China Finance 40 Forum (CF40) Profile picture
China's leading think tank in finance and macroeconomics - Independence. Insight. Influence.
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20 May
Sudden turns in macroeconomic policies before Q3, 2021 would be inadvisable, says Zhu He, CF40 Research Fellow. It’s not yet time for macroeconomic policies to change direction, not to mention the speed of the turn, he says. 1/8

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Recent data suggest a slowdown in China’s recovery, with the output gap closing at a slower pace. It remains uncertain whether #export and real estate #investment can sustain momentum in the next two quarters. 2/8
Any weakening of domestic #consumption or manufacturing investment before they return to normal levels would be a big drag on aggregate #demand and economic recovery. 3/8
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19 May
Dr. Zhang Bin at CASS suggests to give full play to the flexibility of the #RMB exchange rate as a buffer for China’s macroeconomic stability: 1/6

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Whether it is to deal with the difference in relative demand changes at home and abroad, or to handle the impact of international capital flows, maintaining a flexible RMB exchange rate would be a major coping strategy. 2/6
Under a flexible exchange rate regime, RMB will depreciate to a certain extent if the US #economy stages a strong recovery while the recovery of the Chinese economy marginally weakens, which’ll have a positive effect on increasing aggregate demand and preventing deflation. 3/6
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18 May
Taking stock of China’s economic performance in April, CF40 research department calls for stronger macroeconomic policy supports as consumer spending falls short of expectation while export alone can't sustain the sound operation of the entire economy: 1/8
mp.weixin.qq.com/s/nA9lvfcMXGz-…
To be specific, real estate investment has remained quite resilient, but is facing greater downward pressure with tighter regulations and higher interest rates; 2/8
manufacturing investment has picked up driven by exports; while infrastructure investment falls below expectation and is going to be under the pressure of regulations and fiscal strains in 2H21. 3/8
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17 May
Peering into the near future of the Chinese #economy, Dr. Zhang Bin thinks there will be rebound in #consumption and slowdown of #investment: 1/6

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Household consumption in #China remains significantly lower than the pre-Covid level, with great potential for recovery. As Covid’s impact lingers, service consumption growth in China remains significantly lower than its pre-pandemic levels. 2/6
Household savings maintain steady growth, with newly-added household deposits coming in at RMB 6.68 trillion in 2021Q1. Going forward, as the temperature rises and the virus is further contained, service consumption will recover further, driving rebound in general consumption.3/6
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9 Apr
Fang Xinghai, CSRC Vice Chairman, proposed 4 policy suggestions on promoting comprehensive institutional opening-up of China’s capital market at the 2nd Bund Summit: 1/6

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1. Continue to open up the capital market and products. Introduce more channels and models for foreign investors to participate, address their concerns, increase the weight of A-shares in international indices,...2/6
...improve the Shanghai-London Stock Connect to cover more major capital markets in Europe, expand offering of futures products to meet the risk management needs of foreign businesses and investment institutions, and introduce more foreign institutional investors. 3/6
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8 Apr
Financial development in China is ushering in a historical period of opportunities, said Fan Yifei, Deputy Governor of the PBOC, at the 2nd Bund Summit: 1/8

