1/6 As Powell puts in his recent speech, we are “in a world of slow global growth, low inflation, and low interest rates…" and "fac[ing] heightened risks of lengthy, difficult-to-escape periods in which our policy interest rate is pinned near zero.”
2/6 CF40 member Miao Yanliang mentioned in his book that, under a #fiscal policy framework, the #demographic change and pessimistic anticipation collectively contribute to the world characterized by LOW #inflation, LOW #growth and LOW interest rate.
3/6 After the global financial #crisis in 2008, major developed countries faced pressure to reduce #deficits, #debt, and private sector #deleveraging. In this context, the macro-policy has shifted from the former #monetary dominance to #fiscal dominance. #macroeconomics
4/6 Fiscal dominance implies a more independent fiscal policy with monetary policy playing a role of balancing the budget. However, the reality is - monetary policy is ineffective in nowadays. Some reckons the Keynesian-type liquidity trap has been taking place.
5/6 Miao pointed out that the underlying reasons are fear of uncertainty and the pessimistic expectation of the future. Monetary policy not only monetizes debt, but also increases the value of government debt. This is a new development in macroeconomic practices after the crisis.
6/6 Miao thinks the reason behind the pessimism is structural changes of demographic influence - the financial impact of aging and the fading dividend of population growth, with the former includes the shrinking working-age population and the slowdown of the urbanization process.

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More from @ChinaFinance40

Jan 14
CF40 member ZHONG Wei points out that to realize a steady operation of China’s economy in 2022, we need to understand what it means to be “steady” from different frames of reference and policy perspectives.
Read more at: mp.weixin.qq.com/s/KlRv7dtcpPaZ… 1/6
1. Maintain the long-term trend of growth since the reform and opening up. Despite the shift from high speed growth to high quality growth, it may be necessary to maintain a growth rate of no less than 4% or slow down the pace to make it manageable. 2/6
2. China’s central bank and most international organizations think that the reasonable potential growth rate of China’s economy is 5-6%, which might be considered as the growth benchmark for 2022 and the 14th five-year plan period.3/6
Read 6 tweets
Jan 13
Prof Huang Yiping, CF40 Academic Committee Chairman, stressed recently that China should continue to press ahead with market-oriented financial reform. 1/5
“Let the market play a bigger role in the resource allocation of the financial system, instead of relying on government intervention,” he said.

Specifically, he said China needs to move forward at two fronts: financial innovation and financial supervision. 2/5
On financial innovation, he suggested to boost the capital market and increase the share of direct financing in financial intermediation, stimulate bank innovation, and encourage digital finance innovation. 3/5
Read 5 tweets
Jan 12
While still in the early stage of development, #DeFi could play an important role in the future financial system as the blockchain becomes more expansive and traditional assets, more tokenized. 1/8
Given that the main challenges hindering the development of DeFi are similar to those facing the traditional financial system, regulation of it could draw on some of the existing rules, CF40 says in a recent article:


First, regulation of DeFi activities should follow the “same risk, same rules” principle. Regulatory measures should be able to lead DeFi players to internalize the high leverage-driven pro-cyclical costs...3/8
Read 8 tweets
Nov 5, 2021
Current macro policies should avoid hard landing in the property market while boost the overall economic vitality,pointed out by Zhang Bin, Zhu He and Zhong Yi at CF40 in the working paper How to Prevent the Risk of Hard Landing in the Real Estate Market.1/6
The paper argues China’s #economy still faces great downward pressure in the short term. In particular,risk of hard landing in the #housing market should be prevented. Its threat to financial system is limited,but it will take a heavy toll on the real economy.2/6
To avoid such hard landing, #liquidity crisis of real estate companies should be prevented so as to ensure their cash flows. Specifically, three measures need to be adopted.3/6
Read 6 tweets
Nov 4, 2021
In a recent research on Disclosure Standards for Sustainability Information led by CF40 Executive Council member Tu Guangshao, several recommendations for improving the #sustainability #disclosure framework of corporates (“the company” below) in China were made:
1. Sustainability governance

1) Disclosing the company’s structure for sustainable development governance.

2) Disclosing the responsibilities of management in terms of assessing and managing the risks and opportunities related to sustainable development.
3) Disclosing the board’s governance of risks and opportunities related to sustainabilitu, including, at a minimum, the board’s identification of material sustainability issues, and its monitoring of the management of sustainabilitu issues and the progress towards targets.
Read 8 tweets
Sep 29, 2021
The pursuit of common prosperity is a dynamic, long-term process that spans across generations, says Zeng Zheng, a CF40 Young Economist. It requires scientific planning, steady progress and sustained momentum. 1/12
In this process, it’s crucial to understand the relationship between government functions and market forces and their coordination in 3 dimensions. 2/12
DIMENSION 1: the relation between productive forces and production relations. Common prosperity involves both of the two aspects: “prosperity” indicates productivity growth, while “common” indicates production relations and distribution. 3/12
Read 12 tweets

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