Chapter 11 Chapter 9 Save China? 2009-2010 Fiscal Stimulus Package

It's an interesting time we live in.The global economy has just suffered one of the sharpest shocks in living memory. The decline in industrial activity in the G3 economies in the second half of 2008 was sharper than during the Great Depression of the 1930s.Global stock markets have plummeted, and as of the writing of this book in November 2009, the financial crisis is over and there are "green shoots" of recovery in the U.S. and EU economies, but it is still unclear whether the global economy will return to normal as soon as possible.There is no doubt that market sentiment is starting to improve, and the strain on financial markets (and market panic) has eased considerably, but there are still many concerns.The U.S. banking system remains at risk of a housing bubble and huge credit card debt.European banks remain vulnerable to the onslaught of eastern and parts of western European economies, but unlike their U.S. peers, they don't have to recognize bad debts or inject capital.In Asia, some import-dependent economies are concerned whether 2010-2011 will see a significant pick-up in consumption in the G3 economies, even if the worst is over.I also have some doubts.Tens of thousands of Asian exporters will no doubt struggle if there is no sign of improvement in the G3 economies.Even if the company can survive without orders for several months, what about half a year later?I'm afraid there is a danger of being unsustainable.

Faced with an unprecedented plunge in overseas demand, Beijing decided in October 2008 to launch a huge fiscal stimulus plan. In this chapter, I address some important questions related to this fiscal stimulus: With governments around the world running budget deficits, we wonder whether China's fiscal position is healthy.Data show that in the face of the impact of the economic crisis, China's fiscal balance is still in good shape, but there are still large-scale informal debts. The basic composition of China's fiscal stimulus plan.Economic stimulus has focused almost exclusively on infrastructure.The plan for additional investment in existing projects can be launched quickly, and new projects will start in the second half of 2009.However, it is difficult to get an accurate grasp of the size and impact of the fiscal stimulus as many projects are implemented by local governments.

Next we look at how local governments finance the stimulus.Unlike other countries, China's fiscal stimulus is financed by state-owned infrastructure companies using land and bank loans.Only a small part of the funding (about 20%) comes from the budget.I also mention below how local governments can raise funds for their investment projects. Finally, we analyze the possible impact of the economic stimulus plan in the medium term.Some of these are positive, including a better rail system, the city's subway system, and other public projects that will help the economy of the future.But there is no such thing as a free lunch, and fiscal stimulus comes at a price.Since most of the financing pressure falls on the banks rather than the finances, the assets and liabilities of the banks face the risk of deterioration, and there may be a new round of non-performing loans in banks, while the scale of local government debt will expand.This is the one that worries me the most. Lessons from the Mexican financial crisis of the 1980s, the Asian financial crisis of 1997-1998, and the U.S. financial crisis of 2008 all show that debt is a very difficult problem—and if it is mixed with other problems, it will have a huge impact on the economy. destroy.China's debt problem may still be under control, of course I hope so, but the current enlarged debt is mostly hidden debt, which is not optimistic.

This chapter does not involve much research by international economists, but focuses on the specific operation of China's fiscal stimulus plan, especially the financing method, and also mentions some issues that mainstream economists are concerned about. At the time of the global economic crisis, China's fiscal position looked healthy.This was mainly due to strong economic growth, improvements in tax collection and administration, and the positive effects of tax system reforms in the 1990s. From 2003 to 2008, the central fiscal revenue grew strongly. In 2008, the total fiscal budget revenue reached 5.9 trillion yuan, accounting for about 19% of GDP in the same period.Including social security revenue, total fiscal revenue accounts for 24% of GDP, which is close to the tax level of developed countries. The average tax revenue of OECD economies is about 36% of GDP, and the United States is about 27%.Compared with other emerging market economies, China's tax base is relatively large.Compared with developed countries, China still has a certain gap.

Before 2008-2009, fiscal expenditure also maintained strong growth, but its growth rate was always lower than that of fiscal revenue.Under such circumstances, the situation of fiscal deficit for many years was broken. In 2007, the central fiscal surplus was the first to appear, accounting for 0.7% of GDP.However, according to my estimation, the actual fiscal surplus in 2007 was close to 1.5% of GDP, including the balance of social security accounts.According to international practice, the calculation of fiscal revenue and expenditure should include the revenue and expenditure of social security accounts. We call it China's budgetary revenue and expenditure data, which is different from the fiscal revenue and expenditure data released by the Ministry of Finance.It can be seen from the data in recent years that the unofficial budget revenue and expenditure data are significantly higher than the official fiscal revenue and expenditure data.

In the second half of 2008, as the economic growth slowed down, fiscal revenue began to decline, but fiscal expenditure remained high, resulting in a fiscal deficit. In 2008, the official fiscal deficit accounted for 0.4% of GDP, but I think if income from the social security account is included, it should be a small surplus, accounting for about 0.2% of GDP. In 2009, there was a sharp decline in fiscal revenue, but since the middle of the year, tax revenue has shown signs of improvement.The media reported that the tax department has strengthened tax collection and management. There are also rumors that some companies are encouraged to pay the 2010 annual tax in advance to cooperate with the local tax department to complete the task.But in any case, it is an indisputable fact that multiple tax categories, including personal income tax, have rebounded, indicating that the macro economy is gradually recovering again.In contrast, public spending continued to climb rapidly, although spending growth slowed slightly into the third quarter. The first five months of 2009 increased by 28% compared to the same period of the previous year.Of course, this is a very good counter-cyclical operation - when the economy is sluggish, the government should increase spending to smooth out cyclical fluctuations in the economy and boost demand. In the first five months of 2009, social security expenditures increased by 32% year-on-year, medical and education expenditures increased by 40% and 16% respectively, while expenditures related to infrastructure projects increased even more, expenditures on transportation construction increased by 80%, energy-saving emission reduction and ecological construction expenditures Increased by 94%. Public investment spending from January to May accounted for 25% of total fiscal spending during the same period.

