party Committee office, prefer power, rail freight and the loan amount was three indicators to analyze the economic situation in Liaoning Province. The index is a new industrial electricity consumption, rail cargo and bank term loans added new combination. Compared with GDP statistics, since the power consumption, rail cargo and bank loan volume three indicators related to the power grid, specific performance railway, bank accounts, and local governments do not interfere with the worship of GDP, almost no false watered space and motivation, specific data therefore made more real, can reflect China's economic trends. In the case of Chinese economic data, there is a big water, 'Keqiang index' to provide people with an alternative way to judge the Chinese economy. Of course, 'Keqiang index' also has its inherent flaws. It is mainly aimed at the modern industry, especially manufacturing, agriculture and tertiary industry, especially in the service sector is concerned, if the reference to 'power' and 'railroad freight' targets, it is difficult to fully reflect. In addition, China's financial system, the bank loans accounted for only 50%. If bank loans entirely reflect credit, then there may be underestimated, especially for the many financing difficulties of small and micro businesses, because it is often difficult to obtain bank loans, with the 'loan amount' indicators to measure also difficult to fully reflect its operational status. Despite these flaws, but outweighed the bad ones, it can be used as a complement to China's existing statistics and reference. Problems facing the Chinese economy after 30 years of high growth, has formed a high-investment, low cost and high liquidity growth inertia or a path dependency. However, on the one hand, in the total economic output bigger, to maintain the same or a similar increase, the need for more financial investment and monetary expansion, otherwise it difficult to sustain economic growth; on the other hand, even an increase of investment, due to the lack of effective supervision, its stimulating effect on the economy will decline. Moreover, the stimulus will bring soaring asset prices, urging the high production costs, resulting in corporate profits increasingly thin, the gradual loss of price competitiveness, which is one of the important reasons outside China need shrinking. In this situation, if there is no dominant big financial investment, there is no easy money and high liquidity, how China's economic development and growth?
This is what people are concerned about the issue. Currently indeed to such a growth bottleneck of time. In this regard, Li's answer is that by releasing upgrades and system reform dividend to build an upgraded version of the Chinese economy. Li Keqiang on various occasions stressed: 'to promote economic restructuring, reform of the bonus potential of domestic demand, the vitality of innovation together, and form a new momentum, and the quality and efficiency of employment and income, environmental protection and resource conservation have new promotion, create an upgraded version of the Chinese economy. 'At the same time, promote private capital into the financial, energy, railways and other fields, and promote the reform of the social sphere related, longitudinal promote social mobility. Li Keqiang, China's economy to achieve the upgrade, from now, one difficulty he encountered was how to drive the flood of liquidity to the real economy, rather than in the middle part, in the name of innovation arbitrage. This is the task of financial reform. Short-term liquidity in the banking crisis recently, as the 'Central mother,' the central bank is a lot of tools and policy instruments to bail, such as RRR, increase open market operations as well as interest rate cuts, but the central bank is actually in a period of time showing 'indifference', the purpose is to borrow 'money shortage' forced money into the real economy. Because of the tension between the financial side of the bank, the main problem lies in the bank arbitrage funds coupled with large and maturity mismatch. Over the past few years, the Chinese government response to the financial crisis and to implement loose monetary policy and fiscal policy, leading to liquidity have entered the field of investment and speculation, resulting in the financial system continued to enlarge internal leverage, a lot of money in the operation of financial institutions through the lever investment and maturity mismatch for extraction spreads, profit cycle funds between the various financial institutions, which makes the 'shadow banking' popular, but also the risk of an accumulation. In addition, excessive expansion of bank credit system is also easy to form a risk. In this case, turn on the water to support the bank if the central bank through the 'money shortage', although banks can solve immediate problems, but it may further enlarge the bank's 'leverage', and with the US economic recovery, the United States accelerated the flow of capital, the central bank put the money will eventually flow to the United States. Therefore, the central bank needs to withstand short-term bank liquidity squeeze pressure, the middle part of the financial resources of arbitrage funds and maturity mismatches driven to the real economy, which must carry out reform of the financial system. 'Keqiang economics' aim is to rely on market mechanisms, rather than policy incentives and direct government investment, to achieve the desired goal of economic development. Specific to financial reform, is to finance the hand through the market regulation of capital flows so that most place to go, to restore the balance of economic structure, in order to achieve the goal of an upgraded version of the Chinese economy. To this end, Li Keqiang at the executive meeting of the State Council on June 19, also proposed a series of financial support for economic structure adjustment and transformation and upgrading of policy measures. 'Shadow banking' active, although it will cause financial risks, but also explain the low efficiency of the existing financial system. 'Keqiang economics' from the mismatch of resources and efficiency of China's financial system to solve the poor start, the idea can be described as correct. However, the reform is a long-term thing, in the specific implementation, need to consider the impact on related fields, to avoid shock is too great. As for commercial banks, credit crunch, deleveraging is undoubtedly necessary, but one step or gradually tightened, we must carefully weigh, measure to avoid the excesses caused "tales of the abyss cosplay " by the stock market crash in a row, a run, a large area stopped lending phenomenon. If there is one kind of the above three cases, the current will be a major event, if the three form a resonance, it is likely to lead to social crisis.
So, in bank deleveraging, we need to grasp the heat and intensity, not man-made crisis. From this perspective, we can understand the central bank recently on the banks' money shortage 'of a subtle change in attitude, from the earlier emphasis on optimizing the financial allocation of resources, make good use "dragon ball z wigs " of the incremental and revitalize the stock, until recently more attention to stabilize short-term abnormal fluctuations, stabilize market expectations, catalytic factor behind this is the stock market crash. From 'Keqiang index' to 'Keqiang economics', Li Keqiang reflects my growing economic governance and deepen the development of ideas and clear. Facing diehard Chinese economy, 'Keqiang economics' to be successful, according to the non-perseverance decentralization, ideas and direction play a dominant market position, cosplay costumes for sale great efforts to promote the long-term reform measures can not.