You Can Never Catch A Bull's Breast.

We have always stressed that if China's short-term financial development is allowed and banks can only provide short-term loans more and more, then China's real economy will inevitably have a problem of "mismatch of investment and financing period". In order to cover this risk, enterprises have to look for more short term loans to maintain the liquidity demand of enterprises. As a result, the demand for loans for enterprises has risen sharply, the leverage ratio has been continuously raised, the financial cost has been increasing, profits have been decreasing continuously, the risks of enterprises are increasing, the financial costs are higher and the profits are lower. This is not an obvious vicious cycle.

This virtuous cycle is not only conducive to reducing leverage, but also more importantly: it can effectively stimulate domestic demand, and has a strong role in promoting productivity and inventory.

Therefore, a little activation and little activity.

The overall logic should be: to achieve "deleveraging" through "cost reduction", and better "reduce costs" through "lower leverage"; in the process of "reducing costs and deleveraging", we should promote "capacity production and inventory" and achieve a virtuous circle of China's economy.

Now, Mr. Yu Yongding has put forward another vicious circle: that is, because of

With excess capacity and PPI falling, the real debt of enterprises is rising. As real debt rises, businesses will have to reduce lending and investment, which will further exacerbate overcapacity - such a vicious circle.

Yu Yongding believes that if such a vicious cycle is not stopped, the Chinese economy will not naturally stabilize at a relatively low but acceptable level, it may continue to deteriorate, and will cause serious bad debts, and enterprises may fail.

A bad landing will eventually lead to a hard landing for China's economy.

This is what we must be vigilant.

It is the old saying: I do not mean that the economic growth rate is higher or lower, but I care about whether the economic growth is healthy.

What is health? Of course, it is a benign cycle.

Why is a virtuous circle? First, enterprises and residents' economic expectations are good, dare to invest and dare to spend. Second, China's financial industry has the overall view and win-win view, which is actually serving the real economy rather than plundering the real economy; third, China.

More conducive to the formation of capital, rather than the prosperity of currency speculation; fourth, private investment is active, China's endogenous economic growth power is strong; sixth, China's equity investment and financing market is active and prosperous, equity financing greatly reduces the leverage ratio of Chinese enterprises.

Perhaps some people can point out the signs of economic health more, but in my opinion, they should at least have the above characteristics.

And all this should start with reducing costs.

In my opinion, the core and the starting point of "three go, one down and one subsidy" is "reducing costs", which is the inevitable requirement of the internal logic of the economy.

Otherwise, it will be hard to go to capacity and leverage.

It is more likely to lead to a hard landing for China's economy.

So although some scholars like Yu Yongding think that "overcapacity is very important", I still insist on starting from cost reduction.

First, taking cost reduction as the starting point, it is highly maneuverable.

The first is the "tax reduction". In this regard, as long as the central government is determined to use the large proportion of the issuance of treasury bonds to reduce taxes, corporate profits can rise immediately, at least the employees will increase their income growth expectations, and the consumer market will remain active.

Second, the central bank, the CBRC and the SFC jointly control excessive currency speculation. In fact, simply changing the one or two simple regulatory provisions can effectively reduce the scale of currency speculation, squeeze more capital into the capital market, greatly increase the scale of financial market capital, thereby lowering the capital price and lowering the financial cost of enterprises, and can also be pformed into corporate profits immediately.

Third, when the central bank "reduces the accuracy", it will withdraw short-term funds at the same time, deliberately "lock short and lengthen" to extend the financial cycle, while effectively lowering the interest rate of the money market, so that enterprises will no longer reduce the management efficiency for running loans and maintaining the capital chain, which will also greatly improve the efficiency and profits of enterprises.

If the above problems are solved, the financial cost and tax burden of enterprises will be lightened, and the stability of corporate credit will be greatly enhanced. This will greatly enhance the profit and efficiency expectation of enterprises, and the stock market will inevitably rise. In the case of relatively full capital, it will be more conducive to enterprises to automatically lower the leverage ratio through equity financing, reduce leverage, further reduce financial costs, increase profits, increase residents' income expectations, increase consumption more steadily, and increase the stock market's driving force.