The Ministry of Finance has set a revenue growth target of 8% for 2009 -- a target that, as 2009 draws to a close, looks achievable.Therefore, the 2009 fiscal deficit is likely to be around 3% of GDP. In 2009, the Ministry of Finance arranged a budget deficit of 950 billion yuan, accounting for 2.5% of GDP in the same period.Among them, the central fiscal deficit is 750 billion yuan, and the local fiscal deficit is 200 billion yuan.Assuming nothing unexpected, the proportion of the fiscal deficit in 2010 is similar, and may be slightly lower. Economists generally believe that the fiscal deficit as a percentage of GDP should be controlled within 3% as a safe level.However, in the event of an economic crisis, as long as there is an appropriate fiscal revenue and expenditure plan (and the fiscal surplus accumulated during the economic boom), it can be relaxed appropriately.But in recent months, many countries have thrown those security cordons behind them.For example, the fiscal deficit of the United States in 2009 may reach 12% of GDP, far exceeding the safe level.In contrast, China's deficit is much smaller.Therefore, we should not be too demanding, fiscal deficit is a common problem faced by all countries.One advantage China has is that its economic growth is still strong -- once the global economy recovers, China's economic growth will generate a lot of fiscal revenue to cover the deficit gap in the next few years.

Next, let's look at the government's debt situation.It seems healthy at first glance, but if you analyze it deeply, you will find many problems. Gross official government debt is low, at about 18 percent of GDP at the end of 2008.Excluding the bonds issued by the Ministry of Finance to transfer foreign exchange reserves to China Investment Corporation (a newly established sovereign wealth fund), the scale of government debt in 2008 was only about 14% of GDP, an extremely low level. Official government debt levels have declined in recent years, driven by fiscal surpluses.This is very healthy. Economists generally believe that the safety line of government debt is 50% to 60% of GDP.In terms of external debt, as of the end of 2007, China's external debt balance reached US$374 billion, and rose to US$472 billion by June 2008, most of which were corporate external debt, mostly short-term trade credit, while government external debt (government's debt to foreign institutions) Debt) is only 1% of GDP, which is very small.China's foreign exchange reserves of US$2 trillion are equivalent to more than four times the total size of foreign debt.Therefore, it is difficult to imagine a balance of payments crisis in China.In fact, assuming China's fiscal balance remains within a controllable range, the international market will welcome China's issuance of more government debt.

China's fiscal situation is not flawless, and there are still some worrisome problems lurking.When analyzing financial data, we need to take the following factors into account: Policy bank bonds, especially the large amount of financial bonds issued by China Development Bank.By the end of 2007, the balance of policy bank bonds issued by CDB reached 2.3 trillion yuan, accounting for 8.8% of GDP.The debtor behind policy bank bonds is the government, and the role that China Development Bank has always played, and is likely to continue to play in the future, is the main financier of infrastructure projects related to fiscal stimulus.Adding up the debts of the Ministry of Finance and policy banks, the total government debt is about 30% of GDP.

local government debt.Although Article 28 of the Budget Law expressly prohibits local governments from borrowing, many provincial, city, county, township and even village governments are borrowing from banks, local businesses or local residents.Of course, the true size of local government debt is difficult to estimate.According to a survey, the debt scale of village-level governments alone reached 14% of GDP.Another survey conducted by a research institution under the Ministry of Finance estimated that in 2004, the total debt of municipal governments reached 1.1 trillion to 1.2 trillion yuan.According to estimates by Ministry of Finance officials, total local government debt rose to 4 trillion yuan in 2008, accounting for 16.5% of GDP.The scale of local government debt is substantial - equivalent to 175% of local government revenue.Although this is only an estimate, it is likely to be significantly lower than the actual size.