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He explained in the following 4 perspectives:
1. Dual circulation calls for high-quality financial development. The key to a smooth domestic economic cycle is a smooth supply-demand circulation and the release of internal forces. 2/8
The financial industry needs thorough digitization and independent innovation, with technologies driving qualitative growth, so as to help enterprises, particularly #SMEs, better connect to the domestic economic cycle. 3/8
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7 Apr
To improve the public governance of #data in a digital society, China needs to intensify efforts in the following aspects:
1. Provide legislative support for the classified management of data, clarify data ownership and using rights, and stipulate legal responsibilities in the use and transaction of data, or even establish a special supervisory department or mechanism;
2. Step up regulation on various #AI applications. A set of regulatory mechanisms is needed to manage public-oriented AI applications;
Read 6 tweets
21 Jan
China will adhere to the supply-side structural reform while paying attention to #demand management, addressing the obstacles to economic circulation and improving weak links.
What are and how to address the major obstacles to the management of domestic demand? How should China step up policy efforts to further boost #consumption?
According to CF40 Member Wu Ge, the proposal to expand domestic demand through demand management and stimulating domestic circulation came at the right time given the plunge in consumption due to the pandemic. The major obstacle to demand management lies in the consumer sector.
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20 Jan
In 2020, China proposed the new development pattern based on “#dual_circulation” with domestic and international markets reinforcing each other. According to Zhao Changwen, such a pattern will need an innovation-friendly financial system: new.cf40.org.cn/uploads/202010… 1/6
First, an innovation-friendly financial system should be able to help the country seize the opportunities brought by the new round of technological revolution or industrial revolution. 2/6
Second, an innovation-friendly financial system under the “dual circulation” strategy should be able to help resolve three imbalances in economic structure, that is, imbalance between supply and demand in real economy, … 3/6
Read 6 tweets
19 Jan
China is halting the rise in CO2 emissions before 2030 and going carbon neutral before 2060. It's not the only country to declare the target within the time frame, but it's the most important country to do so, said Jin Liqun, @AIIB_Official president, at the 2nd Bund Summit. 1/6
China's noble ambition is commendable, but the challenge is daunting. The government will have to work with the private sector to mobilize resources to finance renewable energy. 2/6
Monetary and fiscal policies should be designed and implemented in a way which should be amenable to R&D and the production of non-fossil energy. Financial institutions should be encouraged to provide financing for non-renewable energy projects. 3/6
Read 6 tweets
18 Jan
In a recent article, @SunMingchun discussed the economic outlook of Chinese mainland, Hong Kong, and the US in 2021: new.cf40.org.cn/uploads/202101… #economics 1/5
The US economy is expected to recover from a low position but will hardly resume to the pre-pandemic level in 2019. The spread of the virus remains to be the biggest obstacle to the economic recovery in the US. 2/5
Chinese economy will continue to recover in 2021 and is expected to achieve a real growth rate of 7%. 3/5
Read 5 tweets
12 Jan
In a recent article, @SunMingchun discussed the economic outlook of Chinese mainland, Hong Kong, and the US in 2021: new.cf40.org.cn/uploads/202101… #economics 1/5
The US economy is expected to recover from a low position but may hardly resume to the pre-pandemic level in 2019. The spread of the virus remains to be the biggest obstacle to the economic recovery in the US. 2/5
Chinese economy will continue to recover in 2021 and is expected to achieve a real growth rate of 7%. 3/5
Read 5 tweets
11 Jan
According to CF40 Nonresident Senior Fellow and former CSRC Chairman Xiao Gang, China will face three major changes in its domestic and international environment that have important implications for its economic and financial development during the 14th Five-Year Plan. 1/7
1. Its demographic dividend and the advantage of low labor cost are diminishing;
2. It no longer enjoys the “latecomer’s advantage”;
3. Its relatively favorable external environment is undergoing profound changes. 2/7
Against this backdrop, Xiao says it’s imperative that China explores and unleashes the new advantage of its super-large market. He proposes several policy suggestions to this end. 3/7
Read 7 tweets
10 Jan
Developing a diversified #pension finance system is now high on China’s agenda. China’s financial regulator is actively pushing forward the development of pension finance, encouraging the banking and insurance industries to provide more diversified pension products. 1/5
