- Preface -

"2018 for the Global EconomicsIt is very extraordinary for Ji, which is a difficult year for many people. The global economic situation is not enough, the international situation is confusing, the geopolitical situation is complicated, the global deleveraging process is in full swing, and trade negotiations are faltering... 2019 has arrived, and many of the difficulties we faced in 2018 have not been resolved. How should we adapt to the new year? How to find new growth and direction in the confusing economic environment? The financial community invited 10 economists to explore the road with you 2019 and ask the future! ”

Guest introduction
Present guest: Li Huiyong

Deputy General Manager of Huabao Fund

The main points

The development of the stock market requires the participation of the main players to form a synergy. There are currently three major construction priorities.

Reasonable choice of monetary policy tools Effective restoration of financial market credit

Public funds play the advantage of business and marketization, seize the opportunity of capital market development

Delaying tax policy to encourage pension investment, effectively filling the funding gap to protect people's lives

Intelligent Manufacturing Promotes China's Industry Transition to Middle and High-end

Stock market development requires the participation of the main body to form a joint force

There are currently three major construction priorities.

financial:The current economy has entered the stage of medium- and long-term growth power shifting and the growth rate has dropped significantly. When the global economic cycle falls and the funds face is disturbed, A The negative reaction of the stocks is more intense. At present, the stock market as a whole is in a good background. What policy do you think is necessary to stabilize the stock market?

Li Huiyong:The stock market is a complex system whose healthy development depends on the combined role of market participants including listed companies, investors, intermediaries, and regulators. After nearly 30 years of development, China's stock market has made great achievements and is already an important part of the national financial system. The Central Economic Work Conference held at the end of last year clearly stated that “to create a standardized, transparent, open, dynamic, and resilient capital market”. This goal means that China’s stock market has entered a new stage. . To achieve this goal, the current more important work has the following three aspects:

1. Defining the position of regulators in the stock market, and using this as a starting point to improve the basic system of the stock market. The position of regulators in the securities market is to formulate trading rules and maintain market order to protect the legitimate rights and interests of investors. It is necessary to strictly supervise and strengthen supervision, but it is not frequent policy intervention. In formulating and implementing the stock market policy, we should follow the principle of prudence, strengthen communication with the market, and the policy should have relative stability, so as to truly provide an institutionalized regulatory basis for the stock market, which is conducive to stabilizing market expectations, rather than falling into regulation. With the “policy game” of anti-regulatory, speculative and anti-speculation, the market will increase. Regulators should also strengthen internal coordination to avoid policy conflicts. In addition, in the laws and regulations to clarify the regulatory authority's responsibility for emergencies, regularly identify the potential risks of the market, and conduct special research, and prepare for the preparation of the situation before the market is stable.

2. Improve the quality of listed companies and improve the dividend mechanism of listed companies. The long-term, stable and healthy development of listed companies is the cornerstone of the stability of the A-share market. It is necessary to provide convenience for the listing of high-quality companies, strict delisting system for companies that do not meet the listing requirements, and strict penalties for violations of laws and regulations of listed companies. At the same time, it is necessary to guide enterprises to change the tendency of refinancing to repay investors, improve the cash dividend system, strengthen the return of listed companies to investors, and encourage listed companies to increase repurchase and increase holdings, and enhance investors' long-term Shareholding confidence.

3. Strengthen investor education, introduce long-term funds, and foster long-term value investment concepts. A-shares are still dominated by retail investors, and the characteristics of chasing up and down and trend trading are obvious, causing excessive market volatility. In order to stabilize the stock market, relevant departments, financial institutions and mainstream media are needed to further strengthen investor education and lead the value investment trend. It is also necessary to further improve the interconnection and interoperability system, and introduce long-term overseas funds and mature overseas investment concepts. We will increase the introduction of long-term investors such as pension funds, social security funds, and insurance funds, and provide more policy incentives for long-term investment in taxation, and foster the overall long-term value investment concept of the market, thus improving the ecological construction of the A-share market.

Reasonable choice of monetary policy tools

Effectively restore financial market credit

financial:Since the beginning of the year, discussions on further reductions in fees and fees have existed. This year's government report clarified that it is necessary to increase the targeted reduction of small and medium-sized banks. You have predicted that there will be two RRR cuts during the year. What is the need for our current RRR cuts? Will the RRR fall soon?