According to the survey, government debt falls into three categories.The largest part is direct debt, most of which are bank loans obtained by state-owned enterprises for infrastructure projects, which do not generate commercial profits (so such enterprises basically rely on local finances to survive).The other category is "indirect" debt, most of which are project loans guaranteed by local governments, which is also a major feature at this stage (will be described in detail below).Local government debt levels vary across the country.Government debt levels in poor areas are slightly higher, perhaps because poor areas do not have as much tax revenue and land sales revenue.According to estimates from the Ministry of Finance, by the end of 2007, the debt scale of Shanxi Province reached 127 billion yuan, accounting for about 23% of the provincial GDP; the debt scale of Henan Province reached 217 billion yuan, accounting for about 14.5% of the provincial GDP; The scale of provincial debt is only 11% of provincial GDP.In recent years, the central bank has been committed to solving the local government debt problem, especially the local debt caused by rural education. Most of the education expenditure is included in the balance sheet of rural credit cooperatives.The Ministry of Finance is also currently encouraging local governments to identify and budget for these hidden debts, and has set up a special department to supervise this.Jiaozuo City in Henan Province began to compile a government debt budget in 2004.According to the "Economic Observer", by the end of 2007, in this city with a population of 3.6 million, the government's bank debt balance reached 4.5 trillion yuan, accounting for 5% to 6% of its GDP.The most worrying thing is that in 2007, when the economy was growing rapidly, the municipal government's total borrowing from local banks increased by about 22%.Therefore, we estimate local government debt to be around 20% of local GDP.However, due to lack of information, there are still many problems with this data, which may be bigger than we think. Let’s look at the bank’s non-performing loans. Bank non-performing loans made up a large portion of overall debt figures in the 1990s and may soon become a problem again.As of June 2009, the scale of bank non-performing loans was only 518 billion yuan, accounting for 1.8% of total loans and 1.5% of GDP, a very low proportion. Before 2001, many analysts estimated that non-performing loans may account for 20% to 40% of total loans.Since then, however, a large number of non-performing loans have been divested to asset managers and other institutions, or written off by bank profits.But it is doubtful that banks can accurately identify problem loans.When the economic crisis hit, China's economy experienced an extremely difficult few months, with a large number of small and medium-sized enterprises closing down, but the banking system seemed to be unaffected.Every bank is known to be under pressure to reduce its non-performing loan ratio, which creates an incentive to cover up problem loans.In addition, banks have recently extended a large amount of credit, and it is also worrying whether the loan can be recovered smoothly when the loan matures in the future. We will continue this topic below. Asset management companies, established in the late 1990s, took over the last bad loans from banks.Given that the NPL recovery rate is less than 30%, the Ministry of Finance must also assume this part of the government debt, which accounts for about 10% of GDP. In addition, there is also a huge gap in pension accounts, and the debt scale is about 7% to 10% of GDP. Calculated in this way, the scale of China's government debt is close to the normal safety line, accounting for about 60% to 70% of GDP.Since the government debt levels of many developed and developing countries have increased recently, the scale of China's government debt is not outstanding.Japan's government debt scale accounts for 170% of its GDP, and the US government debt scale is close to 70% of its GDP. In addition, when analyzing liabilities, it is necessary to consider the size of a country's assets, and China's assets are considerable, but we have very little information.China's assets include claims on some of the fastest-growing world powers -- some of which can be sold to finance government debt.In addition, local governments still own a lot of land and can earn income from land sales. However, due to the lack of transparency, we still cannot take government debt lightly, in case the fiscal stimulus plan brings new and hidden debt, we continue to explore this issue below. In this section, we focus on China's fiscal stimulus plan.How big is it?I don't think anyone knows except the policy makers.As we all know, at the end of 2008, the central government announced the implementation of an economic stimulus plan with a scale of 4 trillion yuan in the next two years.It sounds like the proposed new investment expenditures - excluding the financial expenditures that have entered the 2009 budget, but the increased investment on the basis of the 2008 financial expenditures.At the same time, the central government promises to undertake 1.18 trillion yuan in 2009 and 2010.These funds will be invested in national-level large-scale strategic projects and national key projects that local governments are not interested in, such as rural education and medical and health