At a recent CF40 seminar,experts said the development of the third-pillar pension system in China is facing 2 major challenges:1.Acceleration in population aging means that the establishment of the third-pillar pension system will need more than routine reform measures;2/5
2. Both the design of and regulatory framework for pension products need to be further optimized: cf40.com/en/news_detail… 3/5
Read 5 tweets
9 Jan
Since 2012, the overall feature of China's economic cycle has been "easy to cool and hard to heat up", and the main task of aggregate demand management is to increase demand.1/7
Regarding the choice of policy tools, standard monetary and fiscal policy instruments such as rate cuts and raising government debt to expand expenditures have not fully played their role.2/7
Meanwhile, investment through borrowing that is participated and led by local governments, backed by government credit to varying degrees but not reflected on the government budget, and also widely participated by commercial financial institutions, has prevailed. 3/7
Read 7 tweets
30 Dec 20
Chinese people love #savings. This mentality in itself is by no means wrong. Savings have been important in sustaining Chinese households during covid. But the problem lies in the form of savings, says Ren Chunsheng, Chairman of China Insurance Investment Co., Ltd. 1/6
Most of the savings in China are placed with #banks, but banks’ main function is to extend #credits; only a small portion goes into equity #investments. 2/6
It would be desirable to turn part of the 90 trillion yuan of household savings in China into long-term funds through investments in third-pillar #pensions. 3/6
Read 6 tweets
29 Dec 20
Since October,market views have diverged on the outlook of China’s economic recovery: the first type of view believes that economic recovery will continue,the second holds that the economy has already showed signs of overheating, &the third states that the economy is peaking. 1/7
This essay by CF40 research fellow Zhu He reviews four basic facts of China’s economic recovery since the outbreak of COVID-19 and discusses the possible reasons behind the three different views. cf40.com/en/news_detail… 2/7
Fact 1: Policy forces have played an important role in this round of credit expansion. But whether the momentum of this round of expansion will sustain after policies exit depends on how large role policies have played so far. This is the first divergence in the market. 3/7
Read 7 tweets
28 Dec 20
Xiao Gang says during 14th 5-Year Plan, China needs to carefully manage 5 relationships: that between inheritance & innovation, between the market & the government, between opening-up & independence, between development & safety, and between development strategies & tactics. 1/8
The Chinese government newly proposed that supply-side structural reforms should remain as the emphasis of efforts, while demand-side management also deserve due attention. 2/8
Xiao believes that to promote the new development pattern of #dualcirculation, the key is to balance the upgrade of the supply side and the expansion of consumer demands. 3/8
Read 8 tweets
27 Dec 20
This year, China proposed the new development pattern based on “dual circulation” with domestic and international markets reinforcing each other. According to Zhao Changwen, such a pattern will need an innovation-friendly financial system: new.cf40.org.cn/uploads/202010… 1/6
First, an innovation-friendly financial system should be able to help the country seize the opportunities brought by the new round of technological revolution or industrial revolution. 2/6
Second, an innovation-friendly financial system under the “dual circulation” strategy should be able to help resolve three imbalances in economic structure, that is, imbalance between supply and demand in real economy, … 3/6
Read 6 tweets
15 Oct 20
Joining high-standard economic / trade pacts such as #CPTPP will be an important strategic move for #China to accommodate itself amid the current changes, says Huang Qifan: mp.weixin.qq.com/s/lBj7m4Usv_M-… 1/6
Joining CPTPP will level up China’s opening-up drive, which will force more in-depth and fundamental reforms. That will reinvigorate Chinese market participants, improve the efficiency of the internal circulation, and step up forming a mature market economy...2/6
Meanwhile, participation in the pact will help China to open up wider and engage more in the international circulation...3/6
Read 6 tweets
13 Oct 20
A paradox will emerge if we simply look at the contribution of the demand factors to China’s GDP growth, says Cai Fang: the contribution of external demand to the country’s GDP growth stood at only 11% in 2019; it even fell below zero in many previous years...
In statistical terms, external demand means net exports, or total exports less total imports. So a question arises: does negative external demand mean that it is not important?
It even gives rise to a ridiculous idea that China only needs to cut down its imports so that exports can contribute more to GDP growth, which is nothing but a mercantilist conclusion. But the fact is far from that...
Read 5 tweets