Zhu Bin, Managing director, chief economist of Nanhua Futures, delivered his speech Transition and restart - macroeconomic outlook

The report is divided into the following two parts:

1. Transition

Mr. Zhu pointed out that both the manufacturing industry and industrial enterprises in China are currently facing difficulties, and the real estate industry is also experiencing a trend reversal. The fundamental reason for this is the structural changes in the population. Traditional monetary policies have had little effect on the macro level, and the real estate and infrastructure cycles peaked in 2021. Currently, the manufacturing industry is still an investment area strongly supported by the government, and financial institutions are directing loans towards green manufacturing. However, exports are currently hindered by the impact of the global economic downturn and show no clear signs of improvement. Nevertheless, the devaluation of the RMB is expected to enhance China's export competitiveness.

2. Reboot

There is tremendous room for improvement in Chinese consumer spending, as the three-year pandemic has severely impacted the vibrancy of the Chinese consumer market. However, low domestic consumption in China corresponds to high savings. Mr. Zhu compared consumption data during the pandemic period between China and the United States and the resulting differences in fiscal policies between the two countries. In terms of the current monetary policy, it has lost its effectiveness, and there has been a noticeable decrease in the sensitivity of loan interest rates, indicating that the interest rate reduction measures have become ineffective. From 1998 to 2002, China experienced a deflationary period due to insufficient domestic demand, but at the current stage, the Chinese government has the potential to increase leverage. However, it also faces certain external risks, such as the rapid increase in real interest rates in the United States and the near-zero risk premium in the U.S. stock market. Looking at commodity trends, there is a divergence between domestic and international trends, with a tendency towards a downward trend. The bear market for commodities is still ongoing.