facilities. However, many other types of projects have received approval from the National Development and Reform Commission and local governments, but have not received financial support from the central government.If local governments can provide financing for these projects, projects can start.These projects include highway construction, urban rail transit construction and other urban infrastructure reconstruction.This means that the total investment scale of the fiscal stimulus plan will far exceed 4 trillion yuan. During the Spring Festival of 2009, a government official revealed that the scale of investment projects supported by the government in the next two years will reach 8 trillion to 10 trillion yuan.As far as I know, as of the writing of this book, no clear list of investment projects has been published, so we have no way of knowing the true scale of investment activity.I can't help but wonder if such a list actually exists. So what exactly does China's fiscal stimulus plan look like?Overall it is very simple, the fiscal stimulus plan is mainly based on infrastructure projects, so the number of new projects started in early 2009 soared.Where are the financial funds invested?Only 4% of all investment expenditures are used for social public services.As we discussed in Chapter 4, the fiscal stimulus package can create jobs in the short term, but it will not help China change its investment-led growth model.In fact, imbalances have increased — although one could argue that unbalanced growth is better than no growth, especially at this stage of China's development. Although the scale of investment has increased significantly, the fiscal stimulus plan is still mainly financed by bank credit. Bank credit surged in 2009.The scale of new RMB credit reached about 10 trillion yuan. Of the 7 trillion new bank loans in the first half of 2009, about 2.5 trillion yuan was invested in infrastructure projects related to the fiscal stimulus plan.In contrast, government investment was only 560 billion yuan (including local government investment of 75 billion yuan). In the whole year of 2009, new loans allocated to infrastructure projects will reach 3 trillion to 4 trillion yuan. When the global banking industry (and our foreign banks in China) are tightening credit, why can the Chinese banking industry release such a large-scale loan in such a short period of time? As of the end of 2008, among the assets of the four major state-owned banks, only 41% were corporate loan claims, another 10% were personal mortgage loan claims, and most of the remaining assets were deposit reserves in the central bank (including statutory deposit reserves and excess deposits) Reserves), and 10% of assets are central bank bills. From the end of 2008 to the beginning of 2009, the central bank lowered the deposit reserve ratio several times and redeemed a large number of central bank bills.This is equivalent to the release of a large amount of liquidity by the central bank to commercial banks, which can be used by banks to issue loans.This is completely different from the deserted scene in which the banking industry in Western economies is full of mortgage loans that are about to become bad debts, and derivative financial products are scarce.Impacted by the financial crisis, the western banking industry has tight liquidity and is unwilling to lend to high-risk economic entities.Although China's banking industry has been hit by the economic crisis, it does not lack liquidity and has a strong willingness to lend. Let's spend some time looking at how these investments work in practice.First, let's look at the project approval process. Under the current fixed asset investment management system, according to the scale and nature of investment projects, certain important (such as government investment or restricted investment) or large-scale investment projects need to be reported to the local development and Reform Commission or the National Development and Reform Commission or even the State Council for approval before implementation.Other projects are reported to the corresponding government investment authorities for record according to the principle of territoriality, and no approval is required.The relevant procedures of approval projects are more complicated than those of filing projects.Even before submitting an application for approval, a project to be approved still needs to obtain permission documents from many relevant departments, including environmental assessment reports, land pre-examination and approval, construction land planning permits, and some projects also need to obtain the impact of investment projects on local water systems, etc. license file. Of course, it will take time to complete these procedures and documents.Once these procedures are ready, the project application can be formally submitted to the NDRC.Usually, before the project is reported, it is necessary to consult the National Development and Reform Commission for its support and to be aware of it.Otherwise, it will be difficult to pass all approvals smoothly.Some medium-sized projects are approved by the local Development and Reform Commission, while large-scale projects still need to be checked by the National Development and Reform Commission. The National Development and Reform Commission promised to shorten the government investment approval time to 15 days on the basis of complete materials.However, if new materials need to