Li Huiyong:The necessity of the central bank's RRR cut in the second quarter still exists. On the one hand, from the perspective of the currency gap, the size of the currency gap in the second quarter is around 1.6 trillion. In the second quarter, the MLF expires at nearly 1.2 trillion yuan. At the same time, April and May are two tax-paying big months. Even if the fiscal lending in June, the financial gap brought by the fiscal quarter in the second quarter is about 500 billion yuan. A reduction of 0.5 and 1 percentage point will release 800 billion and 1.5 trillion base currencies respectively, which will effectively ease the funding gap. On the other hand, there are indeed many ways to supplement the funding gap, but historically, the central bank generally uses MLF and other modes of delivery when credit expansion is fast, and prevents excessive credit expansion by constructing interest rate corridors, such as 2016 and 2017. In the year, at the bottom of credit and in the early stage of credit recovery, the cost of capital was reduced and the speed of credit creation was accelerated by means of RRR cut. Although the financial and economic data in the first quarter are better than expected, the risk appetite of the financial market was over-compressed last year. It is still in the early stage of credit recovery. It is still necessary to replenish the base currency by re-adjusting the method at the appropriate time.

Public funds play a business and market advantage

Seize the opportunity of capital market development

financial:Recently, with the arrival of the first anniversary of the 'new asset management regulations' approach, A The stock market is active, and the development of the science and technology board is just around the corner. The development of the public fund industry has once again become the focus of the market. What do you think are the market opportunities for public funds?

Li Huiyong:The requirements of financial institutions in the new era of asset management are to return to the entity and return to the source. The major asset management institutions will pay more attention to the professional division of labor, focus on inter-bank cooperation, finance the people who lack money, invest in wealthy people, and make financial services better. In economic transformation and people's lives. As far as public funds are concerned, market opportunities mainly come from the promotion of their three major advantages: First, strong investment research capabilities and asset allocation capabilities. In the 20 years of development, public funds have built themselves according to the requirements of the most professional institutional investors. In practice, they have formed the most systematic investment research, risk control and asset allocation capabilities in asset management institutions. This is the foundation for public funds to settle down. It is also the moat of the fund company. This asset management capability can provide investors with stable returns through fund products, and can also serve asset allocations of other institutions in the form of investment advisors. Second, a complete product line. The public fund's products cover almost all major assets, including active management products, as well as indexed products and smart Beta products include both domestic market investment products and overseas market investment products. Both off-site and on-site products are included. Previously, it may be a short-term for pension products, and the introduction of pension FOF also made public funds have a place in the pension market. The complete product line provides the most basic configuration tools for various asset allocation organizations. The third is the institutional advantage of marketization. Finance is a relatively high degree of marketization in all sectors of the national economy, and the fund is undoubtedly a relatively high degree of marketization in the financial industry. This includes market-oriented net worth management, market-based assessment mechanism, market-based compensation mechanism, market-oriented talents, and international vision. Other asset management institutions are also developing in the direction of hypermarketization, but public funds already account for The first opportunity can provide reference for other institutions.

Delayed tax policy incentives for pension investment

Effectively make up the funding gap to protect people's lives

financial:You said that EET Type tax incentives help pension investment. What do you think is the current outlook for pension investment in our country, and how will this tax-deferred tax policy affect the pension industry?

Li Huiyong:I am very optimistic about the prospects of China's pension investment. First, China has entered an aging society, and the necessities of pensions will become more and more obvious. According to the latest definition of the United Nations, when a country or region has an elderly population aged 65 and over that accounts for more than 7% of the total population, the country or region has entered an ageing; the proportion reaches 14%, which means deep aging; 20% Entering super ageing. According to this standard, China has begun to enter an aging society in 1999. In 2017, the proportion of elderly people over 65 years old in China is close to 12%, which is approaching the stage of deep aging. The China Pension Finance Development Report (2016) pointed out that China is experiencing the world's largest, fastest and longest-lasting aging process. It is estimated that the elderly population in China will reach 480 million in the middle of this century, and the proportion of people over 60 will exceed 30%. The China Social Insurance Annual Development Report (2016) predicts that if the dependency ratio is measured by the ratio of the number of people participating in the pension insurance to the number of retirements, the old-age dependency ratio in China will change from 2.8:1 in 2016 to 1.3:1 in 2050. That is, 1.3 working-age people support a retired old man.

Second, the pension system is weak and the gap is large. Developed countries such as the United States, Canada, and the United Kingdom have established a comprehensive three-pillar pension system. Although China has initially started the three-pillar pension system, it is highly dependent on the first pillar public pension. The second pillar enterprise has an annual pension coverage of only 23 million people. The occupational annuity has just started, and the third pillar personal pension development lags behind, almost blank. . 900 million people in China rely on basic old-age insurance, and public pensions face a large gap. According to the "China Pension Development Report 2016" issued by the Chinese Academy of Social Sciences, the cumulative bookkeeping amount of the individual pension account for urban employees in China (ie, "empty account") reached 4.7 trillion yuan in 2015, and the urban employee pension insurance fund of that year The accumulated balance is only 3.5 trillion, and the difference is 1.2 trillion.