be added, or for some reason, the proposed investment project needs to be put on hold, the approval speed will be much slower.In addition, after the project is approved, it is necessary to obtain land use approval and planning permission before applying for a loan from the bank (generally, 60% to 70% of the total investment is financed by bank loans), and then the ground can be broken. In China, an important means of regulating the economy is the approval of projects by the National Development and Reform Commission.When the investment authorities want to reduce the investment growth rate, they will slow down the approval speed.This is exactly what happened when "macro-control" was introduced in early 2004.But when it is necessary to speed up the economic growth, relevant agencies will press the "fast forward" button, and the processing speed of relevant procedures will be greatly accelerated.And this is exactly the situation since the announcement of the 4 trillion fiscal stimulus plan in the third quarter of 2008.In addition to the "fast track" projects, since the end of 2008, the National Development and Reform Commission has delegated the approval authority to the local development and reform commissions (that early winter, people who came to Beijing to run the projects crowded the gates of the development and reform commissions).There is also speculation that some projects are approved without rigorous vetting, and some apply on the fly.In addition, there may also be a situation where the bank first retains customers with short-term loans before the investment project has gone through the approval procedures. After approval, the bank can apply for long-term loans relatively smoothly. Once the project is approved, it's time to secure financing.The central finance only provides partial financing (about 25% of the 4 trillion yuan), mainly in the form of direct investment and loan interest discounts.The central finance only assumes all the required capital for major state investment projects.For most investment projects, the central government only invests a small part of the funds.Projects with a higher degree of commercialization are more likely to receive discounted interest or very little financial capital injection.Therefore, most "fiscal" projects require local governments to provide matching funds (about 30% to 40% of the total project investment, depending on the type of project), as well as bank loans (including private capital in some cases) to solve the project remaining funds required.Therefore, local governments are facing enormous financing pressure. At the municipal level, such infrastructure projects are usually run by urban investment companies (hereinafter referred to as chengtou companies), which are generally affiliated with a city-level government department (such as the finance bureau, local development and reform commission, or local state-owned management department).Urban investment companies can undertake project construction work by themselves, set up a series of branches to be responsible for project construction (such as a city light rail construction company, a city water treatment plant, a city expressway construction company), or form a temporary project company.The model adopted varies from place to place.Large cities such as Shanghai have established many such chengtou companies in the past 10 years, while other cities have only recently established such platforms, and currently there are only three or four chengtou companies. In the past few years, local governments generally injected their land assets into urban investment companies.These lands may come from agricultural land being reclassified as industrial, residential or commercial, or from rezoning for cities.The practice has greatly increased land values ​​at little cost to the government.In the process of project development, the importance of land is that it can be used as the capital injection of urban investment companies into projects.Only when a certain capital ratio is reached, the project loan can start, and the ratio of capital to total investment is determined by the National Development and Reform Commission according to the type of project.Taking the rail transit construction project as an example, the required capital ratio must reach 40% in early 2009, and the remaining funds can be raised through loans to form debts. In the second quarter of 2009, the state lowered the capital ratio of various types of infrastructure construction projects to ease the financing difficulties of local finance.After the capital ratio is met, the urban investment company can use the land as collateral to apply for a loan from the bank (the urban investment company is more inclined to sell the land in exchange for funds, so that it can obtain more income from the land sale).After this step is completed, the government can sell or transfer the construction project to the operating company.As usual, project loans will be repaid through project sale proceeds, land sale proceeds or other resources of the local government.In other words, land plays a central role in infrastructure projects.If there is no new land to sell, the project cannot be financed.So in 2008, when land sales plummeted and project financing slowed down, a key factor was the recovery of the land market at the end of 2008 when stimulus measures were necessary to boost economic growth.The central government has introduced a large number of measures to stimulate the real estate market, including lowering mortgage interest rates, down payment ratios, and related taxes. The real estate market began to recover after the Spring Festival this year. The speed and magnitude of the recovery surprised me and many analysts.By the second quarter of 2009, land markets had recovered in many regions, which meant that financing for infrastructure projects could start again. In order to better understand the implementation process of local investment projects, we take the subway construction project in City X as an example.In the past few years, it has been very difficult for the subway construction project reported by the local government to be approved, but when I visited City X in May 2009, it was (supposedly) that the project was about to receive approval from the State Council.On average, the cost of building subways in eastern coastal cities is 400 million yuan per kilometer, so a single-line subway project needs to cost 10 billion to 15 billion yuan and take 4 years to complete.About two-fifths of it are construction costs, two-fifths are equipment costs (the cost of a subway train head and carriages is about 500 million yuan), and the other one-fifth is land and resettlement costs.Due to low ticket prices and huge capital investment, subway projects are typically unprofitable projects around the world (the Hong Kong subway is an exception, which is mainly due to the soaring housing prices around subway stations).Therefore, how to finance such projects has become a big problem.Let's solve the capital problem first, and then solve the loan (debt) problem. In 2009, local fiscal revenue generally declined significantly, but local governments still need to maintain spending in order to slow down the impact of the economic slowdown.Municipal governments also set aside funds for subsidizing loss-making businesses and retraining programs for the unemployed.Therefore, these infrastructure projects cannot be financed by taxes.In addition, from 2008 to the beginning of 2009, land prices across the country fell by 30% to 50% from the previous peak (rough data), especially in suburban land prices.This means that between the fourth quarter of 2008 and the first quarter of 2009, the land resources managed by the municipal government from farmland to project capital also depreciated. From 2007 to 2008, developers did not purchase a large amount of land, so local extra-budgetary revenues were not as abundant as before. More importantly, it became more difficult for urban investment companies to increase financing ratios through land sales.Taking Beijing as an example, according to the "First Financial Daily" report, in 2008, the Beijing government raised 50 billion yuan in land auctions, accounting for about 27% of the city's total fiscal revenue in that year (but not including the amount of land revenue sold through bargaining, So the total land income is even higher).However, in the first quarter of 2009, the amount of land purchased by developers fell by 86% year-on-year, and the government's land auction revenue fell to only 4.7 billion yuan.Beijing plans to ramp up land sales in the second quarter to raise more funds.For municipal governments, the good news in the second quarter is the sudden recovery of liquidity in the land market.Land prices have risen sharply, especially in some big cities, and off-budget revenues have become abundant again in some areas.A similar trend appears to be emerging in second-tier cities. One reason for the sudden turnaround in the market is that banks' willingness to lend to real estate developers has increased since the Spring Festival in 2009.In addition, enterprises that were not interested in real estate, especially some state-owned enterprises, found that they could obtain more bank credit through mortgage investment, and also devoted themselves to the field of real estate development.This is a huge change from the end of 2007 to 2008. At that time, the credit control of the real estate industry was strict, and only the first-tier developers could successfully obtain bank credit and loan extension. In the first quarter of 2009, about 11% of new medium and long-term loans were invested in real estate enterprises, and this ratio may continue to rise in the next few quarters of 2009. The recovery of the land market is crucial for local governments as the central government is unwilling to act as a funder.For infrastructure projects such as urban subways, the central government will not allocate funds.The central government believes that such projects will drive the economic development of local cities and therefore should not be financed by the central government. In the 4 trillion fiscal stimulus plan, the 1.18 trillion yuan allocated by the central government is mainly concentrated in the construction of intercity roads, national power grids, schools, clinics, and rural infrastructure—these types of economic benefits are low or due to the wide scope (such as intercity highways) and individual cities are reluctant to invest in projects.Controlling the financing of local projects appears to be one of the ways the central government can curb overinvestment by local governments. So, with tax revenues and central transfers insufficient in the first half of 2009, and land market conditions uncertain, what financing options do mayors eager to revitalize their local economies have?In the buzzword of the moment, they need to build a "funding platform."There are several funding options to consider. 