The pension system of the United States, the United Kingdom, Canada, Australia, the Netherlands, Denmark and other countries with mature pension systems has reached more than 100% of the country's GDP, of which the US pension scale alone accounts for 64.8% of the global pension, and the Danish pension scale is the domestic GDP. More than twice. In contrast, as of 2017, China's pension assets were $197.8 billion, accounting for only 1.59% of GDP, and less than 1% of global pensions. Such a small pension scale is difficult to maintain a high quality retirement.

Figure 1: Size and growth rate of national pension assets in 2017


Source: OECD, Warburg Fund

Third, the income from pension investment is relatively low. In 2017, the average nominal rate of return on pension investment in OECD countries was 6.1%, and the actual rate of return was 4.0%. In the past five years (2013-2017), the average nominal rate of return was 5.5%, and the actual rate of return was 4.2%. Among them, New Zealand, Australia and the United Kingdom, the three countries with the highest investment income in the past five years, have an average annual real rate of return of 8.4%, 7.5% and 6.9%. In these countries, individual pensions are mostly invested and operated by investment managers such as fund companies. As the basic pension insurance of China's pension main body (accounting for 78% of China's pension scale), the investment scope is strictly limited to bank deposits and treasury bonds, and no qualified investment managers have been introduced for market-oriented investment, resulting in lower overall investment returns. The average yield (nominal) for 2007-2017 is only 2.66%. The overall investment volatility of corporate annuities has increased, but most of the time it has remained below 4%. As a supplement to the pension insurance, the National Social Security Fund has significantly higher return on investment due to the introduction of a professional investment manager for market operation and a broader investment scope. Since its establishment in 2000, the social security fund has achieved an average annual return on investment of 8.37%. On the whole, the low rate of return on China's current pension investment is difficult to achieve the effect of maintaining value. The development of individual pensions, play the role of the main investment force of market professional managers such as public funds, and improve the income of pension investment, will play an important role in solving the problem of pension in China.

In summary, China will face a serious aging situation in the next few decades. At present, the pension system is not perfect, public pensions have been short-circuited, and the development of the third pillar personal pension has just started. China's pensions are small in scale and low in investment income. Future pension investment will have broad development space, and market-oriented investment managers with public funds as the mainstay will play a more important role.

EET (Exempting Exempting) The Taxing type of delayed tax policy is tax exemption in the process of pension payment and investment, and is taxed at the time of collection. This is actually a kind of delay in paying taxes, delaying the current tax that should have been paid until retirement. On the one hand, it saves the time cost of funds. On the other hand, in the case of the progressive tax rate in China, since the income after retirement of employees is lower than that at the time of employment, the marginal tax rate applicable when receiving the annuity tax is also more Low, this will allow pension plan participants to further enjoy tax benefits. At present, China's enterprise annuity has adopted the EET tax system. In the future, the third-pillar personal pension investment adopts this delayed tax EET tax system, which has an important tax incentive effect on China's personal pension investment.

Intelligent Manufacturing Promotes China's Industry Transition to Middle and High-end

financial:China is currently facing the pressure of a relatively large industrial transformation. From a global perspective, manufacturing is China's dominant industry, and its role in the Chinese economy is very important. What problems have you observed in the current manufacturing transformation, which are more urgent and urgent to solve? What is the degree of development of smart manufacturing?

Li Huiyong:The biggest problem in the manufacturing industry is the serious overcapacity, especially the low-end production capacity. Relatively speaking, the high-end production capacity is insufficient. The main reason is that the basic components and basic processes are backward, and there is an urgent need to upgrade the industry.

From a global perspective, manufacturing is China's dominant industry. Intelligent manufacturing can not only enhance the competitiveness of traditional manufacturing, but also form new growth points, which will be the key direction of China's industrial development. Many people have no confidence in the catch-up of Chinese technology. In fact, China's three unique advantages are very beneficial to technology catch-up. The first is the institutional advantage. The government has a strong ability to mobilize resources and is competent for areas that are incapable of private involvement and require large-scale investments or high-risk areas. The second is the advantage of the big market. China has the world's largest consumer market, which can share costs and achieve economies of scale in a larger market. At the same time, it is also possible to achieve catch-up through market-changing technology. The third is the engineer dividend and the complete industrialization system. China still has a large gap in the advanced level in many fields, but the integrity of the domestic industrial system is second to none in the world. This means that China has a relatively large advantage in many areas that require a high degree of social division of labor and industry chain synergies. Throughout the field of successful technology catch-up in China, such as high-speed rail and 5G have the above characteristics. Combined with China's unique advantages, China's industrial upgrading will take the deep integration of the Internet, big data, artificial intelligence and the real economy as a breakthrough to promote the transfer of China's industry to the high-end of the industrial chain, value chain and innovation chain.

Past review
Column introduction

“Financial Street Living Room” is an interview section created by the financial community website. The main interviewees are government officials, economists, listed company executives, and senior market participants who are closely related to the capital market, and strive to expand information, convey value, and feel. Wisdom, the most realistic and vivid image of the frontier of the capital.

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