1. Capital loan.Recently there has been talk of allowing banks to make "capital loans".This financing method allows banks to provide capital loans and debt loans to important projects at the same time, while local governments commit to future capital injections into projects.Regulatory authorities are said to be unsupportive, so the proposal appears to have been shelved.However, there are also speculations that the capital loan may have started quietly, and the bank may think that the capital will be in place later so that the loan will start the project in advance.This will obviously increase the risk faced by banks. 2. Issuance of local government bonds.The Ministry of Finance has issued three-year local bonds for several provinces. In 2009, it is planned to issue 200 billion yuan of local bonds, and then distribute the funds raised by the local bonds to the provinces and cities related to the project. Most of the funds will be allocated to the central and western regions.Under current arrangements, local governments will need to repay their debts over the next three years.Most of the funds will be used for project capital injections to obtain additional bank loans (that is, debt as capital).Some people hope to liberalize the restrictions on local government borrowing, while others believe that this will lead to a huge risk of excessive borrowing, and the issuance of local bonds is undoubtedly a compromise method.The Ministry of Finance may wish to identify and clean up all informal debts of local governments before liberalizing local bond issuance. 3. Trust equity investment.Trust financing continues to heat up, injecting more and more depositor funds into infrastructure projects. Article 43 of the "Commercial Bank Law" stipulates that commercial banks are not allowed to invest in non-self-use real estate or non-bank financial institutions and enterprises.The relevant trust laws and regulations stipulate that trust companies are not allowed to absorb deposits.However, the two can work together.For example, Bank A sells a wealth management product of a trust company to its high-end customers, and then the customer funds are entrusted by the trust company, and these funds will be injected into infrastructure construction projects as project capital.After the funds are injected, the bank is theoretically guaranteed to be repaid after the maturity of the trust product by setting the repayment terms. A vehicle called "Sunshine Private Equity Fund" transfers personal funds into the stock market. Trust companies distribute these funds to fund managers, who use this fund to invest together with their own funds and guarantee a certain return). In an environment of low interest rates, banks have found that high-end customers are keen to invest in such products, especially since many products also guarantee a certain return.But there are also risks, such as the mismatch between the one-year financial products and the long-term construction projects invested in.The solution seems to be to issue another phase of the product to extend the financing after the trust product expires, or to sell the project equity to withdraw the funds and return them to investors, but neither method is fully guaranteed.In addition, credit concentration risk arises because banks are sometimes both investors (to trust companies) and lenders.Details of most of these products are kept private.In addition, there are other risks.For example, we have heard that a local bank used customer deposits and entrusted them to a trust company for equity investment without the customer's knowledge.In theory, this is legal because banks have the right to invest depositors' deposits, but it has the potential to lead to misuse of funds. 4. Corporate bonds.Urban investment companies can also issue corporate bonds.The issuance of such notes requires the approval of sponsors and the People's Bank of China. Since April 2008, corporate bond issuance no longer requires bank guarantees.Most of these 3 to 7-year bills are purchased by banks and insurance companies.Although this is a kind of liability, the funds raised can also be used as capital for investment projects like local debt. From January to April 2009, a total of 282 billion yuan of corporate bonds were issued, while the total issuance in 2008 was only 174 billion yuan.But by the middle of 2009, there were signs that the central government had begun to pay attention to the issue of corporate bonds.Some districts, counties and secondary cities have begun to issue a large number of corporate bonds, but investors do not seem to be aware of the repayment risks.By the end of June 2009, the pace of corporate bond issuance had slowed down significantly. 5. With the help of bank loans.For infrastructure projects that have been formalized for implementation, banks are usually willing to provide short-term financing even if capital raising is difficult, so that the project can be launched first.After part of the capital is in place, a bridge loan will be provided for it.Theoretically, the size of the bridge loan depends on the size of the capital in place.The risk is that a bridge loan will often quietly morph into a standard loan. 6. "False" capital.Finally, if you really can't find capital, you can use "fake" capital.You can borrow some funds first (or simply transfer funds out of another government account for a day or two), inject these funds as capital into a company, provide relevant documents to the bank to apply for a loan, and repay the initial loan with the bank loan. The borrowings form a 100% debt financing project.It's not clear if this is common practice, but many people I've talked to think it's common, especially in smaller cities.In addition, city commercial banks and other small financial institutions are under pressure to adopt this approach more easily. Assuming our mayor has solved the capital problem of the X city subway project, how to raise the rest of the funds?这很简单，他会去银行申请贷款，而X市的所有银行都将慷慨解囊。像全国各地的银行一样，X市的银行出于三个相互关联的动机，向这些几乎一定会亏损的项目放贷。如果三个动机同时得到满足，资金即可投放。 1.银行的盈利动机 从2009年初开始，商业银行，特别是大型商业银行资金充裕。这要部分归因于央行将2005～2008年间对冲操作锁定的资金部分释放回商业银行。具体做法是将商业银行法定存款准备金率从2008年8月的17.5%下调至2009年初的15%。这意味着，商业银行存放在央行的准备金减少，所以银行有更多资金贷给企业。此外，2005～2008年央行发行的部分央行票据到期，商业银行可通过票据出售得到资金，从而扩大放贷规模。央行还在2008年底调低了基准利率，我们可称之为“刺激性”货币政策。 这带来的一个后果是银行净息差受到挤压。渣打银行研究团队估算，2008年下半年四大银行的净息差约为2.7～3.2个百分点，2009年第一季度进一步受到挤压。净息差对中国银行业非常重要，决定着银行的利润。目前，银行一年期存款利率约2%，而贷款利率约5%，这意味着银行可从每笔贷款中赚取3个百分点的利润。对于银行来说，这是一种无成本收益，占到银行利润来源的80%以上。但当利率降低时，息差就会收窄——因为银行的资金成本仍部分取决于活期存款，而活期存款的利率水平一直接近于零。但不管怎样，关键的一点是，降息后，银行净息差受到挤压。这时银行只能通过进一步加大贷款投放力度来弥补利息损失。因此，银行出于经济利益动机，需要通过放贷赚取收入。 2.银行的业绩及行政动机 银行的放贷行为还考虑到业绩表现及行政方面的因素。四大银行各分支行的业绩表现一般都以信贷、存款、信用卡和利润增速是否超过同城（地区）其他银行或分支行为衡量标准。我问X市的一位国有银行行长其业绩怎么衡量，他指着马路对面另一家银行说道：“我只要比他们放贷多就行。”看起来，资产回报率（即资金的使用效率）仍然不是重要的考量因素。 如果一家银行想比竞争对手更快地扩大贷款规模，就需要尽力从大型市政基建项目的银团贷款中分得一杯羹。因此，X市的所有大型银行不顾这类项目的偿还风险，都愿意向其贷款，而且银行喜欢联合放贷以降低风险。各分行的放贷行为受到一定控制，大规模贷款需要总行批准。但就2009年上半年的情形来看，贷款控制有所放松。我们最近拜访的一家大型银行的省级分行的自主放贷规模高达6亿元，如果情况紧急的话可在一周内发放完毕，而更大规模的贷款需报总行批准。还听说目前有些银行为增加资产，已将对大额存款的现金返还（通常做法）延伸至贷款项目。由于央行控制着利率，商业银行需要找到其他可竞争的领域。2009年初，上海的朋友们十分热衷于申请按揭贷款——一旦贷款协议签订，银行就可以返还2万元现金。而外资银行根本无法参与这种“规则之外”的竞争。 另外，银行还会考虑行政方面的因素。如果地方行政部门号召商业银行支持某个重点项目，银行比较难以拒绝。城市商业银行比国有大行更易受行政力量的影响。一位大型国有银行负责人就对由当地某城商行牵头的银团贷款的质量表示担忧。 3.银行的风险控制动机 为什么银行如此热衷于向城市地铁这类很可能遭受损失的项目放贷？当然，城市地铁项目可以提升周边房价，如果设计和运营得当，也将支持城市未来的经济发展。但从成本收益的角度看，世界各国大部分地铁项目都是出名的亏损项目。 银行放贷的理由就在于，X市的地铁项目背后存在事实上的政府担保。不过，政府担保的效力是有差别的。那些获得地方人大批准的项目的政府担保效力最大，受到当地财政部门的重点扶持，对银行来说最为保险。对于这类项目，地方财政部会出具“承诺书”，承诺偿还贷款。但严格从法律意义上说，这类承诺书并不具备法律效力，却得到大多数银行的认同和响应。由于中央政府取消了除一级公路外所有公路的收费，据称2009年上半年银行拒绝向取消收费的公路建设项目放贷，除非当地财政部门出面担保。另外，一些银行也会向那些在政府工作会议，甚至餐桌上得到官方支持的项目放贷（虽然有些不放心），但这遭到一些人的否定。 不过，我们走访的几家当地银行已明显意识到地方政府过度涉入信贷的潜在风险。一位二线城市大型国有银行领导告诉我们，了解三四线城市的财政状况相对容易。各行高层之间互有交流，并可从央行贷款信息数据库中进行核查。据称，他所在的银行坚持只接受由政府财政部门正式担保的基建贷款项目。另一位在北京负责国家级贷款监控的领导说，他所在的银行只向有省级政府担保的项目放贷，仅有市政府担保是不够的。他认为，省政府担保的项目大部分信贷风险非常低，因为这些等级更高的政府债务情况也较好。在许多城市，由于财政部门需要限制担保范围，由政府下属机构或国有企业经营的商业项目均无法得到政府担保。我们见到的一位当地政府官员正在努力为一个准商业性项目筹资，但当地财政部拒绝为其提供正式担保。因此，他正试图在本部门下设独立的商业融资平台。 以上三个动机中单凭任何一个都不足以解释2009年上半年的信贷高速增长，但如果将商业动机、业绩和行政动机以及事实上存在的政府担保三者结合起来，就为信贷激增创造了完全的条件。 那么，财政刺激计划的效果如何呢？现在下结论还太早，但需要指出几点。首先，所有的财政支出似乎都旨在稳定就业市场，但效果有多大无人知晓，甚至国家统计局都不十分清楚。铁路建设项目大批上马，但许多铁路建设公司人员编制已满，相关专家认为这些公司将不会再雇用更多工人，但没有任何统计数据可以确认。不过，其他建设项目肯定会提供许多就业岗位，但这能否吸纳年初出口行业失业的2000万工人（如果年度外来务工人员调查数据可信的话），我们不得而知。政府还向企业施压，要求国有企业及其他企业不得裁员，但允许企业降低员工工资、加班费以及其他福利。站在一个经济学家的角度看，这是一件好事。许多国家（包括工会组织强大、法制更加灵活的国家）都无法像中国这样保障就业。而在中国，许多外来务工人员至少还能保住工作并拿到最低工资（约为其2008年工资的一半）。 这轮投资热潮带来的另一大好处就是，许多国家急需的基础设施得以建设，其中包括多条铁路干线。该领域在过去几年一直缺乏投资。其中一个原因是，铁路建设项目本应由地方出资并获取收入，但目前所有客货运收入都要直接上缴国家铁道部，因此地方政府不愿出资修建铁路。这对经济造成严重的负面影响。例如，全国范围内的货物运输（包括煤炭运输）出现严重瓶颈，春节期间铁路客运“一票难求”（不过这可能不是基础设施缺乏的问题，而更多是车票的出售和分配环节的问题）。铁路运力的匮乏同时还意味着能源的浪费，因为等量的公路货运要比铁路货运消耗更多能源。加快客货运铁路建设是中国经济发展的重要一步，将使铁路运输变得更加高效、廉价和环保。因此，这是财政刺激政策带来的一大好处。 银行将基建项目贷款视为低风险贷款。在我们近期访问的当地银行中，没有人认为地方政府会破产或无力还款。典型的回答是：“政府拥有一切！怎么可能还不上贷款？只要卖些东西就够了。”可见，银行对政府担保颇为信赖，但我表示怀疑。 首先，地方政府已积累了大量表外负债，其中大多为银行贷款（如上文所述）。2009年，这部分负债额大幅攀升。仅2009年上半年投入基建类“刺激”项目的银行贷款就约达2.1万亿～2.8万亿元。相比之下，2009年1月到5月，中央财政资本支出为4880亿元，同期地方政府支出750亿元，规模要小得多。假设2009年全年新增银行信贷10万亿元，投入基建项目的资金规模将达到3万亿～4万亿元。这可能被当成地方政府的表外负债。到2010年，中央及地方政府债务总额可能达到GDP的45%。 西方银行体系几近崩溃的情景增添了人们对中国银行业经营模式的信心。然而，尽管国务院支持当前宽松的货币政策环境，但北京的官学界已经明显表现出担忧。一些人甚至认为我们正在经历对过去五年来商业银行改革成果的巨大破坏。仿佛刹那之间，商业银行纷纷摒弃了商业化运作模式，转而为经济刺激方案大量注资。这意味着，如果几年后这些贷款变成不良贷款，全国各地的银行经理都没有责任。任何贷款，包括那些没有投入财政刺激项目的贷款，都有可能变成不良贷款，而这些银行经理们可辩解称这些贷款都是在帮助经济复苏。换句话说，我怀疑目前投入非财政刺激项目的贷款质量在降低。这是很危险的。 过去几年来，各类城建公司累积的直接和间接债务问题十分复杂。来自中投公司和投行的分析师统计了各地城投公司的债券发行量，并进行排行，北京名列榜首，近几个月共发行债券350亿元。但除了这些债券之外，由于缺乏贷款、资产和担保的信息，银行编外人员、审计者和监管者几乎不可能掌握其全部负债情况。我着实担心那些背负着放贷压力，又没有北京总行保护的三四线城市的银行。随着大型国有银行信贷增速开始放缓，2009年下半年，这些三四线城市银行的放贷压力将加大。 我怀疑许多基建项目在筹备阶段就没有充分考虑如何偿还贷款的问题。虽然银行为公共项目融资的行为在世界范围内非常普遍，但在业务执行上通常会有明确的规范，并部分基于项目本身产生的利润，制定贷款细节及合理的还款计划。如果项目是非商业性的，则通常采用发行带有政府正式担保的市级政府债券进行融资更合适。债券发行书上也会写明该项目的还款计划。而且作为债务人，政府的信用状况和负债情况都是透明的。而在中国，似乎许多基建项目没有这样的还款保障体系。 对于不良贷款问题的严重程度，我们无从知晓，甚至也很难推测。既没有先例，也不知道2009年后半年以及2010年还将发生什么。但需要记住的关键一点是，短期内不良贷款不会显现。原因有以下几点： 第一，目前项目贷款类型多为一次性还清贷款。也就是说，在贷款期间内仅支付利息，期末一次性偿还本金。因此，借款人还款能力的恶化并不一定导致该贷款分类被收缩。平均贷款期限越长，不良贷款就越难以被及时发现。 第二，部分贷款到期后可选择展期，推迟了不良贷款的发现时间。 第三，大部分贷款都有抵押，可回收率因行业和具体贷款企业的不同而有差异；另一些贷款有担保。不过，目前不良贷款的收回率显示，抵押物和担保的真实价值往往与其账面价值不符。目前不良贷款的收回率仅约20%～30%，大大低于抵押贷款所要求的50%～80%的回收率。 第四，衡量减值贷款的标准过于宽泛，这意味着分行一级仍有可能掩饰不良贷款。 第五，如果地方政府是贷款担保人，问题将更加复杂。在这种情况下，银行更不愿把这笔贷款划为不良贷款，当地政府也会出面干涉，并寻找私下的解决办法。 在多数情况下，由于地方政府担保范围扩大，银行业的信贷问题最终将转化为地方政府的财政问题。在未来某一时点，地方政府将不得不偿还贷款——这意味着不得不增加税收、土地销售收入和其他财政收入，来为这些项目埋单。如果这一希望落空，再靠中央政府救助。 整体来看，政府期望依靠增加当前支出以刺激经济增长，从而增加未来税收收入以补偿开支。这种方法虽然听上去合理，但也意味着中国家庭和企业的税收负担有可能加重。政府不太可能采取减税措施，意味着企业税负过重以及家庭税收负担和社会福利负担过重的状况仍难以得到改观。如果能公开所有项目的融资安排，并制订好还款计划，这可能是一场更为安全的赌博。我们需要清醒地认识到，尽管人们庆幸于当前国内银行业的健康状况，但对于可能将进行资产重组（可能在未来五年内）或在2010年重启改革，并致力于成为真正的市场化经济主体的中国银行业来说，这无异于一场豪赌。 中国的财政刺激计划规模居世界之首，截至2009年11月本书完稿时，财政刺激计划似乎已将中国经济拉出相对短暂的深度衰退。不过，这也意味着目前所下的赌注很大。希望这一刺激计划对经济的利大于弊。随着时间的推移，未来10年，我们将有机会更深刻地检讨此番财政刺激的得与失。